18 May 2013

Marking the Field: US Stated Gold Reserves and Gold Held at the Fed - World Gold and Gold Swaps

The US Treasury says that it holds 261,499,000 fine troy ounces in its international reserves.

The gold is valued on the books at $42.2222 per fine troy ounce. This represents a total value of $11,041,063,078.

Since there are 32,150.7466 troy ounces in a tonne, the US Treasury has 8,133.53 tonnes of fine gold on its books.  Note that the number as presented on a copy of the official US Treasury statement shown below includes 'gold swaps.' 

A discussion of the procedures and nature of gold swaps and loans by the IMF is here.

Most of the gold reserves of the US are stored at the US Bullion Depository, also know at Ft. Knox.

Current Report: April 30, 2013

Department of the Treasury
Financial Management Service
April 30, 2013

SummaryFine Troy OuncesBook Value
Gold Bullion258,641,878.074$10,920,429,098.79
Gold Coins, Blanks, Miscellaneous2,857,048.173120,645,943.46
Mint-Held Gold - Deep Storage   
  Denver, CO43,853,707.2791,851,599,995.81
  Fort Knox, KY147,341,858.3826,221,097,412.78
  West Point, NY54,067,331.3792,282,841,677.17
Subtotal - Deep Storage Gold245,262,897.04010,355,539,085.76
Mint-Held Treasury Gold - Working Stock   
  All locations - Coins, blanks, miscellaneous 2,783,218.656117,513,614.74
Subtotal - Working Stock Gold 2,783,218.656117,513,614.74
Grand Total - Mint-Held Gold248,046,115.69610,473,052,700.50
Federal Reserve Bank-Held Gold  
Gold Bullion:  
  Federal Reserve Banks - NY Vault13,376,987.715564,805,850.63
  Federal Reserve Banks - display1,993.31984,162.40
Subtotal - Gold Bullion13,378,981.034564,890,013.03
Gold Coins:  
  Federal Reserve Banks - NY Vault73,452.0663,116,391.91
  Federal Reserve Banks - display377.45115,936.81
Subtotal - Gold Coins73,829.5173,132.328.72
Total - Federal Reserve Bank-Held Gold13,452,810.551568,022,341.75
Total - Treasury-Owned Gold261,498,926.247$11,041,075,042.25

Deep Storage: Deep-Storage gold is the portion of the U.S. government-owned Gold Bullion Reserve that the U.S. Mint secures in sealed vaults, which are examined annually by the Department of Treasury's Office of the Inspector General. Deep-Storage gold comprises the vast majority of the Reserve and consists primarily of gold bars. This portion was formerly called "Bullion Reserve" or "Custodial Gold Bullion Reserve."

Working Stock: Working-Stock gold is the portion of the U.S. government-owned Gold Bullion Reserve that the U.S. Mint uses as the raw material for minting congressionally authorized coins. Working-Stock gold comprises only about 1 percent of the Reserve and consists of bars, blanks, unsold coins, and condemned coins. This portion was formerly listed as individual coins and blanks or called "PEF Gold."

 Last Updated:  March 21, 2013

According to the September 30, 2012 audit, the Federal Reserve holds 13,452,810.532 fine Troy ounces (FTO) of gold bullion in its vaults, almost all at the Federal Reserve Bank of NY. 

This is 418.43 tonnes.

The gold belongs to the US Treasury. The Fed owns no gold.

The Federal Reserve Bank of New York is said to hold approximately 7,000 tonnes of gold in its vaults, most of it in custody for foreign governments and banks, and international institutions.

Below is the September 2012 accounting of the Treasury gold held in vaults and on display at the Federal Reserve banks.

 United States gold reserves held by Federal Reserve Banks consisted of the following at September 30, 2012: Statutory Value at $42.222 per FTO

Market Value At September 30, 2012, the market value of gold per the London Gold Fixing (PM) was $1,776.00 per FTO.
Gold Bars 13,378,981.032  FTO $ 564,890,013 $ 23,761,070,313
Gold Coins 73,829.500 FTO 3,117,244 131,121,192
Total 13,452,810.532 FTO $ 568,007,257 $ 23,892,191,505

"The Federal Reserve Bank of New York holds 99.98% of the total United States-owned gold bars and coins held by FRBs within its vault. The remaining 0.02% of the United States-owned gold bars and coins held by FRBs are on display at the Federal Reserve Banks of Richmond, Atlanta, Kansas City, Minneapolis, San Francisco, New York and Dallas."

The Fed does hold gold certificates on its books.   They were given in exchange for the transfer of gold held by the Fed to the US Treasury in 1934.

With regard to the Fed's Gold Certificates here is some history by way of explanation:

Acting under this authority [the Emergency Banking Act of March 9, 1933], the secretary of the Treasury issued orders dated December 28, 1933, and January 15, 1934, the latter requiring all gold coin, gold bullion, and gold certificates to be delivered to the Treasurer of the United States on or before January 17, 1934.

