NEW YORK, September 12 — The Federal Reserve Bank of New York is losing its grip on the world’s gold. European central banks have accelerated the repatriation of bullion held in the New York Fed’s vaults at 33 Liberty Street in Manhattan, a shift driven by geopolitical priorities and a push to cut reliance on US custody. The bottom line for investors: the world’s largest gold custodian, which has stored foreign gold since 1924, is watching account holders take their metal home.
By the numbers, the New York Fed holds an estimated 6,000 to 7,000 metric tons of gold for foreign governments and international organizations. The gold is held on a custodial basis — the Fed does not own it, it stores it for account holders.
The vaults were built in the 1920s.
Germany moved first, and moved fast
Germany holds the second-largest gold reserves in the world after the United States, at approximately 3,350 metric tons. In 2013, the Bundesbank announced a plan to repatriate 674 metric tons from the New York Fed and the Banque de France, aiming to bring half of Germany’s reserves back to Frankfurt by 2020. The Bundesbank finished ahead of schedule in 2017, moving 300 metric tons from New York and 374 metric tons from Paris.
Public pressure and a desire to audit the gold drove the decision. In 2012, the German Federal Court of Auditors had criticized the Bundesbank for inadequate oversight of its reserves.
The Bundesbank subsequently published a detailed list of its holdings and locations. The Netherlands followed. De Nederlandsche Bank repatriated 122.5 metric tons from New York in 2014, saying the move was intended to promote a more balanced distribution of reserves.
The Dutch central bank had also repatriated gold from Canada and the United Kingdom in 2013. Not every European move touched US soil.
Austria’s Oesterreichische Nationalbank announced in 2015 that it would repatriate 140 metric tons from the Bank of England, not from the United States. Poland’s Narodowy Bank Polski repatriated 100 metric tons from the Bank of England in 2019.
The custody business, and the costs
The New York Fed charges fees for gold storage. The gold it holds is not insured by the Federal Deposit Insurance Corporation and is not backed by the US government. The bank has said it conducts regular audits and that the gold is safe.
Some central banks have nonetheless asked for greater transparency. Moving metal is a logistical challenge.
Gold typically travels in armored vehicles and cargo planes under strict security, and the requesting central bank bears the cost. The trend is not confined to Europe. Turkey repatriated its gold reserves from the United States in 2018.
In 2020, Venezuela’s central bank sued the Bank of England over access to its gold; the case was dismissed. The Bank of England, which holds approximately 400,000 gold bars — about 5,134 metric tons — in its vaults, much of it for foreign central banks, has also faced repatriation calls.
Two crises are credited with starting the shift. The 2008 financial crisis pushed central banks to reconsider counterparty risks. The 2012-2013 Cyprus banking crisis raised concerns about deposit confiscation.
Russia’s central bank increased its gold reserves in 2017, though its gold is held domestically. The US has imposed sanctions on Russia, Iran and Venezuela, prompting those countries to seek alternatives to the dollar.
What the dollar still holds
Repatriation can be read as a sign of declining trust in the US-dominated financial system. The dollar’s share of global reserves tells a more measured story. The greenback accounted for about 59% of global foreign exchange reserves in 2023, according to the International Monetary Fund.
The euro accounted for about 20%. Gold itself has been in demand.
The price topped US$2,000 per troy ounce in 2023. Central banks have been net buyers since 2010, with purchases reaching a record 1,136 metric tons in 2022, according to the World Gold Council. In 2023, central banks added 1,037 metric tons.
Watch the custody figures at 33 Liberty Street, and watch whether more account holders follow Germany and the Netherlands out the door. The vaults are not empty, but the direction of travel is clear.
