Why do countries entrust their gold reserves to the United States?

In recent years, although some countries have gradually repatriated their gold reserves back to their home countries, the United States remains the main destination for global gold reserves. According to data from the World Gold Council, the total official gold reserves worldwide are approximately 31,000 tons, of which the United States holds 8,133.5 tons, accounting for 26.2% of the global total. Why do so many countries store their gold in the United States?

Several world-class gold storage facilities are located in the United States

The United States has several of the most famous and highest security level gold storage sites globally:

The Federal Reserve Bank of New York: The largest gold storage facility in the world, located 25 meters underground, with a steel door weighing 90 tons. This place stores gold from over 30 countries and international organizations, totaling about 6,700 tons, but almost none of it is the United States' own gold reserves.

Fort Knox in Kentucky: Located within a military base, it stores about 4,580 tons of gold belonging to the U.S. Treasury, more than half of the U.S. total reserves. The facility is known for its 1.2-meter thick granite walls, a 22-ton door, and multiple military security measures.

Denver Mint and West Point Storage: Each stores about 400 tons and 1,700 tons of gold respectively.

Philadelphia and San Francisco Mints: In addition to daily minting, they also store part of the gold, totaling about 1,400 tons.

Main reasons for storing gold in the United States

Historical reasons:

After World War II, the United States became the strongest economy in the world. In the "Bretton Woods system" established in 1944, the dollar was pegged to gold (1 ounce = 35 dollars), and countries transported their gold to the United States to exchange for dollars. In addition, the Marshall Plan's economic aid and security considerations during the Cold War also prompted European countries to deposit their gold in the United States to avoid geopolitical risks.

Sound financial infrastructure:

The New York Fed's gold storage system is highly secure, transparent in management, and efficient in transfers. Within this system, gold transactions can be completed through "book transfers" without the need for cross-border transportation, significantly reducing the cost of international financial transactions.

Geopolitical and strategic considerations:

For NATO allies or U.S. allies, storing gold in the United States is not only a demonstration of financial trust, but also a strategic participation in the U.S. dollar-dominated system.

Low storage costs:

The U.S. charges an annual fee of approximately $1.75-2.5 per gold bar (12.4 kilograms). For example, the annual fee for 1,000 tons of gold (about 80,645 bars) is only $14-20,000, which is less than 0.0003% of its market value, almost a symbolic expense.

Extension of soft power:

The U.S. does not profit from storing gold, but rather strengthens the world's dependence on and trust in the U.S. dollar system by providing free or low-cost secure custody services.

More and more countries choose "gold repatriation"

Although the U.S. gold storage system remains attractive, in recent years, many countries have begun to gradually repatriate their gold back to their home countries to achieve "monetary sovereignty" and strategic security:

Germany: Since 2013, it has gradually repatriated 300 tons from New York and 374 tons from Paris back to Frankfurt. Currently, there are still 1,200 tons of gold planned to return.

Italy: 43% of its gold is still stored in the United States, and the issue of returning it continues to receive attention.

Poland, India, the Netherlands, Austria, Romania, and other countries have gradually retrieved part of their gold from the U.S. and the U.K. since 2015, due to concerns about political risks and sanctions.

The causes of the "gold repatriation trend" include:

Concerns about the uncertainty of the future of American politics (such as interventions during the Trump era);

Caution against frozen overseas assets (as experienced by Russia and Venezuela);

Increasing emphasis on "monetary safety" and strategic autonomy;

Escalating global geopolitical tensions.

Source: Kazakhstan News Agency

Original article: https://www.toutiao.com/article/1839057846016009/

Statement: This article represents the views of the author.