ContextKeynote speech by Joachim Nagel, President of the Deutsche Bundesbank, at the Global Precious Metals Conference, Sorrento, 5 October 2026.
Why it mattersLinks geopolitical fragmentation to growth, inflation risks and reserve management, with gold discussed as one diversification option for central banks.
- Geopolitical rivalry disrupts supply chains and raises economic uncertainty.
- Geopolitical shocks make inflation and the balance of risks harder for central banks to read.
- A fragmented world raises doubts about how to diversify reserves safely.
- Keep monetary policy focused on price stability while watching supply-side shocks.
- Reassess reserve portfolios for resilience and diversification.
- Weigh gold's role in reserves as one part of a wider diversification strategy.
Read the speech summary
1. Geopolitics as the common thread
Speaking at a precious metals conference in Sorrento, the President of the Bundesbank built his remarks around one idea: rivalry between powers and security concerns now shape trade, investment and supply chains. This affects the growth outlook, the conduct of monetary policy and the way central banks choose their reserve assets, including gold.
2. Growth: resilient but exposed
Despite the war in the Middle East and disrupted shipping through the Strait of Hormuz, world growth and trade have held up, helped by heavy spending on artificial intelligence infrastructure. Euro area activity surprised on the upside; the September staff projections put growth at 0.9% in 2026 and about 1.5% in 2027 and 2028, driven increasingly by household spending and by investment in digital tools, energy security, the green transition and defence. Germany is in a slow recovery, with growth near 1% this year supported by orders, industry and public spending. The outlook nevertheless depends closely on trade, energy prices and confidence.
3. Monetary policy and the energy shock
Higher interest rates cannot create oil or reopen trade routes, so a first jump in energy prices cannot be prevented. The real question is whether the shock fades or spreads into wages and prices; in the second case, policy must stop it from feeding on itself. Euro area inflation is projected at 3.0% in 2026, falling to 2.5% in 2027 and 2.1% in 2028, with underlying pressure still strong and risks tilted upwards because of low gas storage, damaged refineries and threats to food supply. As there is no clear sign yet of contagion to wages and long-term expectations remain near 2%, the ECB raised rates by a quarter point in both June and September, bringing the deposit rate to 2.5%. Decisions will stay data-driven and taken one meeting at a time.
4. Gold as anchor, then in retreat
Reserves protect a country under external pressure and are managed for liquidity, safety and return. Gold differs from foreign currency holdings because it depends on no issuer. Under the post-war Bretton Woods system it anchored the monetary order and made up almost 70% of world reserves in 1950, much of it held by the United States. Doubts about dollar convertibility helped end that system; gold still represented close to 60% of reserves in 1979. Over the following three decades its share fell to about 10% by 2009, as central banks sold gold, built large foreign currency reserves (Japan, then China) and preferred interest-bearing government bonds in a world focused on integration and cooperation.
5. The return of gold
After the 2008 crisis, central banks, notably in China and Russia, became buyers again. Low bond yields reduced the cost of holding a metal that pays no interest, and geopolitics gained weight: gold serves as a refuge in stress and, held at home, cannot be frozen by sanctions. Its share of global reserves rose to about 14% in 2023 and, mainly because of the price surge, to nearly 25% by 2025. Higher bond yields make bonds more attractive again, but rising public debt and lasting geopolitical risk keep a strong case for diversifying into gold. He closed with a line from Tasso to suggest that the worth of gold lies in the use people give it.