Why do many countries no longer trust the United States to store their gold?

60 countries store gold in the United States.

The desire of central banks to accumulate more gold is understandable. It is the only asset in the world without the inherent risk associated with currency fluctuations. Currently, geopolitical issues are at the forefront, trade wars are erupting, economists are anticipating a US stock market crash, and an uncertain future for the dollar and a global economic recession are being predicted. Therefore, gold bars are proving very useful.

Holding 7,000 tons of gold worth nearly $350 billion, the Federal Reserve's gold vault in New York is believed to be the world's largest gold storage facility. (Photo: Casino)

Ten years ago, gold from approximately 60 countries was stored in the United States, primarily for safety reasons in case of military conflict and to increase liquidity. This was because the New York Mercantile Exchange (NYMEX) conducted the largest transactions in precious metals.

Gold is stored near consumer markets to reduce transportation costs, which are very high for the precious metal due to expensive insurance premiums. The multi-million dollar expense of transporting gold reserves is only decided upon in economic or political emergencies.

According to the U.S. Treasury, Fort Knox and other storage facilities currently hold 261 million ounces of gold. However, the last audit was conducted in the 1960s. And all attempts to initiate a new audit have been blocked by Congress.

Some argue that the Americans exploited other countries' gold reserves for their own purposes: they leased it to banks and used it to manipulate the market and control the price of the precious metal.

In this context, a logical question arises: Is Washington prepared to return gold that does not belong to the United States at any time? To avoid risk, an increasing number of countries are demanding the return of their gold reserves.

Golden Repatriation

The wave of gold repatriation began in 2012, when Venezuela announced it was reclaiming all 160 tons of gold from the United States, valued at approximately $9 billion. President Hugo Chavez subsequently stated that the gold bars had to be urgently returned to the country, otherwise they could become hostages and tools of pressure for Washington.

Six years later, that's exactly what happened. Last October/November, the Bank of England blocked the transfer of $1.2 billion worth of gold to Venezuela. According to a Bloomberg report, Washington was behind this decision.

Illustrative image. Source: Leonhard Foeger/Reuters.

In 2014, the Dutch Central Bank retrieved 120 tons of gold from New York and brought it back to Amsterdam – nearly 4 million ounces. This means that currently 30% of the Netherlands' gold reserves are held in the United States, instead of the previous 50%.

In Amsterdam, they explained that storing half of the gold reserves in one place was unwise and inappropriate. "Perhaps this was reasonable during the Cold War, but not now," the Dutch central bank said.

Analysts are confident that the Netherlands will continue to acquire gold from the US to become less dependent on the unpredictable actions of Donald Trump.

Germany's Bundesbank is also demanding the return of its gold. Berlin began a program in 2012 to repatriate a portion of its gold reserves, stored in the United States since the end of World War II; 300 tons of the precious metal have been returned to the Bundesbank treasury in Frankfurt am Main.

Finally, in April last year, Türkiye completed the repatriation of its gold reserves. Last year, the Turkish Central Bank repurchased 187 tons, becoming the world's second-largest buyer of the precious metal after Russia. In total, Ankara has 591 tons of gold reserves (data as of the end of December), 27.8 tons of which were delivered from the US and held in a local storage facility.

Loss of faith

The flow of gold from the United States continues almost uninterrupted. The reasons are clear: rising Fed interest rates, pressure on the euro and other currencies, increased geopolitical risks, and trade wars launched by Washington against the rest of the world.

The gold stored in the vaults of the US Federal Reserve is in the form of bars, similar in shape to building bricks, and stacked on top of each other. Photo: Latimes.

Against this backdrop, the global economy seeks to reduce its reliance on the dollar. Gold is a reliable hedge against crises and financial instability, but trust in the Americans is now dwindling. There is no guarantee that Washington, increasingly under financial pressure, will not freeze the assets of "unfriendly" nations.

For Russia, there is nothing to worry about. The central bank stores its gold reserves domestically. Anatoly Aksakov, chairman of the State Duma Committee on Financial Markets, reported this last year.

"No one is allowed to lay a hand on the gold. We don't trust anyone with our gold," he emphasized.