Gold occupies a central place in the monetary and financial history of the United States. With more than 8,100 tonnes held, the United States has the largest stock of gold in the world.  

This national treasure, the result of centuries of accumulation, symbolises both the country's economic power and its central role in the international monetary system of the 20th century. But where does this gold come from? How is it stored? Is it regularly audited? And above all, what role does it play in US monetary policy today?

TABLE OF CONTENTS : 

• Where does the United States' gold stock come from?
• 1933: Roosevelt confiscates gold
• Fort Knox: a mythical fortress
• A gold shortage at Fort Knox?
• Gold stocks: what use are they today?
• Is the United States falling behind?

Where does the United States' gold stock come from? 

Until the beginning of the twentieth century, the gold stock in the United States was essentially private, held in banks and, to a lesser extent, in the Treasury. The accumulation of gold by the United States began in earnest in the 19th century, notably with the adoption of the gold standard in 1900. This international monetary standard, which was very popular at the time, was based on the convertibility of currencies into gold at a fixed rate. Coins in particular were part of this system.   

Under this system, central banks had to hold sufficient gold reserves to guarantee the convertibility of banknotes. The US Treasury, then the Federal Reserve created in 1913, therefore embarked on an active policy of accumulating precious metal to support the dollar. In 1913, the stock of gold held by the Treasury and federal banks was estimated at less than $200 million, compared with a stock of monetary gold of almost $2 billion for the system as a whole.

Stock of gold held by the Treasury and Federal Reserve Banks. Source: Gold Held in the Treasury and Federal Reserve Banks for United States (M1437AUSM144NNBR) | FRED | St. Louis Fed 

The First World War marked a major turning point in US policy. While many European countries suspended the convertibility of their currencies into gold to finance the war effort, the United States maintained its gold peg, attracting massive flows of precious metal. In 1919, the stock of gold held by the Treasury and federal banks increased tenfold to almost 2 billion dollars, and rose by a further 50% over the following 5 years as a result of the 1921 depression.  

At the same time, the Genoa Conference in 1922 helped to assert American monetary power. This conference accompanied the transition from the dominance of the pound sterling to that of the US dollar as an international reserve currency. The development of the American economy, which became the world's leading power while remaining unaffected by the European wars, changed the course of world monetary policy. 

1933: Roosevelt confiscates gold 

This trend gained momentum after 1934, when President Franklin D. Roosevelt imposed the confiscation of gold held by private individuals and the transfer of these stocks to the Treasury. The Gold Reserve Act then set the price of gold at 35 dollars an ounce. By devaluing the currency in this way, Roosevelt intended to stimulate the economy and boost exports, which further encouraged foreign countries to sell their gold to the world's leading power. A very large proportion of the United States' gold stock was accumulated between 1934 and 1950, driven by growth in the United States and difficulties in Europe. Moreover, convertibility at $35 an ounce remained unchanged until 1971.  

The Second World War, and especially the post-war period, contributed to this accumulation. The Bretton Woods system, set up in 1944, anchored the dollar as the pivot of the international monetary system: all currencies were pegged to the dollar, and the dollar itself was convertible into gold. When the Bretton Woods system was set up, France held the majority of the world's gold reserves. The purpose of this system was to avoid competitive devaluations between countries and to establish the United States as the world's ‘financial policeman’.  

The United States then became the world's central bank and consolidated an unrivalled stock of gold, surpassing the British hegemony established over a century earlier. But the United States' trade and financial difficulties in the 1960s eventually led to the collapse of the gold standard, ending all convertibility of the dollar into gold. This left the country with a gold stockpile of almost 8,000 tonnes.

Legend: the fortress of Fort Knox. Source: Flickr

Fort Knox: a legendary fortress 

The world's most famous gold depository is located in Kentucky. Built in 1936, this ultra-secure building houses most of the gold held by the US Treasury. Contrary to popular belief, Fort Knox is not owned by the Federal Reserve, but by the US Treasury. It is believed to house around 4,580 tonnes of gold, or more than half of the US total. 

This reserve has been in the news recently, since Donald Trump stated his wish to audit the reserve. It is important to note that the last time the reserve was open to the public was in 1974. In addition to Fort Knox, two other major locations complete the storage arsenal: 

• The Federal Reserve Bank of New York, which holds a significant proportion of the gold on behalf of foreign governments and international organisations. Some American gold is also held there. 
• The Denver Mint (Colorado) and the West Point Mint (New York) also hold significant reserves, in security conditions comparable to those at Fort Knox.

