Germany to repatriate 700 tonnes of gold from U.S., France These are stories Report on Business is following Wednesday, Jan. 16, 2013. Germany to repatriate gold Germany's central bank has decided it wants at least some of its massive gold holdings held inside its borders. The Bundesbank today announced plans to repatriate almost 700 tonnes of gold now held by other central banks in New York and Paris by 2020. "With this new storage plan, the Bundesbank is focusing on the two primary functions of the gold reserves: to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centres abroad within a short space of time," the central bank said in a statement as it outlined plans to pull 300 tonnes from the Federal Reserve in New York and 374 tonnes from the Bank of France in Paris. The bullion will be held in the Bundesbank's own vaults in Frankfurt. "The withdrawal of the reserves from the storage location in Paris reflects the change in the framework conditions since the introduction of the euro," said the central bank. Given that France, like Germany, also has the euro as its national currency, the Bundesbank is no longer dependent on Paris as a financial centre in which to exchange gold for an international reserve currency should the need arise. As capacity has now become available in the Bundesbank's own vaults in Germany, the gold stocks can now be relocated from Paris to Frankfurt. This actually dates back to the days of the Cold War, amid fears West Germany could be invaded by the Soviet Union, putting its gold reserves at risk. Last year, however, Germany's independent auditing agency, the Federal Court of Auditors, sparked something of a political controversy when it urged the Bundesbank to more closely monitor the gold held by other central banks. At the end of last year, the Bundesbank held almost 3,400 tonnes of gold, valued at €132.8-billion, or more than $175-billion (U.S.), at the time. With more than 270,000 bars, more than 1,000 tonnes are in Frankfurt, more than 1,500 tonnes in New York, 450 tonnes in London, and the 370 tonnes in France. The Bundesbank's move is significant in that repatriating bullion can push up prices amid the move to physical gold. "This move by the Bundesbank may trigger a chain reaction, prompting other countries to start repatriating the gold stored in London, New York or Paris," the Montreal-based Centre for Research on Globalization "If gold repatriation becomes a worldwide trend, it will be obvious that both the U.S. and U.K. have lost their credibility as gold custodians," the group added. What drives the loonie As currency tensions mount across the globe today, a new report looks at what's driving the strength of the Canadian dollar, and how it may have moved from a "petro-currency" to the "Bay St. Buck." The study on so-called Dutch Disease by Mr. Cross, released by the think tank this morning, notes how Canadian oil prices lag those of world benchmarks, but how the dollar has been propped up by foreign money flooding into the country by the hundreds of billions. As the report was being released today, Russia was citing its concerns over a currency war. His comments, in turn, followed comments late yesterday by Jean-Claude Juncker, Luxembourg's prime minister and the chief of the group of finance ministers of the euro zone. Markets slide Global markets are falling so far this morning as what had been a New Year's rally fast disappears. "The post-fiscal cliff rally has been looking weaker and weaker of late, as the bulls struggle to lift markets beyond recent highs," said market analyst Chris Beauchamp of IG in London. Tokyo's Nikkei slumped 2.6 per cent, while Hong Kong's Hang Seng slipped 0.1 per cent. In Europe, London's FTSE 100, Germany's DAX and the Paris CAC 40 were down by between 0.2 per cent and 0.6 per cent by about 9 a.m. Dow Jones industrial average and S&P 500 futures also slipped. "Global equities are decidedly lower this morning with most major markets dipping into the red (with the exception of Australia's ASX 200)," said Carl Campus of BMO Nesbitt Burns. The [U.S. dollar] index is weaker while comments from Japanese officials seem to be supporting the currency for the second straight session. Meantime, commodity prices are mixed with WTI crude up 0.3 per cent to $93.53/barrel, gold little changed at $1679/ounce, and copper down 0.2 per cent. Bank profits soar Major U.S. banks are reporting surging profits today. But, unfortunately for Jamie Dimon, there won't be a whale of a bonus. JPMorgan Chase & Co. cut Mr. Dimon's compensation in the wake of the $6-billion (U.S.) trading loss last year by the "London Whale," the nickname for the trader involved. Don't cry for JPMorgan's chief executive. True, his bonus is being cut by half, but he's still getting a $10-million bonus and $1.5-million in salary. This came as the banking posted a hefty gain in profit to $5.7-billion or $1.29 a share in the fourth quarter. Goldman Sachs Group Inc. also posted a sharply higher profit, of $2.9-billion or $5.60 a share, as did Bank of New York Mellon Corp., whose profit jumped to $622-million or 53 cents. Magna boosts forecast Magna International Inc. says it's making headway in efforts to expand beyond North America and Western Europe. Canada's largest auto-parts maker said on Wednesday it expects total sales in 2013 of between $31.3-billion (U.S.) and $32.7-billion, compared with a forecast made in November of $30.3-billion to $31.2-billion, The Globe and Mail's Bertrand Marotte reports. Our outlook reflects the progress we are making in expanding Magna's business outside of our traditional markets. Our growing footprint in high growth markets, combined with our strong positions in North America and Europe, further enhances our ability to support our customers on global platforms," Magna chief executive officer Don Walker said in a news release.