Did you know that the largest accumulation of gold in human history is located deep underneath the heart of Manhattan’s financial district at the New York Federal Reserve Bank? The New York Fed’s gold vault is on the basement floor of its main office building in Manhattan. Built during the construction of the building in the early 1920s, the vault provides account holders with a secure location to store their monetary gold reserves.
Gold custody is one of several financial services the Federal Reserve Bank of New York provides by acting as the guardian and custodian of the gold on behalf of central banks, governments and official international organizations. None of the gold stored in the vault belongs to the New York Fed nor to private individuals or private sector entities. While the list of account holders remains the Fed’s top secret, we could ensure that the Bank of England, Banque de France, and Deutsche Bundesbank are among the gold account holders. The reason why foreign countries store their gold in the Federal Reserve Bank of New York is to benefit from the convenience and centrality of the location. One of the powerful values of centralizing gold reserves in one spot is that countries can transfer gold amongst themselves by simply moving bars from one compartment to another, at a modest handling cost of $2 per bar.
Since World War II, gold holdings in the gold vault continued to increase, and it peaked in 1973, shortly after the United States suspended convertibility of dollars into gold for foreign governments. At its peak, the vault contained over 12,000 tons of monetary gold, but in time, gold deposit and withdrawal activity slowed, and the vault experienced a steady decline in overall holdings. Today, the vault is still considered the world’s largest known depository of monetary gold.
As of 2019, the vault contains approximately 497,000 gold bars, which represents a weight of about 6,190 tons. The vault can support this weight because it rests on the bedrock of Manhattan Island, 80 feet below street level and 50 feet below sea level.
Security within the Federal Reserve is a top priority that is enhanced continuously by the massive steel-reinforced concrete walls surrounding the vault and the 24-hour monitoring of activity inside and outside the vault by security cameras, as well as the use of motion sensors when the vault is closed. Additionally, the gold is protected by the New York Fed’s robust building security system and the armed Federal Reserve police force.
The verification process of the gold’spurity is taken very seriously, and that’s whyall bars brought into the vault for deposit are carefully weighed, and the refiner and fineness (purity) markings on the bars are inspected to ensure that they fulfill all depositor instructions. Following the verification process, the gold is moved to one of the vault’s 122 compartments, where each compartment that contains gold held by a single account holder is numbered rather than named to maintain confidentiality of the account holders.
The New York Fed applies charges to account holders with compartments, such as handling fees for gold transactions, including when gold enters or leaves the vault or when ownership transfers (moves between compartments).
Surprisingly, gold bars are not 100 percent pure gold. If they were 100 percent pure, the bars would be too malleable to preserve their shape. This would render them difficult to store or move. Therefore, each bar contains a small amount of at least one other metal, such as copper, silver or platinum.