Pundit's Perspectives – Mon 17 Nov, 2014

135 years of US Fed Earmarked Gold

The following article was written by our friend Bron Suchecki. Bron has been on the show a number of times and watch for him to be joining us on the weekedn show shortly. This article originally appeared in the Gold Standard Institute’s November journal here.

Nick Laird at Sharelynx has recently complied historical data from multiple sources on the amount of earmarked (custodial) gold held by the US Federal Reserve Bank for other central banks. The chart below shows these stocks, in green, as well as the US’ gold reserves (in blue) and in red is an estimate by the Fed (pre confiscation) of gold held in the US by citizens and others. It provides a broad historical view of monetary gold in the US.

US Fed bank gold holdings 1880 2014 physical market


First feature to note is the privately held/circulating gold stocks figure in red. Up to 1915 we see that the gold held by government was stable and it was privately held gold that was growing. After this, the amount of gold in circulation as a proportion of total monetary gold reduced with the introduction of the Federal Reserve System. It ceased completely at the point holding gold was made illegal.

During the Bretton Woods period you will note that from 1950 to 1965 the total amount of gold held by the Fed was relatively stable at 25,000 tonnes.

However, the US’ gold reserves declined during this period from 22,000 tonnes to below 13,000 tonnes, with the ownership of the 9,000 or so tonnes simply being transferred to other central banks by book entry. In 1950 only 15% of the gold stored in the Fed was owned by foreign central banks – by the end of 1965, 48% of the gold was owned by foreigners. This reflected the change in the US towards deficits and the exchange of dollars for gold by nations running trade surpluses with the US.

From 1965 onwards the US’ gold reserves continue to fall while the holdings of other central banks at the Fed were quite stable at around 12,000 tonnes. It is not coincidental that foreign gold holdings at the Fed should peak at 12,282 tonnes in August 1971, the month the US unilaterally cancelled the direct convertibility of the US dollar to gold. Thereafter foreign central banks holdings at the Fed fell to 7,200 tonnes by 2000, an average rate of 15 tonnes a month.

The period mid-1992 to mid-2001 saw a rapid decline in foreign gold holdings at the Fed, a reduction of just over 3,000 tonnes in 9 years.

Another coincidence that the global mine hedge book added 2,000 tonnes over the same time period? Interesting as well that the gold price bottomed (or dollar topped) in April 2001 just ahead of the stabilisation of foreign gold holdings at the Fed in June 2001 and a peaking of the global mine hedge book in September 2001?

Focusing in more detail, the chart below of foreign central bank gold holdings at the Fed over the past fifteen years shows little activity except for 2007 and 2008, when just under 410 tonnes was withdrawn – big sellers during that period included Switzerland (250 tonnes) and France (227 tonnes). It would seem that the remaining central banks holding around 6,000 tonnes are generally happy with the Fed’s free custodial storage service.

US Fed bank earmarked gold holdings 2000 2014 physical market

Of particular interest is the spate of recent withdrawals, which Koos Jansen has speculated are repatriations by Germany. Since June 2013, 75 tonnes has been withdrawn and if all are related to Germany, then they are on track with their plans to transfer 150 tonnes from New York to Frankfurt by 2015 and another 150 tonnes by 2020.


Bron Suchecki

  1. On November 17, 2014 at 1:02 pm,
    sally says:

    you said doc was coming on.. you had him listed on Saturdays show…he wasnt on…is he still alive..??

    • On November 17, 2014 at 1:14 pm,
      irishtony says:

      sally….HE just checked his own pulse…Yep he reckons he is still alive..he will be joining us shortly.

      • On November 17, 2014 at 2:29 pm,
        irishtony says:

        Sally he just emerged from quarantine.