Expert: Why Europe is bringing its gold home from the United States

European countries are bringing hundreds of tonnes of gold home from North America as confidence in the United States as the safest place to store reserves weakens, according to commodity analyst Christian Kopfer.

The Netherlands, Germany and France are among the countries that have reportedly moved gold, according to the BBC. Kopfer said the original decision to store European gold in North America dated back to the two world wars. Because the wars largely took place in Europe and did not reach American soil, the United States was considered an exceptionally secure location.

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When the gold price hits records, it is usually not a sign of anything good.

Recent unpredictable political developments in the United States have changed that calculation. Many countries are choosing London instead. Kopfer said the decisive factor is the city’s role as the world’s most important gold market. “If you want to be able to buy or sell gold quickly in a crisis, that is where you should be,” he said.

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If you want to be able to buy or sell gold quickly in a crisis, that is where you should be.

Moving hundreds of tonnes across the Atlantic would bring enormous costs and security risks, so the reserves are generally not transported by ship or aircraft. Instead, countries use a financial arrangement known as swapping. They can sell gold in New York while buying an equivalent amount in London, shifting the location of the asset without physically moving the bars.

The transfers come as gold prices reach historic levels. The price has more than doubled in five years, rising from below $2,000 to above $4,000 per ounce, or approximately 19,000 to 38,000 Swedish kronor. Kopfer described the market as a “supercycle” and said the surge reflected financial stress caused by chronic budget deficits and concerns about the value of money. Sweden has not followed the trend so far. At the end of April, the Riksbank held 125.7 tonnes of gold worth 172.6 billion kronor, stored in several locations.

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It is a sign of increased financial stress in the global system.