Gold in the Federal Reserve Bank in New York City 1 1

[WoodenJefferson]

Federal Reserve Bank of New York Building

First used in 1924, the Federal Reserve Bank of New York took six years to build

Federal Reserve Bank of New York Entrance

The entrance to the Federal Reserve Bank of New York is located at 33 Liberty St

Entry to the Gold Vault

This ten-foot passageway is cut through a 90-ton steel cylinder

Gold Bars in the Gold Vault of the Federal Reserve Bank of New York

The gold vault at the Federal Reserve Bank of New York is built directly on Manhattan's bedrock to be able to support the enormous weight of the gold.

 

 

Gold Bars are held in 122 compartments in the main and auxillary vaults

Each gold bar weighs about 27.4 pounds and is worth about $400,000

 

The Federal Reserve Bank of New York maintains a vault that lies 86 feet below sea level, resting on Manhattan bedrock. By 1927, the vault contained ten percent of the world's official gold reserves. Currently, it is reputedly the largest gold repository in the world (though this cannot be confirmed as Swiss Banks do not report their gold stocks) and holds approx 5,000 metric tons of gold bullion ($160 billion as of March, 2008), more than Fort Knox. The gold is owned by many foreign nations, central banks and international organizations. The Federal Reserve Bank does not own the gold but serves as guardian of the precious metal, which it "protects" at no charge as a gesture of good will to other nations. Free tours of the vault are available to the public.

 

note: Members of three separate bank departments are required to enter the vaults and to move gold bars.

 

 

[DC Dawg]

The Federal Reserve Bank of New York maintains a vault that lies 86 feet below sea level, resting on Manhattan bedrock. By 1927, the vault contained ten percent of the world's official gold reserves. Currently, it is reputedly the largest gold repository in the world (though this cannot be confirmed as Swiss Banks do not report their gold stocks) and holds approx 5,000 metric tons of gold bullion ($160 billion as of March, 2008), more than Fort Knox. The gold is owned by many foreign nations, central banks and international organizations. The Federal Reserve Bank does not own the gold but serves as guardian of the precious metal, which it "protects" at no charge as a gesture of good will to other nations. Free tours of the vault are available to the public.

Some additional facts about the NY Fed Gold Storage:

• There is more gold stored at the NY Fed than there is in Fort Knox. That has been the case since the establishment of Fort Knox Bullion Repository in 1937.
• Anyone may store gold reserves in the NY Fed (there is a minimum).
• The NY Fed does not charge for the storage but does charge for the services required to deposit and remove the gold from the vaults.
• In order to work for the NY Fed in any area supporting the transaction of money or gold, the employee would undergo a background check similar to the one required for a Top Secret National Security clearance (very similar to the TS/SCI for those who know what that means ).
• During the era that international transactions were paid in gold, the NY Fed would take direct deposits, store the gold directly in the vaults for the country.
• Nowadays, the NY Fed will accept deposits of gold and pay out US Dollars to the depositor. The NY Fed is responsible for international transaction and ships 70-80 percent of the currency it buys from the BEP overseas.
• Robbing the gold from the NY Fed was the main theme around the movie Die Hard With a Vengeance. However, the way the bad guys did it presented an inaccurate view of the construction of the vault. The subway line does not run that close to the vault and the vaults are deeper than the subway.

Scott

[World Colonial]

The Fed pays USD for gold? Is that at the ridiculous "official" price of $42.22 per ounce or the real market price?

 

I also would be interested to know if the Fed leases or forward sells any of it. I read from one source that Saudia Arabia had deposited silver with the Bank of England and then when they wanted it back, it was not there. It had been sold in the forward market and the Bank Of England had to go out and buy the bullion back. I do no not know if this story is real or not though.

[DC Dawg]

The Fed pays USD for gold? Is that at the ridiculous "official" price of $42.22 per ounce or the real market price?

First, I made a slight mistake... the NY Fed does not "pay" for the gold. They will lend the money or arrange for a loan through another institution using the gold as collateral. The service has a fee that is paid by the borrower (in addition to the interest on the loan). If the country wants the money in dollars, it is shipped by the NY Fed.

 

I also would be interested to know if the Fed leases or forward sells any of it. I read from one source that Saudia Arabia had deposited silver with the Bank of England and then when they wanted it back, it was not there. It had been sold in the forward market and the Bank Of England had to go out and buy the bullion back. I do no not know if this story is real or not though.

