I know this has important global trade implications and all, but I'm really curious about the logistics of this. Where is all this gold coming from? How is it being delivered to NY? Is it being delivered to the fed bank? How much will delivery cost? Will it just be some 'plain' armored cars or will they shut down some streets while a military convoy comes in? So many questions...
I wouldn't recommend reading this Guardian article (or any others) for details, they're all ChatGPT generated garbage; you can tell by the laughably incorrect math and vague lack of information.
Massive gold deliveries >$1B actually happen fairly often - any time there's a real price discrepancy, someone is moving gold and making money - and $4B in gold isn't all that big; it's ~45 metric tons. You can easily fit that on a single cargo plane, with costs in the low six figures if it wasn't so valuable. At 5 tons per armored truck that's 9 trucks. Brinks does this sort of thing all the time and they used to - still may? have custody of billions in gold of their own. The whole industry operates with "security by obscurity", so you won't get exact details, but the whole thing is a bit lower security than you're thinking. There are police, but not usually military escorts; even with gold between governments military escorts aren't the rule.
While there are certainly cases where it’s moved around to new customers, I suspect Brinks frequently stores it themselves and changes the ownership in a ledger running on a 1980s mainframe, with printed paper copies stored 100 miles away
I'll just throw this tidbit out even though it sounds like in this specific case gold is physically moving.
But in many (most?) cases, gold in these amounts is held in very few physical locations around the world, like The Bank of England, and "moving gold" just means changing paperwork on who "owns" which gold inside the vault.
The sanctions on Russia has triggered a flight of capital and gold across countries. I am just surprised why US is buying so much gold given that its mostly developing countries to buffer up their own reserves so that they can trade in their own currencies.
US has USD so why is it stocking up on Gold. Someone somewhere knows the answers.
Definitely not “in almost all” cases are people physically shifting gold. Thousands of transactions in gold are done every day. The bulk of those will be Futures with no physical delivery. There are very few commod trades with physical delivery except for industrial uses so this is highly unusual.
Now when you’re talking about strategic trades by central banks, many of those will be for geopolitical reasons. eg Argentina might be worried that in the event of a sovereign default (which goodness knows Argentina have done plenty of times) bondholders may sieze assets, so might want to move the gold to a friendly jurisdiction where the legal system will make this harder for people. Remember that if you’re just moving depositary reciepts (the paperwork GP is talking about) you need someone who owns gold in your target location to swap with. So say you have gold in NYC and you want gold in London, it’s going to be very easy for you to find someone with gold physically in London to swap with or you can just sell your NYC gold and buy some LDN gold. But it’s going to be much much harder to buy gold somewhere where there isn’t a commod forward delivery location (eg Buenos Aires) so it’s much more likely you would have to move gold in that case.
When financial firms take physical delivery [1] it’s usually as an arbitrage because of what the forward curve looks like in that particular commodity, making it viable to do the so called “cash and carry” arb where you buy the physical, sell short the future, take physical delivery, hold it for a while and then deliver. It’s rare and a bit of a surprise tactic and when people do this the difference after carry costs is not usually very large in percentage terms so people do it in big size to make it worthwhile.
And yes it is a bunch of trucks carrying physical gold probably to a vault in the basement of JPM that even most folks at JPM don’t know exists. They won’t be shutting off roads as they don’t want to draw attention before the delivery is complete.
[1] And I used to be a strategist in fixed income, currencies and commodities so I do know people who planned these trades in the past.
Historically it comes from global gold mines -> various bullion collectors.
Right now the Kalgoorlie Superpit (really big hole) is wound down, however it had three decades of producing ~ 1 Billion (AUD) of gold per annum.
Other lesser gold mines have also produced in history and others still produce today.
Most gold "does nothing" .. it's shiny, it's collectable, people pile it up.
It's really good for long lasting expensive space tech, it's great for decorating statues, it looks good as jewellry .. but it's essentially just 'precious'.
its all delivered in secret flights and routes. Last year, an insider in Canadian airport got tipped off about impending arrival of gold and got along with his friends for the "largest heist in canadian history" https://en.wikipedia.org/wiki/Toronto_Pearson_International_...
I saw on Sky News yesterday that so much gold is being moved into the United States recently that it's hard for the central banks in other nations to get much lately.
https://www.amazon.com/Lords-Finance-Bankers-Broke-World/dp/... (hat tip to HN as this was where this book was recommended to me)
Granted we don't have an official gold standard, but could todays gold exchange cause similar problems?
https://www.history.com/news/how-did-the-gold-standard-contr...