United States Stores More Than $1 Trillion Worth of Gold Belonging To Foreign Governments

Deep in the bowels of the New York Federal Reserve building, 507,000 gold bars - or 6,331 metric tons - sits behind 90-ton steel doors and reinforced concrete.

There are 122 vaults in total in the building, with each account holder having their own vault. Gold bars are numbered and belong to the owner of the vault.

The owners of the vaults include foreign governments, central banks and the International Monetary Fund, to name a few.

Given the fact that over $1 trillion in gold bars sits in the vaults (which are 80 feet below street level, by the way), security in insanely tight. There is 24/7 surveillance, armed guards at every step and three different Fed staff members are required to okay any transaction.

More than 35 foreign governments store gold at the NY Fed building. This includes Germany, Italy and the Netherlands, which have a combined $400 billion plus in gold bars in the United States.

Some nations have repatriated some of their gold. Germany, for instance, moved some of their gold from the NY Fed back home, though they elected to leave 37% of their gold holdings in the United States, for reasons of diversification.

Venezuela, in 2011 and 2012, repatriated all of their gold after President Chavez took office.

Other nations like Belgium and Austria moved some of their gold holdings back home after facing pressure from voters.

Nations like Lebanon and India seem content to keep significant amounts of their gold in the United States.

So the question becomes - why would a sovereign nation choose to store gold in the United States?

Different countries have different reasons.

During the Cold War, for instance, West Germany chose to store their gold in the United States, as they feared an invasion from the Soviet Union, and were worried that their gold would be stolen from them.

Other countries simply have gold left over from the Bretton Woods days, when gold was necessary to trade with the United States.

Other nations choose to leave gold in the United States (New York specifically) as it is a very easy way to purchase US dollars if they need to. New York is a global gold trading center, and having tens of billions of dollars in gold sitting in New York makes it simple for a sovereign nation to access US dollars if the need arises.

A fourth reason - some nations just don't want the bother and expense of storing their own gold, as the New York Fed is probably one of the most secure locations in the world.

Lastly, the United States is considered a "safe" and stable jurisdiction where there is little to no threat of gold getting confiscated by a rogue administration.

It's expensive to move gold out of the New York Fed building and back home.

Between 2013 and 2017, Germany moved 674 tonnes of gold back home as part of a diversification strategy, and this ended up costing them 7 million Euros.

The New York Fed building has also stored a number of priceless artifacts over the years, including the Magna Carta, the Crown of St. Stephen and the US Constitution & Declaration (during World War II).

Source: Foreign Gold Stored in US

Filed under: General Knowledge