In the run up to the end of the year during December, a remarkable sight emerged across Germany – long lines of customers queuing up outside the country’s precious metals shops and gold dealer showrooms.
Was it seasonal gift buying by Germany’s citizens, a population well-known for its love of physical precious metals? Or perhaps the onset of panic about negative interest rates in Europe’s largest economy?
As it turns out, panic it was, but of a different type, with the long lines triggered by the realization that from 1 January 2020, new national legislation was to take effect that would dramatically reduce the threshold on anonymous buying of precious metals from the existing €10,000 limit (US$ 11,150) to a far lower limit of €2000 (US$ 2,230), all under the guise of money laundering prevention.
With a staggering 9,000 tonnes of gold held by the German population, 55% of which is in the form of physical gold bars and gold coins and the rest in gold jewelry, Germany’s citizens are savvy about gold and are active savers and investors in the yellow precious metal. Add to this the fact that the German bullion market is one of the most sophisticated and developed in the world, supporting an extensive set of industry participants from banks and gold refineries, to nationwide gold dealers and distributors, to smaller regional and local bullion retailers.
Panic buying – “We are being overrun”
So when the German government throws up restrictions on such a fundamental right as anonymous buying of gold and other precious metals, Germany’s citizens were going to sit up and take notice and do what any rationale economic actor would do in the circumstances – buy as much gold as they can get their hands on before the 1 January deadline. Hence the queues and long lines outside the gold shops including some of Germany’s biggest gold dealers such as Degussa and Pro Aurum.
Börse Online, Germany’s leading investor magazine, summed up the situation in its 13 December article “Supply shortages at gold traders: ‘We are overrun, the queues go up into the street’“:
“Large gold traders such as ProAurumand Degussa are currently experiencing massive bottlenecks in gold products, and customers are literally buying their shelves empty.“We are currently being overrun,” says Raphael Scherer, managing director at Degussa Edelmetalle.“The queues go up into the street.”
It is similar with Pro Aurum.Like Degussa, the company is one of the largest gold traders in Europe.“We are currently seeing a tripling of the normal order volume – both online and in the branches,” says Robert Hartmann from Pro Aurum”.
Deutschland steht die nächste Währungsreform bevor.
Vor Degussa in Köln bildet sich eine Schlange derer, die anonym #Gold kaufen, bevor das ab 1.1.20 dank #Groko nur noch bis 2.000 statt 10.000 #Euro möglich ist. So werden die Bürger gezwungen, im wertlosen Euro zu bleiben.
Kerstin Botschek, Branch Manager at Degussa in Cologne, explained the situation to German newspaper Die Welt in its 23 December “Legislative change creates queues in front of gold trading houses“:
“These long lines are based on the lowering of the cash limit. 98.5 percent of customers want to buy gold for less than 10,000 euros without registering. Few are buying jewelry any other gift.”
The situation was similar at Pro Aurum in Munich which it documented on its website:
“Many Pro Aurum employees in Munich cannot believe their eyes…the line of waiting customers extends to the on the sidewalk in front of the building. In the freezing cold, people persevere to buy physical precious metals. You take everything that is still available with you – but the product range is shrinking day by day, because the demand is simply overwhelming.”
Germany goes beyond the EU Directives
To understand why this is truly part of a war on gold by the German government, we must understand the background to this legislation. The European Union (EU), of which Germany is a member, regularly issues legal Directives on all manner of subjects. These directives, although they are required to be reflected in the national law of member states, don’t dictate how they should be reflected in national law, and so member states have flexibility in how they implement the directives within their national legislations. One such body of Directives are the EU Anti Money Laundering Directives, which the EU claims are to protect the financial system from being used for money laundering and terrorist financing.
In mid-November 2019, Germany’s parliament, the Bundestag, enacted a German federal government bill which implemented a European Union (EU) amendment to the fourth EU Money Laundering Directive. This amendment, known as the fifth EU Money Laundering Directive, was introduced by the EU in 2018, and then EU member states had until 10 January 2020 to reflect the changes in their national law via domestic legislation. The German Federal Council then passed the Bundestag’s act on 29 November and the law came into force on 1 January 2020.
