# Why do countries store their gold in other countries? **URL:** \ **Category:** Factual Questions\ **Created:** [July 17, 2014, 9:15pm UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401 "2014-07-17T21:15:51Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Bones\_Daley](https://avatars.discourse-cdn.com/v4/letter/b/bc8723/32.png) [@Bones\_Daley](https://boards.straightdope.com/u/Bones_Daley)\ **Post date:** [July 17, 2014, 9:15pm UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/1 "2014-07-17T21:15:51Z")
I am thinking in particular of the German Bundesbank, who own 3396 tonnes of gold, less than a third of which is held in the vaults in Frankfurt. There are many other countries who deposits their gold reserves in the vaults of foreign countries. 45% of the Bundesbank gold is stored with the Fed in New York, and the rest in London and in France. Now, when the Germans got uneasy about the way the American economy was going … they requested an on-site inspection/audit of their gold, and were refused. We can all draw our own conclusions about that … But my question is …why on earth would any country want to store their gold in the vaults of a foreign country in the first place? ---
**Author:** ![Mk\_VII](https://avatars.discourse-cdn.com/v4/letter/m/5f9b8f/32.png) [@Mk\_VII](https://boards.straightdope.com/u/Mk_VII)\ **Post date:** [July 17, 2014, 9:20pm UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/2 "2014-07-17T21:20:28Z")
If you get invaded, the country’s gold reserves are still there for the government-in-exile to carry on with. ---
**Author:** ![Bones\_Daley](https://avatars.discourse-cdn.com/v4/letter/b/bc8723/32.png) [@Bones\_Daley](https://boards.straightdope.com/u/Bones_Daley)\ **Post date:** [July 17, 2014, 9:48pm UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/3 "2014-07-17T21:48:44Z")
> [@Mk\_VII](#): > > If you get invaded, the country’s gold reserves are still there for the government-in-exile to carry on with. Good point . ---
**Author:** ![Alley\_Dweller](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alley_dweller/32/430_2.png) [@Alley\_Dweller](https://boards.straightdope.com/u/Alley_Dweller)\ **Post date:** [July 17, 2014, 10:09pm UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/4 "2014-07-17T22:09:11Z")
[According to Spiegel Online International](http://www.spiegel.de/international/germany/german-politicians-demand-to-see-gold-in-us-federal-reserve-a-864068.html): > [@](#): > > The Bundesbank also objects to this notion for another reason. It says the gold is supposed to act as an emergency buffer. In the extreme situation of a currency collapse, the bankers say that the gold bars could easily and quickly be exchanged on location for pounds or dollars to pay urgent bills. ---
**Author:** ![Bones\_Daley](https://avatars.discourse-cdn.com/v4/letter/b/bc8723/32.png) [@Bones\_Daley](https://boards.straightdope.com/u/Bones_Daley)\ **Post date:** [July 17, 2014, 10:23pm UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/5 "2014-07-17T22:23:56Z")
> [@Alley\_Dweller](#): > > [According to Spiegel Online International](http://www.spiegel.de/international/germany/german-politicians-demand-to-see-gold-in-us-federal-reserve-a-864068.html): Interesting and informative link. The question still arises however … why would the Fed not allow the emissaries of the Bundesbank to view their own gold ? Security /schmurity … how difficult would it be to frisk the inspectors … what did the Fed think might happen in a worst case scenario ? ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [July 17, 2014, 10:44pm UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/6 "2014-07-17T22:44:44Z")
The real reason is that it is/was impractical to ship gold bars across the Atlantic Ocean, whereas it is easy and practical to put a note on shelf 27 of vault 16 that ingots 27001 to 27850 that used to be owned by the French Government are now owned by the German government. All this gold was accumulated in American banks over decades the German was running a surplus with America. Rather than shipping the gold to Germany, the gold was accumulated in German accounts in American banks. They just changed the label on the account from “US government” to “German government”. ---
**Author:** ![alphaboi867](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alphaboi867/32/3898_2.png) [@alphaboi867](https://boards.straightdope.com/u/alphaboi867)\ **Post date:** [July 17, 2014, 11:09pm UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/7 "2014-07-17T23:09:41Z")
> [@Mk\_VII](#): > > If you get invaded, the country’s gold reserves are still there for the government-in-exile to carry on with. And if the Soviets ever decided to invade Western Europe West Germany would’ve been one of the 1st to fall. ---
