About 20 years ago when I was still a cadet at West Point, my
economics professor organized a class trip to the Federal Reserve Bank
of New York.
The part of the trip that I remember most was touring
the Fed’s high security vault, 80 feet below street level beneath the
bank’s main office building downtown.
This vault houses the largest known depository of gold in the world.
None of that gold, of course, belongs to the Fed. The Federal Reserve doesn’t own a single ounce of gold.
Almost all of that gold is owned by foreign governments and central banks.
been that way since the end of World War II—European governments wanted
to store their wealth overseas, out of the reach of the Soviet Union.
a kind of professional courtesy among governments and central banks,
their gold has been stored for free by the Fed for the last 70+ years.
Even after the Soviet Union fell, most governments still chose to keep their gold in New York.
It was safe. America was a rich, trusted ally. Why bother moving it?