A gold shortage at Fort Knox?  

The issue of auditing the US gold stockpile regularly sparks debate, particularly among supporters of fiscal and monetary transparency. For example, partial audits took place in 2011 at Fort Knox, in the presence of representatives of Congress and the press. However, no full, independent audit has been conducted since the 1950s. 

In addition, the GAO (Government Accountability Office), the federal government's audit body, has been asked on several occasions to examine gold accounting procedures, but its investigations generally do not go as far as a full physical audit. Supporters of a ‘full audit’ have long called for a total inspection, including weighing, analysis and checking of ingot numbers.  

Despite this, the Treasury publishes monthly data on its gold stocks, showing the number of tonnes held and their value in dollars, based on the official price of $42.22 an ounce, a vestige of the Bretton Woods system. This figure is well below the current market price, which is expected to rise to over 3,000 dollars an ounce by 2025, and in no way reflects the real value of the stock.

Gold stocks: what use are they today?  

The gold held by the United States does not appear on the Federal Reserve's balance sheet, but on that of the US Treasury. This distinguishes the United States from many other central banks. On the other hand, the Fed does hold gold certificates issued by the Treasury, which appear as assets on its balance sheet. The central bank's holding of gold is therefore indirect. Unlike many countries where the central bank holds the gold directly, here it is the Treasury that holds the gold on behalf of the central bank.  

These certificates therefore represent a claim on the stored gold, but do not give rise to physical movements. Furthermore, the fact that the value is recorded at the historical price of 42.22 dollars an ounce means that a large part of the real value of the gold stock is not reflected in the central bank's financial statements, a situation that some economists consider problematic from the point of view of transparency. 

Since Richard Nixon ended the convertibility of the dollar into gold in 1971, gold has played no direct role in US monetary policy. The Fed conducts its operations via interest rates, reserve requirements and, more recently, quantitative easing (QE) programmes. As an asset, gold remains essentially a strategic reserve in the background.

Is the United States falling behind? 

Against a backdrop of falling confidence in fiat currencies and geopolitical tensions, gold retains a strong symbolic and political value.  

The desire of many central banks around the world to de-dollarise, reinforced by the war in Ukraine and the aggressive trade policy of recent weeks, has led to a real ‘return to gold’ by the main central banks.  Gold is often seen as an ‘ultimate asset of confidence’, capable of guaranteeing a state's solvency in an extreme situation. 

Although the United States does not sell its gold, its per capita concentration of gold remains lower than that of many countries, particularly in Europe. Since the 1980s, the country's stock has remained stable at around 8,133.5 tonnes, a volume that has not changed despite economic or monetary fluctuations that would have implied an increase in the quantities held. However, this immobility contrasts with the strategy of other countries such as the United Kingdom (which sold a large proportion of its gold between 1999 and 2002) or Germany, which repatriated some of its gold from New York.

Some countries, such as China, also intend to make up for a much greater backwardness by accumulating stocks of gold to consolidate their monetary position. This stability in US gold stocks also reflects a certain American vision: gold is not an investment instrument, but a strategic asset to be held in case of a major crisis. It is also a way of asserting monetary continuity, even in a system based entirely on fiat money.  

It is therefore legitimate to ask whether this trend will change over the next few years if confidence in the dollar weakens, which would require larger stocks of gold, both for foreign countries and for the United States.

Conclusion 

Never in the history of mankind has a country held as much gold as the United States. This stock, which exceeds 8,000 tonnes, is the result of a historical and economic legacy. First accumulated at the end of the 19th century to ensure the stability and expansion of the banking system, the country's gold stock increased considerably after the First World War. The weakness of European countries and the growing strength of the dollar gradually gave way to gold flows to the United States, which held the majority of the world's gold reserves after the Second World War.  

This unrivalled wealth led to the establishment of the Bretton Woods system in 1944, reaffirming the convertibility of gold with the world at $35 an ounce. But the country's deficits and financial mismanagement led to the collapse of the system in 1971. Since then, the United States' stock has appeared to be in eternal repose. In the basement of Fort Knox, the majority of these gold bars rest very discreetly.  

The rarity of audits and inspections of this stockpile also raises doubts. Trump's recent intervention in favour of an audit of the gold stockpile has reopened the possibility of discovering the largest stockpile of gold in the world. Finally, the reversal in US international policy could also increase the need for the country to build up its stockpile, as the rest of the world accumulates increasing quantities.