No, they could sell the gold in the US to purchase gold that’s already physically closer for a slight premium. Possibly that ends up being cheaper than actual transport.
In December there was a large movement of physical gold from London to New York as banks closed their EFP arbs. This was enough to put a lot of pressure on the market.
I imagine if Germany did that with their reserves a similar effect would come about.
What else would be meaningful in this context? Are sovereign countries currently restricted in trading gold backed securities when stored abroad? I don't think so.
Not necessarily. It’s fair to wager that the gold they speak of is gold securities and not literal gold bars because if they try to collect gold bars they’re going to be sad.
Considering the US only has 8,000 tonnes of gold total, this is going to be interesting. I don’t think their gold is just sitting in a closet in manhattan.
> As of 2024, the vault housed approximately 507,000 gold bars, with a combined weight of 6,331 metric tons. The vault is able to support this weight because it rests on the bedrock of Manhattan Island, 80 feet below street level and 50 feet below sea level.
> Following the verification process, the gold is moved to one of the vault’s 122 compartments, where each compartment contains gold held by a single account holder (meaning that gold is not commingled between account holders).
Thanks for the link! I wonder how this works. Is there just no practical impact of the "book value" being so far off the market price? Surely any exchange is done at the prevailing rates.
> The market value of a gold bar depends on its weight, purity level, and the prevailing market price for gold. Rather than market pricing which fluctuates daily, the New York Fed uses the United States official book value of $42.2222 per troy ounce for gold holdings.