But on this occasion, the German government in its legislation, went much further than the requirements of the latest EU Money Laundering Directive. Specifically, as regards transactions in precious metals, the new German law passed in November (a draft of which is here in pdf) lowered the threshold on where precious metals can be bought without identity checks (anonymous transactions) from €10,000 to €2,000 per transaction.
In Germany, anonymous transactions such as these are known as “Tafelgeschäfte”. Generally speaking, the German concept of “Tafelgeschäfte” can refers to any over-the-counter transaction for an investment or security that a customer can receive in physical form. This could include bearer bonds or an equity security with attached dividend coupons, as well as physical precious metals bars and coins. In these literally “over the counter” or across the counter transactions, customers do not need an account to perform the transaction, and customer identity remains anonymous, e.g. in the case of gold, the customer pays cash, and the dealer or bank hands over gold bars or coins.
But while the 2018 EU Directive said nothing whatsoever about precious metals, this did not stop the German federal government from dramatically lowering the anonymous threshold for precious metals transactions in its 2019 version of its domestic bill, a bill that it claims reflects the fifth EU Money Laundering Directive.
Its also important to note that the existing €10,000 threshold limit on anonymous precious metals transactions in Germany (Tafelgeschäfte) had only been in existence since 2017. Prior to that, the reporting threshold was €15,000. This threshold reduction from €15,000 to €10,000 was also rail-roaded through in German legislation which supposedly reflected the 2015 EU-Directive against Money Laundering and Terrorism Financing (a.k.a. the fourth EU AML-Directive). But again in that instance, while the 2015 EU Directive said nothing about precious metals, the 2017 German legislation defined a list of ‘high value goods’ including “precious metals such as gold, silver and platinum”, “gemstones” and “jewelry and watches”, deeming that:
“All goods dealers who make or receive cash payments of 10,000 euros and more (previously 15,000) will have to fulfill the obligations of the Fourth Money Laundering Directive”.
When it becomes serious, you have to lie
Fast forward to the 2019 German bill and out of nowhere it states that:
“The findings of the national risk analysis have shown that, especially in the area of gold trading, heavy cash transactions are taking place just below the current threshold for identification obligations of 10,000 euros, … The threshold of EUR 2,000 envisaged in the draft law aims to prevent or significantly limit this bypass trade.”
And also that:
“In the area of precious metals trading, strong cash transactions can be observed below the threshold amount of 10,000 euros that was applicable under the previous legal situation. At the same time, there is an increased risk of money laundering in the area of precious metals trading. The regulation is necessary to prevent possible evasion and smurfing.”
Strong cash flows observed by who, you might ask? Certainly not the bullion industry. According to, Raphael Scherer, managing director at Degussa Edelmetalle in a December interview with Borse Online:
“gold traders must already report suspected cases of money laundering. ‘We also reject customers who think they can buy Eur 9999 multiple times from us to get around the threshold’ said Scherer. ‘There are such cases, but these are isolated cases.'”
The lack of concrete evidence put forward by the Federal government for lowering the transaction threshold was also not lost on German parliamentary deputies, some of whom submitted questions government asking for details. The following selection of questions are from Frank Schäffler, Christian Dürr, and Dr. Florian Toncar of the FDP, and the answers from the government are shocking to say the least:
Q 1. To the best of the knowledge of the Federal Government, what is the value of the precious metals held by private individuals in Germany?
Answer: The Federal Government has no knowledge of this.
Q2. What was the annual volume of trade in precious metals in Germany during the last five years, according to the Federal Government (please break down the answer according to the individual years and precious metals)? How much of this is accounted for by private individuals?
Answer: The federal government has no information on this.
Q3. To the knowledge of the Federal government cabinet, what was the annual volume of cash transactions for precious metals in Germany in the last five years (please break down according to the individual years)?
Answer: Money laundering supervision of the trading of precious metals in the non-financial sector is the responsibility of the Länder. Therefore, the government cabinet has no information on the annual volume of cash transactions in precious metals.
Q3 a) How many people living in Germany have bought precious metals using anonymous cash transactions in the past five years?