**Author:** ![gazpacho](https://avatars.discourse-cdn.com/v4/letter/g/6f9a4e/32.png) [@gazpacho](https://boards.straightdope.com/u/gazpacho)\ **Post date:** [July 17, 2014, 11:10pm UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/8 "2014-07-17T23:10:50Z")
> [@Bones\_Daley](#): > > Interesting and informative link. > > The question still arises however … why would the Fed not allow the emissaries of the Bundesbank to view their own gold ? > > Security /schmurity … how difficult would it be to frisk the inspectors … what did the Fed think might happen in a worst case scenario ? The most probable case is that more countries will want to inspect their gold and it would generally be a hassle for them. If I was the Fed I would not want them to inspect. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [July 17, 2014, 11:30pm UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/9 "2014-07-17T23:30:00Z")
> [@Bones\_Daley](#): > > Now, when the Germans got uneasy about the way the American economy was going … they requested an on-site inspection/audit of their gold, and were refused. We can all draw our own conclusions about that … Do you have a legitimate cite that says that the Germans were refused an on-site inspection or audit of their gold? Because the [Bundesbank website says](http://www.bundesbank.de/Redaktion/EN/Interviews/2014_02_19_thiele_handelsblatt.html) > [@](#): > > There are these rumours that either the gold in New York is no longer there or you do not have unrestricted access to it.Why have you not called in auditors or other externals to oversee the transfers in response to such rumours? > > It astounds me that Handelsblatt pays any attention to such absurd rumours. I was in New York myself in June 2012 with the colleagues responsible for managing the gold reserves and saw for myself how our money is stored in the vault there. The Americans have never stonewalled or hindered us in any way. On the contrary, their cooperation has been most constructive in every respect. Our internal audit team was present last year during the on-site removal of gold bars and closely monitored everything. The smelting process is also being monitored by independent experts. ---
**Author:** ![pdunderhill](https://avatars.discourse-cdn.com/v4/letter/p/4bbf92/32.png) [@pdunderhill](https://boards.straightdope.com/u/pdunderhill)\ **Post date:** [July 17, 2014, 11:33pm UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/10 "2014-07-17T23:33:00Z")
Gold, like most metals varies in price day to day. If you need to sell a tonne of gold from trader A to B you don’t need to move the physical locaction, \*but if you sell within a location, ie the London Metals Exchange,\*\*\*then you can bypass significant trading taxes. I.E. Choose the best part of intentional market to trade your precious metal, work out the cost of physically moving ingots vs the cost of trading in futures… Sometimes when you buy a ton of Gold you want a ton of gold, not a promissory note. As an aside, I worked in an Aluminium re-cycling plant in west London and occasionally we would see 200 tonnes of double/triple heart 99.99/99.999 pure metal come in on low loaders. Lots of armored Mercedes from Heathrow! Should have added car occupants were a bit ‘shady’. Peter ---
**Author:** ![Ramira](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ramira/32/344_2.png) [@Ramira](https://boards.straightdope.com/u/Ramira)\ **Post date:** [July 18, 2014, 12:33am UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/11 "2014-07-18T00:33:10Z")
> [@Bones\_Daley](#): > > they requested an on-site inspection/audit of their gold, and were refused. We can all draw our own conclusions about that … That many of the untrue rumours are believed easily? > [@](#): > > But my question is …why on earth would any country want to store their gold in the vaults of a foreign country in the first place? The gold is heavy to move about. It is easier and safer to leave it and exchange the receipts. ---
**Author:** ![TubeAmp](https://avatars.discourse-cdn.com/v4/letter/t/a87d85/32.png) [@TubeAmp](https://boards.straightdope.com/u/TubeAmp)\ **Post date:** [July 18, 2014, 3:05am UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/12 "2014-07-18T03:05:50Z")
The public can take a tour: [This page has moved - FEDERAL RESERVE BANK of NEW YORK](http://www.newyorkfed.org/aboutthefed/visiting.html) and yes it includes the gold vaults. T A ---
**Author:** ![j\_sum1](https://avatars.discourse-cdn.com/v4/letter/j/8baadc/32.png) [@j\_sum1](https://boards.straightdope.com/u/j_sum1)\ **Post date:** [July 18, 2014, 5:09am UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/13 "2014-07-18T05:09:00Z")
A couple of weeks ago I did a tour of the Bank of England. Unfortunately I did not get to view the vault. I asked the question though and was surprised to find that it was such an active place. It seems that the bars get physically moved from shelf to shelf on a regular basis as transactions are made. (As well as their being documentation of which bars belong to whom.) The guy I spoke with did say that there was at least one bar that hadn’t moved in the last 196 years but also said that staff were in the vault several times a week moving the bricks. ---