The Fed is not allowed to lease or sell the gold in their vaults. That would make them equivalent to an investment bank and broker, which would be a violation of their charter.

 

Scott

[WoodenJefferson]

Been over a year, any changes to this post?

[prudden]

Once heard not too long ago, that West point surpassed Fort Knox for the amount of gold stored.True?Not True?

[MorganMan]

Wait till next year, there won't be any left

 

MM

[jtryka]

I doubt the US has even half of the gold we say we have. Although the Fed may be restricted from engaging in swaps or leases, the Treasury is not, and they are the owners of the gold reserve. As for the gold at the NY Fed, they may not be allowed to lease or sell the gold held on behalf of foreign governments, but that does not stop those foreign governments from selling or leasing it. As for Fort Knox, it hasn't been audited since the 1950s I think, and only a few members of Congress have seen the gold and that was in the 1970s, so who knows what is there and what claims may be held against what is still there?

[WoodenJefferson]

Once heard not too long ago, that West point surpassed Fort Knox for the amount of gold stored.True?Not True?

 

 

May 19, 2009

 

United States, 8,965.6 Tons, $286.89 Billion. Perhaps the most famous gold depository in the world is the United States Bullion Depository in Fort Knox, Kentucky. It holds a majority of the US gold reserves, which are estimated by the US Mint to be approximately 147.3 million ounces, or approximately 4,603 tons. The United States' total gold reserves, 8,965.6 tons, are valued at approximately $286.89 billion. The remainder of the US reserves are held at the Philadelphia Mint, the Denver Mint, the West Point Bullion Depository and the San Francisco Assay Office.

 

 

http://www.socyberty.com/Economics/Worlds-Largest-Gold-Reserves.716893

[physics-fan3.14]

The Fed pays USD for gold? Is that at the ridiculous "official" price of $42.22 per ounce or the real market price?

 

Could someone please elaborate on this? Where did (does?) this price come from? How often is it updated? What is the purpose of this price? What is the history of this price?

 

I have heard a number of conspiracy theories regarding the so-called "official price" of gold, and I'm hoping someone (with sources, please) can clear it up.

[jtryka]

Under the classical gold standard, the official pegged price of gold was $20.67 per ounce (hence a double eagle contains 0.9675 ounce pure gold). When FDR confiscated the people's gold in 1933, he subsequently raised the official price to $35, thus devaluing the dollar by roughly 70% overnight. The official price remained at $35 per ounce under the Bretton Woods regime, whereby foreign governments could convert dollars to gold at the fixed rate. This lasted until 1971 when Nixon closed the gold window. When Nixon officially ended the gold standard he also raised the official price from $35 to $42.2222222, but the only impact this had was on the official valuation of the US gold reserve since no payments or purchases have been officially made under that price since it was adopted. The nearest comparable is the book value of land on a company's balance sheet. Ford may have purchased land in the 1930s for a plant at a value of $10,000 and it remains on the books at that price until today, even though the value of the land may be $1 million today. The same was true of the US silver reserves which were valued at $1.2929 per ounce until it was exhausted by the mint in 2003 or 2004. Hope this helps.

Edited May 29, 2009 by jtryka

[physics-fan3.14]

That does help, Jeff.

 

I'll just list a couple of things I've heard about this official gold price, and ya'll can debunk at will:

 

I've heard there is a website where the price is listed, and updated occassionally?

I've heard that in the case of a future gold recall by the government, this is the price they would pay?

I've heard that if someone does demand to trade in gold for cash, this is the price the treasury will pay?

 

Keep in mind that these all come from my dad, who could actually be certified as crazy. He also loves ludicrous conspiracy theories (he insists the moon landing was filmed in New Mexico, among other things, just to give you an idea).

[DC Dawg]

The Fed pays USD for gold? Is that at the ridiculous "official" price of $42.22 per ounce or the real market price?

 

Could someone please elaborate on this? Where did (does?) this price come from? How often is it updated? What is the purpose of this price? What is the history of this price?

 

I have heard a number of conspiracy theories regarding the so-called "official price" of gold, and I'm hoping someone (with sources, please) can clear it up.

The statutory price of gold is "42 and two-ninths dollars a fine troy ounce" according to 31 U.S.C. §5117(b). The price was last changed in 1976.