A new type of gold certificate, series of 1934, in denominations of $100, $1,000, $10,000, and $100,000, was issued only to Federal Reserve banks against certain credits established with the Treasurer of the United States. These certificates are not paid out by Federal Reserve banks and do not appear in circulation. They bear on their face the wording: "This is to certify that there is on deposit in the Treasury of the United States of America dollars in gold, payable to bearer on demand as authorized by law."

Gold certificates, however, have not been printed since January, 1935. Under the Gold Reserve Act of January 30, 1934, all gold held by the Federal Reserve banks was transferred to the U.S. Treasury, in accordance with Presidential Proclamation of January 31, 1934, the former receiving the gold certificate credits on the books of the Treasury at the former statutory price for gold $20.67 per ounce.

Gold assets were valued at $35 per fine troy ounce, giving effect to the devaluation January 31, 1934, until May 8, 1972, when they were revalued at $38 pursuant to the Par Value Modification Act, P.L. 92-268, approved March 31, 1972. The increment amounted to $822 million.

Gold assets were subsequently revalued at $42.22 pursuant to the amendment of Section 2 of the Par Value Modification Act, P.L. 93-110, approved September 21, 1973. This increment amounted to $1,157 million. All of the U.S. Treasury's monetary gold stock valuation, including the preceding revaluation increments, has been monetized by the U.S. Treasury by the issuance to the Federal Reserve banks of $11,160,104,000 for their gold certificate account (total as of close of 1980). In addition, the U.S. Treasury monetized $2,518 million (as of close of 1980) of the U.S. special drawing rights by issuance to the Federal Reserve banks for their special drawing rights certificate account.

On the books of the Federal Reserve banks, neither the gold certificate account nor the special drawing rights certificate account plays any restrictive role in Federal Reserve banks' operations. With the U.S. losing monetary gold in recent years of balance-of-payments deficits, causing decline in gold certificates (credits), two restraints were eliminated: P.L. 89-3, March 3, 1965, eliminated the requirement contained in Section 16 of the Federal Reserve Act for the maintenance of reserves in gold certificates by Federal Reserve banks of not less than 25% against Federal Reserve bank deposit liabilities; and P.L. 90-269, March 18, 1968, eliminated the remaining provision in Section 16 of the Federal Reserve Act under which the Federal Reserve banks were required to maintain reserves in gold certificates of not less than 25% against Federal Reserve notes.

Gold certificates (credits) held by the individual 12 Federal Reserve banks, therefore, merely reflect the total of monetary gold held by the U.S. and also the individual Federal Reserve bank holdings of gold certificates (credits) to their credit on the books of the INTER-DISTRICT SETTLEMENT ACCOUNT.

Nevertheless, both the gold certificate account and special drawing rights account at Federal Reserve banks were utilized as eligible assets to serve as part of the 100% collateral pledged with the Federal Reserve agent at each Federal Reserve bank for issues of Federal Reserve notes. (The Depository Institutions Deregulation And Monetary Control Act Of 1980 removed the collateral requirements for Federal Reserve notes held in the vaults of Federal Reserve banks.)

Encyclopedia of Banking & Finance (9th Edition) by Charles J Woelfel
There has been much speculation provoked primarily by GATA that the Fed has engaged in gold swaps on behalf of the Treasury.  Some of this was sparked by a reference to 'gold swaps' in FOMC minutes.  

There is some thinking that gold owned by other countries and held in custody by the Fed has been 're-hypothecated' in gold swaps and leases to bullion banks and sold into the private marketplace.   And there is some thinking that the gold has been used as collateral in multiples as is the current fashion in financial circles.

A request under the Freedom of Information Act provided some documents, and a denial of information for certain 'intra-agency documents' as cited in this letter from the Fed here.
The letter, dated September 17 and written by Federal Reserve Board member Kevin M. Warsh (see http://www.federalreserve.gov/aboutthefed/bios/board/warsh.htm), formerly a member of the President's Working Group on Financial Markets, detailed the Fed's position that the gold swap records sought by GATA are exempt from disclosure under the U.S. Freedom of Information Act.

Warsh wrote in part: "In connection with your appeal, I have confirmed that the information withheld under Exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of Exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you."

When, in 2001, GATA discovered a reference to gold swaps in the minutes of the January 31-February 1, 1995, meeting of the Federal Reserve's Federal Open Market Committee and pressed the Fed, through two U.S. senators, for an explanation, Fed Chairman Alan Greenspan denied that the Fed was involved in gold swaps in any way. Greenspan also produced a memorandum written by the Fed official who had been quoted about gold swaps in the FOMC minutes, FOMC General Counsel J. Virgil Mattingly, in which Mattingly denied making any such comments. (See http://www.gata.org/node/1181.)

The Fed's September 17 letter to GATA confirming that the Fed has gold swap arrangements can be found here:

Here is the distribution of the stated reserves of world gold.