**Author:** ![here\_and\_there](https://avatars.discourse-cdn.com/v4/letter/h/f07891/32.png) [@here\_and\_there](https://boards.straightdope.com/u/here_and_there)\ **Post date:** [July 18, 2014, 10:19am UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/14 "2014-07-18T10:19:03Z")
Independent countries do not store their gold in foreign banks. Vassal states do that. ---
**Author:** ![samclem](https://avatars.discourse-cdn.com/v4/letter/s/a9a28c/32.png) [@samclem](https://boards.straightdope.com/u/samclem)\ **Post date:** [July 18, 2014, 10:58am UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/15 "2014-07-18T10:58:16Z")
> [@here\_and\_there](#): > > Independent countries do not store their gold in foreign banks. Vassal states do that. So, Germany is a “vassal” state? ---
**Author:** ![Smeghead](https://avatars.discourse-cdn.com/v4/letter/s/f1d935/32.png) [@Smeghead](https://boards.straightdope.com/u/Smeghead)\ **Post date:** [July 18, 2014, 12:06pm UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/16 "2014-07-18T12:06:25Z")
It’s also far more cost-effective to have a small handful of very very secure facilities rather than each and every country having to build their own. ---
**Author:** ![rbroome](https://avatars.discourse-cdn.com/v4/letter/r/838e76/32.png) [@rbroome](https://boards.straightdope.com/u/rbroome)\ **Post date:** [July 18, 2014, 12:06pm UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/17 "2014-07-18T12:06:29Z")
I think the simple reason is that gold reserves aren’t needed in the country. What is Germany (or any country) going to do with a bunch of gold bars in their own country? To the extent these are useful at all, they are used to settle international debts. So by definition they are more useful outside the country than inside the country. Keeping it all in one central location, and the New York Fed is as good a place as any, is simpler and safer for all concerned. ---
**Author:** ![Si\_Amigo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/si_amigo/32/2877_2.png) [@Si\_Amigo](https://boards.straightdope.com/u/Si_Amigo)\ **Post date:** [July 18, 2014, 12:36pm UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/18 "2014-07-18T12:36:07Z")
> [@gazpacho](#): > > The most probable case is that more countries will want to inspect their gold and it would generally be a hassle for them. If I was the Fed I would not want them to inspect. It would require an entire audit of the Fed in order to ascertain which gold bars were “theirs”, it’s not like they are physically stamped anymore or even if they where they have been shuffled around enough times to make markings meaningless. Not only the Fed, but other countries would balk at such an audit because it may reveal information that the mother country would deem confidential. That and there is no gold, just gold plated bricks. 😃 ---
**Author:** ![Bones\_Daley](https://avatars.discourse-cdn.com/v4/letter/b/bc8723/32.png) [@Bones\_Daley](https://boards.straightdope.com/u/Bones_Daley)\ **Post date:** [July 18, 2014, 12:50pm UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/19 "2014-07-18T12:50:18Z")
> [@Si\_Amigo](#): > > It would require an entire audit of the Fed in order to ascertain which gold bars were “theirs”, it’s not like they are physically stamped anymore or even if they where they have been shuffled around enough times to make markings meaningless. Not so , leastways not according to the info on the Fed’s own website:- > [@](#): > > All bars brought into the vault for deposit are carefully weighed, and the refiner and fineness (purity) markings on the bars are inspected to ensure they agree with the depositor instructions and recorded in the New York Fed’s records. This step is vital because the New York Fed returns the exact bars deposited by the account holder upon withdrawal—gold deposits are not considered fungible. ---
**Author:** ![Ramira](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ramira/32/344_2.png) [@Ramira](https://boards.straightdope.com/u/Ramira)\ **Post date:** [July 18, 2014, 12:53pm UTC](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401/20 "2014-07-18T12:53:57Z")
> [@here\_and\_there](#): > > Independent countries do not store their gold in foreign banks. Vassal states do that. This has no sense at all of course and comes from not understanding in any fashion the way the gold reserves are used since even the 19th century. [Next page](https://boards.straightdope.com/t/why-do-countries-store-their-gold-in-other-countries/693401.md?page=2)