 

To read "31 U.S.C. §5117(b)," this is Title 31, Section 5117, subsection (b) of the United States Code. To verify the date change, if you click on Notes on the right side of the page, it will indicate that the price was changed by 1968, Pub. L. 90–269 (the 269th Public Law passed by the 90th congress signed by the president--in this case Lyndon B. Johnson) and was reset by executive order on October 19, 1976 by Gerald Ford.

 

This is a statutory price, not a market price. This is the price that the US government values its holdings for bookkeeping purposes. It has no basis in reality, which is noted in the US Mint's Annual report where they report both the statutory price and market price. For reporting, the market price used is the London PM Fix price on the last business day of the government's fiscal year (9/30/08).

 

Just to be complete, 31 U.S.C. §5116(b)(2) fixes the price of silver to "$1.292929292 a fine troy ounce." This was last changed in 1985 in Pub. L. 99-61 as part of the bill that authorized the Statue of Liberty commemorative.

 

I hope that the sources being the pointers to the appropriate sections of the law is sufficient!

 

Scott

Edited May 29, 2009 by Scott B

[jtryka]

As for the first assertion, I know of no such website, however, this is an excerpt of the gold and silver custodial reserve section of the 2008 Annual Report of the United States Mint (taken from note 6 of the financial statements on page 53-54 of the annual report):

 

As custodian, the United States Mint is responsible for

safeguarding much of the Nation’s gold and silver

reserves, which include deep storage and working stock.

The asset and the custodial liability to Treasury are

reported on the Balance Sheet at statutory rates. In

accordance with 31 U.S.C. § 5117(b) and 31 U.S.C. §

5116(b)(2), statutory rates of $42.2222 fine troy ounce

(FTO) of gold and no less than $1.292929292 per FTO

of silver, respectively, are used to value the entire

custodial reserves held by the United States Mint.

Accordingly, the United States Mint values the silver at

$1.292929292 per FTO.

 

(side note, a few years ago, the custodial gold was reclassified to "deep storage" which many in the gold community took to mean stored in the ground as unmined deposits since all the refined gold had been sold - this is goldbug humor).

 

As for the second statement, this is theoretically possible, since that is the statutory price, and fits well with the denominations assigned to Eagle and Buffalo bullion coins. However, one must ask the next question, which is why? Let's make a big assumption and say that all the gold held in ETFs, safe deposit boxes, wedding bands and teeth is the equivalent of the current gold reserve of the US of 245 million ounces. The market value of that gold as of the last annual report (market price of $884.50) was just short of $217 billion, and the statutory value was $10 billion, so if the government pulled it off, they would make a windfall profit of $207 billion, or enough to close the gap of this year's $1.8 trillion deficit by a little over 10%, and they doesn't even include the massive cost of administering such a decree. In practice, this act would make the deflation that the Feds already fear far worse than currently stands, since suddenly millions of Americans would see one more asset they hold decline in value by 95% overnight (and you thought housing was bad!). A more likely event in line with the 1933 confiscation would be to take the gold and revalue it to reflect the current liabilities of the Federal government, which would value the gold at roughly $10,000 per ounce, create significant inflation and probable get the economy moving again (imagine how much you would add to the economy if you could turn in your Statue of Liberty half eagle for $2,500 or your old class ring for $5,000). But this is not at all likely to happen unless things get really bad and our foreign friends start demanding payment in something other than dollars and the Feds are forced to go back onto some form of gold standard.

 

As for the third point, I think this may technically be true, however it would only be a an easy way to find arguably the stupidest person in the world. I don't think the Treasury has ever conducted a purchase of gold at the statutory rate as it currently stands at $42.22 per ounce since the US is no longer on any form of gold standard. In fact, every year, the Mint purchases millions of ounces of gold and silver, and I guarantee you wouldn't find any new gold or silver eagles if the Mint only paid $42.22 per ounce for gold and $1.2929 per ounce of silver. They must pay current market prices, hence in FY08, the Mint made a 1.9% profit margin on bullion products with sales of $948.8 million, cost of goods sold of $922.6 million and SG&A of $8.4 million.

 

I know this was long, but I hope it helps.

[physics-fan3.14]

Thanks again, Jeff and Scott. (Never apologize for being long, thorough, and informative )

 

Why does they keep the artificially low price of $42 on the books? Why don't they value it somewhere closer to market value?

[jtryka]

In short, because that is what the law says, as for the rationale of the law, that's anyone's guess. My feeling is that this is simply a way to assign a dollar value to the reserves for bookkeeping purposes, since the market value changes every minute of the day. However, you will note that the annual report of the Mint does note the market value as of the end of the fiscal year as well as the statutory value.

