Tracking the estimated total amount of above-ground gold has become a popular pursuit for researchers, journalists, gold bullion dealers, and investors. To get a clear answer to where is the worlds gold stored (hint: think central banks), we need to understand how much space we need to store it.
That can be a tough question to answer, although the "68-foot cube" theory is one of the most common. This proposition is often credited to famed investor Warren Buffet. While discussing the pros and cons of gold as an investment, Buffett remarked that the total amount of above-ground gold could be molded into a 68-foot cube. Obviously, cue the on-rush of speculation. Within the gold investment community, this easy to picture point created some buzz. Was Buffet right that such a small amount of gold was available for purchase?
The calculation for the size of rooms of where is the worlds gold stored is relatively simple. Gold has a density of roughly 19.3 g/cm3. In larger terms, we know that gold has a density of 19.3 tonnes/m3. Therefore, 154,400 tonnes would take up 20 m3.
A plethora of estimates exist as to how much gold there is in the world. We looked through the numbers and were note surprised to find there is more gold than commonly reported. However, it still is not that much. Much like estimating total amount of silver coins left in circulation, total gold supply figures are all over the place.
On the low end, you could take GFMS calculation data provided by Thomson Reuters. According to their research there are 171,300 tonnes in circulation. On the high end is the more speculative estimate from The Gold Standard Institute. According to them, there is likely more than approximately 2.5 million tonnes of gold is in the market. What about a more academic opinion? According to Goldmoney gold experts James Turk and Juan Castañeda, we can rest assured us there is only about 160,000 tonnes of pure gold ever produced. So how do we map out the pool of gold? Well, if the 2.5 million tonnes estimate is correct, that would be roughly 50m3.
Now let us turn our attention to the actual question at hand, i.e. where is the world's gold stored? Well, we can start by referencing who are the biggest public and private owners of gold.
If you want to know where the gold is, the best place to start is vaulting at government banks. Unlike your local branch, these ultra-high-security institutions house the collateral behind our currencies.
The Federal Reserve Bank of the United States of America
Where else to start than the United States of America, which has the largest repository of gold in the world. The gold is kept in mints located across the country. As far as we know, the most gold of any bank is held in the Federal Reserve Bank of New York.
As of 2015, sitting some 80 ft. underground (50 ft below sea level) are roughly 508,000 [400 ozt.] gold bars coming to 6,350 tons of gold. This basement vault is one of the world's largest. At a gold spot price of USD $1,200, that comes to USD $222.25 billion, or roughly CAD $285 billion. Unfortunately that is small beans compared to the US national debt of over 20 trillion and growing.
A few other gold storage locations are the Philadelphia Mint, the Denver Mint, Fort Knox, and a bullion repository at West Point, N.Y. Here is the scary fact: the Fed does not actually own more than 5% of the gold they store. The vast majority is owned by foreign nations, e.g. China and Russia (that has been buying gold), that have been buying more American gold recently.
The Bundesbank: a key player in where is the world's gold stored.
The locus of German financial stability, the Bundesbank, is another bank with heaping piles of gold bars in their basement. Germany has been on the hunt recently. The nation has been burning through euros to re-patriotize (bring back) German gold. It has been coming from New York, London, and Paris to the domestic reserve in Berlin. According to USFunds.com, the Bundesbank has planned to have 3,381 tonnes in Berlin by 2020.
What about London?
England’s gold reserves, stored below the downtown, are vast. Bigger still are London's many global banking and financing headquarters. As the second-largest 'custodian' after the federal reserve, the Bank of England has over 400,000 gold bars (over GBP £100 billion). As of August 2017, the Bank reported a total of over 5,691 tons of gold in custody.
Recent events, especially Brexit, have put increasing pressure on the Pound Sterling. That’s nothing to sniff at, especially considering the Bank may need to sell some to off-set the weakening pound. On the other hand, it may continue to increase gold reserves along with China and Russia. The Bank increased its reserves by over 9.79% from April 2016 to August 2017.
Perhaps the most famous location is actually a secret! The ICBC (The Industrial and Commercial Bank of China) recently bought a store of gold from Barclays Bank. A new secret vault has been built that can hold up to 2,000 tons of gold. There is no reason why another secret vault won’t be built as China's gold reserves grow.
Another huge portion of gold is stored in vaults across the world, held in the name of private investors, investment firms, commercial banks, and of course owners of gold jewelry! Going back to our academic source, Chris Thompson has made the educated guess that about 28,000 tonnes of gold are in private hands. According to his number, roughly 1/5th of total gold is held privately.
While central banks do play an important role in stabilizing currency markets, some of us at Global Bullion have mixed sentiments on storing so much gold in national reserves. On the one hand, it is integral to trust in our financial system. On the other, we seem to lack enough gold in these reserves to back up currencies int he event of crises... So if Western governments want to make this work, perhaps they ought to look at some variation of the gold standard? For example, allocating a per capita or per person gold reserve.
These are the questions you need to ask your bullion dealer to make an informed purchase and make sure that precious metals are working for you.