Could Germany and Italy withdraw their reserves from the United States?

CGTN Europe

CGTN Europe spoke to investment manager and business commentator Justin Urquhart-Stewart.

Transcript

00:00You're no stranger to moving around squillions of dosh around the world.

00:03Is it realistic for Germany and Italy to withdraw their gold reserves from the United States?

00:09And practically, how do you do it?

00:11Well, is it realistic? The answer is it can be done.

00:13But the whole point of actually having central reserves was that you have one secure place,

00:17which you knew it's well spread, but in a secure place, therefore everyone's goods in one area.

00:23So hopefully you can keep that as safe as possible.

00:24However, if you're concerned about possibly the strength of your currency,

00:28in Germany's case of the euro and Italy as well,

00:31perhaps you actually want to start bringing some of that back just in case there are going to be further issues.

00:35And maybe a possibly unreliable president might turn around and say,

00:38I won't allow gold shipments out of the US because that would imply there are difficulties with the American economy or confidence in it.

00:44That might be what's going through their mind.

00:46Also, if a country brings its gold back, it's showing support and saying our currency is backed up by gold,

00:53which, of course, has never been the case ever since we got rid of the gold standard.

00:56We have to go back to 1946 and then Bretton Woods and then the breakdown of that as well.

01:01So you have to be very careful by doing this, because if you'll start doing it too much,

01:05you'll start creating a lack of confidence in security.

01:10People are asking, what's wrong?

01:11Why are you doing this now?

01:13But at the moment, and you mentioned this earlier, gold obviously a traditional safe haven for investors.

01:18In uncertain times at the moment, we're seeing people jump into that.

01:21And it's also a way to hedge inflation somewhat, isn't it?

01:24It is indeed. Of course, Britain has a fantastic history of this, as once upon a time, our Chancellor, Mr. Gordon Brown at that time,

01:30in 1999, managed to sell her gold at that price.

01:33I think it was $276 an ounce, as far as the current price of $3,322.

01:39Brilliant idea of that by our Chancellor.

01:40Never let politicians make investment decisions.

01:42But, yes, it is seen as that backstop.

01:46But bear in mind, gold, you can hold it, you can see it and stroke it, but it doesn't give you any dividends.

01:52There's no income coming from the thing.

01:54So, no, be rather wary.

01:56That's why people, if you start seeing countries mucking around with their gold,

01:59then it means that they're concerned, therefore we're concerned about their concern,

02:03and you're creating that nervousness again.

02:05This economy, the global economy, needs more confidence.

02:07That's why you need the tariffs sorted out quickly, so you can get back to growing the economy again.

02:12So, what is the outlook on gold, then?

02:13I mean, we've seen prices dip again after the ceasefire between Iran and Israel come in.

02:19Uncertainty continues, though, as you hinted.

02:21I mean, I wonder, could prices go up further?

02:24Yeah, prices could very easily go up further.

02:27You only have to look past 24 hours, as you've seen with what's happened in terms of concern

02:31over whether the big bombs actually had their effect in Iran or not.

02:34And so that sort of reaction will continue.

02:37We are now in a much more concerned economy, global economy, than we were even a year ago,

02:43because you can't see which way this is going.

02:45And it's not just a matter of having an unreliable president,

02:47it's also how the other countries are reacting as well.

02:50In all of this, of course, you've got Ukraine still carrying on.

02:53We've almost forgotten about that.

02:54And, of course, other issues in the Middle East.

02:56There are lots of reasons to be concerned.

02:58The question is, is it time to panic?

03:00And the answer is, no, it's not.

03:01Everything is still, the global economy is still growing, despite the ineptitude of its leaders.

03:06We just have to make sure that continues to happen.

03:08Otherwise, it's back to Wales with the scotch.

03:10Well, I'm glad we're not panicking or going back to Wales currently.

03:13I want to talk, though, about the trend of de-dollarisation.

03:16Is this all part of the same story?

03:19Yeah, what your countries are very concerned about find themselves being tied to the dollar.

03:23You've had certain countries which have actually converted their domestic currency to the dollar.

03:29You've had El Salvador trying to do that.

03:31Then they were trying to replace that with Bitcoin, which really is mad.

03:35So people are trying to pull themselves away from it.

03:38And particularly look at those South American nations who often had a lot of American dollar debt.

03:41And, of course, as the dollar then rises, they're in a position where they're having to pay back more money in their domestic currency.

03:47So the greater independence they're going to have, and this is one of the initiatives the Chinese have had,

03:51to say, look, bypass that, come directly with us, we'll find an alternative.

03:55Then more of that will be occurring.

03:57Justin, good to see you.

03:58Thanks very much for coming.

03:59And Justin Urquhart-Stewart.

04:00Thanks very much for coming.

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