As of December 2012 (Top 40 based on World Gold Council data)[9]
Gold's share
of national
forex reserves (%)
1 United States8,133.576%
2 Germany3,391.373%
3International Monetary Fund logo.svg International Monetary Fund2,814.0N.A.
4 Italy2,451.872%
5 France2,435.471%
6 China1,054.12%
7 Switzerland1,040.111%
8 Russia976.9[10]9%
9 Japan765.23%
10 Netherlands612.560%
11 India557.710%
12Logo European Central Bank.svg European Central Bank502.133%
13 Taiwan423.66%
14 Portugal382.590%
15 Turkey375.7[10]16%
16 Venezuela365.875%
17 Saudi Arabia322.93%
18 United Kingdom310.316%
19 Lebanon286.829%
20 Spain281.630%
21 Austria280.055.0%
22 Belgium227.539%
23 Philippines192.712%
24 Algeria173.65%
25 Thailand152.44%
26 Singapore127.43%
27 Sweden125.713%
28 South Africa125.113%
29 Mexico124.54%
30 Libya116.65%
31BIS-logo.PNG Bank for International Settlements116.0N.A.
32 Kazakhstan115.322%
33 Greece111.982%
34 Romania103.712%
35 Poland102.95%
36 South Korea84.41%
37 Australia79.99%
38 Kuwait79.013%
39 Egypt75.625%
40 Indonesia73.14%
41Denmark Kingdom of Denmark66.54.1%
42Pakistan Islamic Republic of Pakistan64.418.9%
43Argentina Argentine Republic54.76.4%
44Brazil Federative Republic of Brazil52.50.5%
45Bolivia Plurinational State of Bolivia49.322.9%
46Finland Republic of Finland49.124.6%
47Bulgaria Republic of Bulgaria39.912.0%
48Belarus Republic of Belarus38.541.4%
49West African Economic and Monetary Union36.512.9%
50Malaysia Malaysia36.41.5%
51Ukraine Ukraine35.24.9%
52Peru Republic of Peru34.74.0%
53Slovakia Slovakia31.867.6%
54Ecuador Ecuador26.332.0%
55Syria Syrian Arab Republic25.87.9%
56Morocco Kingdom of Morocco22.05.6%
57Nigeria Federal Republic of Nigeria21.43.2%
58Serbia Republic of Serbia14.15.1%
59Cyprus Republic of Cyprus13.958.3%
60Bangladesh People's Republic of Bangladesh13.57.5%
61Netherlands Antilles Netherlands Antilles13.136.3%
62Jordan Hashemite Kingdom of Jordan12.85.5%
63Czech Republic Czech Republic12.51.6%
64Qatar State of Qatar12.44.4%
65Cambodia Kingdom of Cambodia12.416.6%
66Colombia Republic of Colombia10.41.8%
67Laos Lao People's Democratic Republic8.836.5%
68Sri Lanka Democratic Socialist Republic of Sri Lanka8.15.3%
69Latvia Republic of Latvia7.705.5%
70El Salvador Republic of El Salvador7.314.6%
71Guatemala Republic of Guatemala6.95.8%
72Republic of Macedonia Republic of Macedonia6.814.8%
73Tunisia Tunisian Republic6.74.5%
74Republic of Ireland Ireland6.015.1%
75Nepal Federal Democratic Republic of Nepal6.0 [11]
76Lithuania Republic of Lithuania5.804.1%
77Bahrain Kingdom of Bahrain4.7
78Tajikistan Republic of Tajikistan4.4
79Mauritius Republic of Mauritius3.906.5%
80Canada Canada3.40.3%
81Slovenia Republic of Slovenia3.215.8%
82Aruba Aruba3.124.2%
83Hungary Hungary3.10.3%
84Kyrgyzstan Kyrgyz Republic2.67.5%
85Mongolia Mongolia2.34.8%
86Luxembourg Grand Duchy of Luxembourg2.210.6%
87Suriname Republic of Suriname2.213.1%
88Hong Kong Hong Kong Special Administrative Region2.10.0%
89Iceland Republic of Iceland2.001.3%
90Papua New Guinea Independent State of Papua New Guinea2.02.8%
91Trinidad and Tobago Republic of Trinidad and Tobago1.91.1%
92Albania Republic of Albania1.63.4%
93Yemen Republic of Yemen1.61.8%
94Cameroon Republic of Cameroon0.91.2%
95Honduras Republic of Honduras0.71.4%
96Paraguay Republic of Paraguay0.70.7%
97Dominican Republic Dominican Republic0.61.1%
98Gabon Gabonese Republic0.40.8%
99Malawi Republic of Malawi0.48.9%
100Central African Republic Central African Republic0.38.4%
101Chad Republic of Chad0.32.4%
102Republic of the Congo Republic of the Congo0.30.4%
103Uruguay Oriental Republic of Uruguay0.30.1%
104Fiji Republic of Fiji0.20.0%
105Estonia Republic of Estonia0.26.0%
106Chile Republic of Chile0.20.0%
107Malta Republic of Malta0.21.6%
108Costa Rica Republic of Costa Rica0.10.1%
109Haiti Republic of Haiti0.00.1%