Q3 b) How many individual transactions of this type (cash for precious metals below Eur 10,000) have been carried out in the past five years?
Answer: The federal government has no information on this.
Q3 c) What proportion of these cash transaction business for precious metals is accounted for by trading in gold, silver or platinum?
Answer: The exact share of gold, silver and platinum Tafelgeschäfte (anonymous over the counter transactions) is not known to the federal government. The findings available to the federal government from the competent supervisory authorities of the Lander suggest that the vast majority of them in the non-financial sector involve trading in gold. In contrast, the trade in silver and platinum is considerably lower.
Q4. To the knowledge of the federal government, how many precious metal dealers are there currently in Germany?
Q 4 a) How many of them do transactions of cash for precious metals below the Eur 10,000 limit?
Answer: The money laundering supervision of trading in precious metals in the non-financial sector is the responsibility of the Länder… The federal government therefore has no findings.
Q4 b) According to the federal government, how many precious metal traders have been involved in money laundering or terrorist financing over the past ten years?
Answer: Reference is made to the answer to question 6b
War on Gold – War on Truth
The answer to question 6b makes incredible reading and really torpedos any claim that the German government need to target precious metals transactions for money laundering.
Q6 b) In how many reporting or criminal cases was there a reference to precious metals?
In 2017, of 59,845 suspicious transaction reports that were recorded by the Central Office for Financial Transaction Investigations (FIU), 64 related to precious metals.
In 2018, of a total of 77,252 suspicious transaction reported to the FIU, 175 related to precious metals.
So over the most recent two year period, of 137,097 suspicious transactions reported to the Central Office for Financial Transaction Investigations, only 239 cases related to precious metals. That’s just 0.17%. But wait! It gets more ridiculous. Of these 239 cases reported to the FIU in which precious metals were involved, only 4 of these involved amounts below the already applicable € 10,000 threshold. Just 4 cases.
According to Bundestag deputy, Frank Schäffler:
“If the government lowers the threshold forTafelgeschäfte [over the counter transactions] only because of four specific cases, it shows the absurdity of the tightening.”
The questions continue:
Q6 c) To the best of the knowledge of the Federal Government, how often and to what extent over the past ten years have anonymous cash transactions for precious metals been used for money laundering
Answer: No statistical data are available about the frequency of the use of so-called “Tafelgeschäfte” for the purpose of money laundering
Q7. What information does the Federal Government have “that especially in the area of gold trading, a strong cash flow just below the current threshold for identification requirements of 10,000 euros takes place”?
Answer: The reduction in the threshold amount is based on the findings of the national risk analysis of the federal government, in which the supervisory authorities of the federal states as well as the police and law enforcement and security authorities contributed findings.
In the area of precious metals trading, a strong cash traffic below the current legal situation threshold amount of 10.000 euro was observed. At the same time, in the area of precious metals trading there is an assumed increased risk of money laundering.
As a product – comparable to cash – precious metals offer a high degree of anonymity and are suitable for the investment of large amounts with above-average value stability, easy transportation and global acceptance.
In other words, these statists detest all the positive characteristics of gold and their true colors are being shown in the above statement.
The questions continue:
Q8. What benefits does the federal government expect from lowering the threshold on anonymous over the counter transactions?
To what extent does the federal government estimate that money laundering transactions would be prevented by the new upper limit [lower threshold]?
Answer:…The regulation is particularly necessary in order to avoid possible circumvention and to prevent the artificial splitting of transactions (“Smurfing”).
Due to its arbitrary denomination of transactions without loss of value and its high acceptance as a means of payment, trading in gold is particularly vulnerable to money laundering.
With this reduction, a threshold amount is being chosen at which it can be assumed that it will be economically unattractive for refineries and traders to reduce the delivery weight [of metal] with the aim of falling below the threshold [economically unattractive in smaller bars or coins]
Q11. What is the upper limit for panel laws is provided to the knowledge of the Federal government, at least?
Q 11a) Why does the federal government go beyond the minimum ceiling of EUR 10,000 in the fourth EU money laundering Directive (2017)