According to a German federal court, annual audits and physical inspection should be done by the country’s central bank for its Gold Reserves worldwide, as well as reserves that are in the custody of the Federal Reserve Bank of New York. Apart from the FRBNY, German gold reserves are held by London, Paris and Frankfurt.
The physical presence of the gold in the nation will not make any significant difference unless the central bank of Germany decides to utilize the money for some non-monetary, practical purpose, such as making watches. However, there has been a long scepticism about the government’s gold reserves and the central bank.
Paranoia about gold reserves is nothing new. For instance, the gold of the United States government, which according to official reports is held by the United States Bullion Depository at Fort Knox, has been said to not be real gold at all. Almost from the time that the Depository was founded, way back in 1937, such rumors have been rampant. In fact, some say that the original gold has been looted and substituted with gold-painted tungsten. While the government has dismissed such claims as being baseless, it does conduct scheduled audits and purity tests in Fort Knox on a regular basis on a small gold sample of gold reserves.