[DC Dawg]

(side note, a few years ago, the custodial gold was reclassified to "deep storage" which many in the gold community took to mean stored in the ground as unmined deposits since all the refined gold had been sold - this is goldbug humor).

Forgetting the rumor mongers, the legal definition of "deep storage" is the United States Bullion Depository at Fort Knox, Kentucky.

 

But this is not at all likely to happen unless things get really bad and our foreign friends start demanding payment in something other than dollars and the Feds are forced to go back onto some form of gold standard.

Not only is this unlikely, but it is illegal. The repeal of the "Gold Clause" (31 U.S.C. §5118) prevents an FDR-style gold recall. FDR issued Executive Order 6102 on April 5, 1933 (allegedly) to prevent the mass export of gold under the Trading with the Enemy Act. The Trading with the Enemy Act was repealed a long time ago (I forgot the reference) and the Gold Clause repeal was passed in 1972 (P.L. 92-258). Any attempt by any president to try an FDR-style recall would be met with a flurry of lawsuits!

 

They must pay current market prices, hence in FY08, the Mint made a 1.9% profit margin on bullion products with sales of $948.8 million, cost of goods sold of $922.6 million and SG&A of $8.4 million.

The US Mint is required to pay market prices for bullion and base their prices on the market price of bullion. For purchasing, 31 U.S.C. §5112 has repeated a few times:

 

"The Secretary shall acquire gold for the coins issued under this subsection by purchase of gold mined from natural deposits in the United States, or in a territory or possession of the United States, within 1 year after the month in which the ore from which it is derived was mined."

 

And for the pricing of silver bullion (Eagles):

 

"The Secretary shall sell the coins minted under subsection (e) to the public at a price equal to the market value of the bullion at the time of sale, plus the cost of minting, marketing, and distributing such coins (including labor, materials, dies, use of machinery, and promotional and overhead expenses)."

 

Like I said in my last post, the prices published in the law are statutory prices for bookkeeping purposes, not what the government pays or will pay.

 

Scott

Edited May 29, 2009 by Scott B

[Just Bob]

Keep in mind that these all come from my dad, who could actually be certified as crazy. He also loves ludicrous conspiracy theories (he insists the moon landing was filmed in New Mexico, among other things, just to give you an idea).

 

 

I would love to meet this man!

[just-john]

seem the people with the gold set what ever price they want I know my 1 o/z eagles say $50.00 payed more than that but who knows .Now the gov is getting into GM because of their poor management . Didn't they the Gov spend like 1 to 3 trillion bucks this year that they don't have any gold silver or stuff the Gov has is owned by the people who hold the notes/treasury bonds ect .Think their called China .Things that make me go Hummmm GM plans to create a research facility in Shanghai for $250m to develop hybrid cars and alternative energy vehicles.Good to see my future tax money going straight out of the country.Think were in for a few bumps to come hang on this could get interesting .Goverment needs to threaten to ban gold and cars then their sales would jump 30 to 60% like firearms

[just-john]

It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head. Warren Buffet

[DaveG]

physics-fan3.14,

 

You might find the World Gold Council's website useful. Among many other things, they have a chronology that provides details of the the things jtryka told you, plus links to supporting documents.

[jpcienkus]

Bump.

 

Very informative. I'm sure a CPA/Accountant would be able to explain why they carry the inventory on the books at such a deflated rate.

[RWB]

"...statutory prices for bookkeeping purposes." 'Cause the law says to do so.

[Bookkeeping]

On 4/4/2008 at 3:11 AM, WoodenJefferson said:

Federal Reserve Bank of New York Building

First used in 1924, the Federal Reserve Bank of New York took six years to build

Federal Reserve Bank of New York Entrance

The entrance to the Federal Reserve Bank of New York is located at 33 Liberty St

Entry to the Gold Vault

This ten-foot passageway is cut through a 90-ton steel cylinder

monthly bookkeeping services
http://yourbooksontime.com

Gold Bars in the Gold Vault of the Federal Reserve Bank of New York

The gold vault at the Federal Reserve Bank of New York is built directly on Manhattan's bedrock to be able to support the enormous weight of the gold.

