AMSTERDAM — Last week, the Dutch central bank (DNB) revealed it had moved substantial portions of its gold holdings from the United States and Canada to the U.K. and the Netherlands. While the bank’s announcement didn’t mention U.S. President Donald Trump, its decision underscores growing concerns among governments around the world about the safety of their vital financial reserves being held in U.S. custody given Trump’s unconventional and often hostile behavior toward allies.
Instead, the DNB cited “increasing geopolitical unrest” and explained that by moving part of the country’s gold reserves to Europe, it is better prepared for an emergency. The Netherlands, like other European countries, has been girding for the possibility that Russian President Vladimir Putin will continue to escalate his attacks against Ukraine’s supporters in Europe. Homes here have been instructed to stockpile several days’ worth of supplies.
“We assume that we will never need to deploy the gold,” the DNB’s president, Olaf Sleijpen, said in a statement. “But it is nevertheless necessary to strengthen our resilience and preparedness.”
That is a contrast from the explanation that the French government offered when it sold off some $15 billion worth of bullion held in New York earlier this year and used the proceeds to buy gold in France. Officials claimed the move was simply an effort to swap out lower-quality gold for bars with higher purity.
Silence may be golden, as the saying goes, but no one is fooled: Trump’s behavior, seen by many as erratic and dangerous, is at least part of the reason why governments are reducing their exposure to the United States.
In Germany, which has stored its gold reserves in the U.S. for many decades, the pressure is growing on the Bundesbank to take action. Observers point to Trump’s threats against Greenland, his aggressive tariffs against close allies like Canada and a slew of other norm-breaking actions, to argue that German assets are not safe on U.S. soil.
Stefan Risse, an economist at Frankfurt-based investment firm Acatis, described a possible scenario to the German news service Deutsche Welle: “Here’s what [Trump] could do: He says, well, the Germans have invested far less in defense for ten years than they should have. We picked up the tab, so you have an open bill with us. Let’s make it payable now.”
Some observers disagree, arguing that not even Trump would risk the fallout from such a move. “If the U.S. were to suddenly seize [the gold] from its owner, then New York as a gold trading center would be lost,” Johannes Beerman, a former director of the Bundesbank, told Deutsche Welle. The downside consequences would be so costly, he concluded, that the U.S. simply could not afford it.
The Europeans’ removal of their gold from New York is a symptom of a larger problem: a lack of trust in America.
Yet even without Trump taking such an extreme step, the impact of the gradual loss of confidence in the U.S. is already palpable and could get much worse. Lower institutional trust in the U.S. translates into a lack of trust in U.S. Treasury bonds, which would require even higher interest rates to persuade investors to purchase the securities that fund U.S. fiscal deficits. Indeed, bond yields are already surging around the world, including in the United States.
Of course, Washington still benefits from the tremendous liquidity of its bond markets—far exceeding any alternatives. And the U.S. economy, despite its troubles, is still a global powerhouse.
The current president of Germany’s central bank, Joachim Nagel, sounded confident in an interview in January. “I have no doubt that our gold is still safely stored in New York.” But then, the Dutch too seemed satisfied with their setup earlier in the year. In March, Sleijpen, the DNB president, said he was “fully confident” in the geographical distribution of the country’s gold and saw “no reason at this point to change that strategy.”
While Sleijpen and his colleagues have changed their calculus, their decision does not indicate a full loss of confidence. The Netherlands is keeping 18.5 percent of its gold in the U.S., down from nearly one-third. In other words, the Dutch are fine-tuning their risk profile, lessening their exposure without completely pulling their gold from a country that many here say they now barely recognize.
That, however, may not be the end of the story.
Throughout Europe there’s a growing push to “de-risk” from the U.S.—a term once used almost exclusively with regard to China—with gold as one front in that campaign. And the concern goes well beyond central banks: The Taxpayers Association of Europe is contacting European finance ministers, arguing they should stop relying on the U.S. Federal Reserve to protect such important assets. And private investors across Europe are reassessing their exposure to markets in the U.S., where the exploding national debt has elicited little visible concern from the Trump administration.
In Italy, which holds the world’s third-largest gold reserves after the U.S. and Germany, pressure is also building. A prominent economics commentator, Enrico Grazzini, recently warned that “leaving 43 percent of Italy’s gold reserves in America under the unreliable Trump administration is very dangerous for the national interest.”
The Europeans’ removal of their gold from New York is a symptom of a larger problem: a lack of trust in America. If that problem worsens as the result of more erratic behavior from Trump, the consequences for the U.S. economy will prove much more dire.
Frida Ghitis is WPR’s senior columnist and a contributor to CNN and The Washington Post. Her WPR column appears every Thursday. You can follow her on Twitter and Threads at @fridaghitis.