 

 

Gold Bars are held in 122 compartments in the main and auxillary vaults

Each gold bar weighs about 27.4 pounds and is worth about $400,000

 

The Federal Reserve Bank of New York maintains a vault that lies 86 feet below sea level, resting on Manhattan bedrock. By 1927, the vault contained ten percent of the world's official gold reserves. Currently, it is reputedly the largest gold repository in the world (though this cannot be confirmed as Swiss Banks do not report their gold stocks) and holds approx 5,000 metric tons of gold bullion ($160 billion as of March, 2008), more than Fort Knox. The gold is owned by many foreign nations, central banks and international organizations. The Federal Reserve Bank does not own the gold but serves as guardian of the precious metal, which it "protects" at no charge as a gesture of good will to other nations. Free tours of the vault are available to the public.

 

note: Members of three separate bank departments are required to enter the vaults and to move gold bars.

 

 

gorgeous!

[RWB]

No, they do not give out samples like at the Hershey Park "factory" tour.

[Henri Charriere]

@RWB

A lot of interesting information dispensed on this thread.

An update is needed, but where to start?  Why, the Fed itself, of course! Last time I approached the entrance, I never got a chance to touch the door handle. A uniformed armed guard intercepted me -- I was working on nearby Wall Street, suit and tie, no 4-foot long beard, early 1980's -- and asked to state my business. Sorry, no tours. (I'll have to give it another shot -- oh wait, there's the internet now.)

There was a special documentary on this utilitarian, stone block building which revealed there is still extant, a little-known tunnel that connects the building underground to the nearby [now J.P. Morgan] Chase Bank. Fodder for conspiracy theorists.

No harm done in resuscitating old threads, but it's been nearly 2 years since you unearthed this multi-faceted jewel, and a good 14 years since it was begun by the OP, @WoodenJefferson who hasn't been heard from in quite a spell.

I award this my highest rating, five Roosters, hands down.   🐓  

[GoldFinger1969]

Is the vault/gold on the bedrock...or the Manhattan Schiste ? 

I believe the bedrock is about 200 feet below ground level, the Schiste is closer to the surface.

[GoldFinger1969]

On 5/28/2009 at 10:36 PM, jtryka said:

I doubt the US has even half of the gold we say we have. Although the Fed may be restricted from engaging in swaps or leases, the Treasury is not, and they are the owners of the gold reserve. As for the gold at the NY Fed, they may not be allowed to lease or sell the gold held on behalf of foreign governments, but that does not stop those foreign governments from selling or leasing it. As for Fort Knox, it hasn't been audited since the 1950s I think, and only a few members of Congress have seen the gold and that was in the 1970s, so who knows what is there and what claims may be held against what is still there?

It was audited in the 1970's, Ron Paul led the delegation.  Conspiracy theories aside, our financial accounting is A+.

Not sure if the NY Fed has more gold than Fort Knox.  Have to check the numbers.

Don't forget to debit Fort Knox for 10 ounces....the amount of the 1933 Double Eagles I'll be getting back to the hobby. 

[Henri Charriere]

The depth at which Manhattan "schist" lies varies.  There are some areas where it lies at great depth and others where it is closer to the surface.

The figure given, 86 feet, sounds about right. When the Trade Center was initially excavated in the early 1970, and re-excavated thirty years later, I saw both, and can assure you the figures given for both were similar. I am unaware of any excavation anywhere in the city that exceeded 100' so the figure given by historical accounts is accurate.

 

Edited January 16, 2022 by Quintus Arrius
Revision of 87' to 86'.

[GoldFinger1969]

On 1/16/2022 at 11:16 AM, Quintus Arrius said:

The depth at which Manhattan "schist" lies varies.  There are some areas where it lies at great depth and others where it is closer to the surface.  The figure given, 87 feet, sounds about right. When the Trade Center was initially excavated in the early 1970, and re-excavated thirty years later, I saw both, and can assure you the figures given for both were similar. I am unaware of any excavation anywhere in the city that exceeded 100' so the figure given by historical accounts is accurate.

Very easy to tell where the Manhattan Schist disappears....it's below 30th Street heading downtown with all the low buildings.  The Shiste re-surfaces as you approach Freedom Tower/old WTC/Bowery which is why you see many skyscrapers down there.

The cost of drilling down to the bedrock there is very expensive...that's why Manhattan always had skyscrapers in mid-town and downtown but not in the Chelsea and Lower Manhattan area.  That's exactly where the Schiste falls away from the surface.

Edited January 16, 2022 by GoldFinger1969