Deep beneath Liberty Street in New York, approximately 25 meters below the bustling city, lies a colossal vault housing over half a million gold bars. This formidable stronghold belongs to the United States’ central bank, the Federal Reserve (the Fed), serving as a crucial repository for nations and institutions worldwide.
The vault itself is a marvel of engineering and security, shielded by a massive 90-ton steel cylinder. Once sealed, its immense lock can only be opened the following day, underscoring the extraordinary measures taken to protect its precious contents.
Known as the Fed’s Gold Vault, it stands as the largest known gold storage facility globally. It currently safeguards an estimated 6,300 tons of gold bullion, a staggering amount valued at over US$1 trillion (approximately 5 quadrillion Indonesian Rupiah) at current market prices. This immense hoard alone represents roughly 4% of the US Gross Domestic Product (GDP).
More than just a treasure chest, this vault plays a pivotal role in maintaining global financial stability. Numerous countries entrust their gold reserves to its care, recognizing gold as a primary protective asset. These strategic reserves are vital for underpinning currencies and providing an essential buffer against emergencies during times of crisis.
Historically, gold has consistently been perceived as a safe haven asset during periods of financial turmoil, geopolitical volatility, and inflationary pressures that erode currency values. Consequently, this precious metal constitutes a significant portion of central bank reserves across the globe, with a particularly strong emphasis in Europe.
Barry Eichengreen, an international monetary systems expert at the University of California, Berkeley, articulated gold’s critical function to BBC Mundo, stating, “This is one of their most important assets because, amidst adverse geopolitical events, it allows them to act as a lender of last resort for banks and corporations and to intervene in foreign exchange markets.”
For several decades, the United States and its central bank, the Fed, were universally regarded as the most trustworthy custodians for such vital assets. This trust was particularly pronounced among many European nations, who amassed substantial gold holdings, feeling increasingly vulnerable to the rising power of the Soviet Union.
However, with the re-emergence of Donald Trump in the political landscape, a palpable shift has occurred. European politicians and experts have begun to openly question the prudence of keeping their gold reserves stored in the U.S. and are now debating the feasibility of repatriation.
Trump’s often confrontational stance and his divergent views from European leaders on a spectrum of issues—ranging from trade tariffs and Denmark’s sovereignty over Greenland to the ongoing conflict with Iran—have collectively ignited significant apprehension regarding the security of European gold held by the Fed.
How Did European Gold End Up in the United States?
In stark contrast to Russia, whose central bank meticulously stores its gold reserves within its own borders—thereby safeguarding them from potential Western sanctions—a significant number of European nations continue to hold their reserves abroad, with many located in the New York Gold Vault.
The accumulation of European gold in the United States began in earnest during the 1950s, driven primarily by widespread fear of the Soviet threat looming over the continent.
Barry Eichengreen elaborates on this historical context: “Germany and other European countries, whose economies were recovering and increasingly exporting to the United States, received payments in a combination of gold and dollars.”
He further clarified the rationale at the time: “Transporting gold by ship or plane and purchasing insurance to protect it was expensive. Therefore, depositing it free of charge in the Federal Reserve’s vault seemed like an eminently sensible idea.”
The Bretton Woods system, established in 1944, cemented a fixed exchange rate regime where the U.S. dollar was directly linked to gold. This arrangement elevated both gold and the dollar to the status of the most trusted and stable assets in the global financial system.
For European nations, placing their gold holdings at no cost with the U.S. central bank immediately after World War II appeared highly advantageous. Facing the daunting Soviet threat of that era, the protection offered by the United States was unequivocally perceived as the best possible guarantee.
Yet, the Soviet Union is now a relic of the past. Today, the prospective return of Donald Trump to the White House threatens to fundamentally alter the decades-long alignment and strategic trust that has characterized the relationship between Washington and its European allies.
Germany, which holds the world’s second-largest gold reserves after the United States, is now a hotbed of dissenting voices raising alarm bells. Calls for the repatriation of its gold have grown increasingly vocal.
Economist Emanuel Mönch, a former lead researcher at the German central bank, the Bundesbank, is a strong advocate for bringing home the gold stored in New York. German press estimates suggest this amounts to approximately 1,200 tons, valued at nearly US$200 billion (around 1 quadrillion Indonesian Rupiah).
Mönch articulated his concerns, stating, “Given the current geopolitical situation, it seems risky to store so much gold in the United States.” He firmly believes that repatriating these substantial gold deposits would significantly contribute to Germany’s “greater strategic independence.”
Echoing these sentiments, Michael Jäger, president of the German Taxpayers Association, voiced his profound distrust: “Trump is unpredictable and capable of anything to generate revenue. Therefore, our gold is no longer safe in the Fed’s vault.”
Jäger further amplified his worries: “What will happen if provocations concerning Greenland continue? The risk that the Bundesbank cannot access its gold increases, so it should repatriate its reserves.”
These anxieties are not confined to economists and association heads; members of Chancellor Friedrich Merz’s CDU party in parliament have also publicly echoed similar concerns.
Despite the growing chorus of unease, Bundesbank chief Joachim Nagel has actively sought to assuage these fears and maintain confidence.
At an International Monetary Fund meeting in Washington last October, Nagel dismissed the concerns, stating simply, “There is no reason to worry.”
He reiterated his unwavering confidence in February during a press conference: “This does not disturb my sleep. I fully trust our colleagues at the United States central bank.”
However, conspicuously, neither the Federal Reserve nor the Trump administration has publicly reaffirmed this crucial trust, adding to the prevailing uncertainty.
Analyst Barry Eichengreen noted this lack of reassurance, remarking, “I didn’t hear a single calming word, and I think that would be appropriate.”
BBC Mundo reached out to the Federal Reserve for comment but received no response, highlighting the institution’s deliberate silence on the matter.
This institutional quietude unfolds against a backdrop of already strained relations between the Fed’s head, Jerome Powell, and the U.S. government.
Trump has consistently and vociferously criticized Powell for his refusal to lower interest rates. The Department of Justice even went as far as opening a criminal investigation into Powell—a move he vehemently condemned as part of “threats and pressures” from the executive branch designed to undermine the Fed’s independence and compel it to “follow the president’s preferences.”
A Wave of Repatriation
Germany is far from the only European nation with significant gold holdings in New York. Italy and Switzerland are frequently cited among the countries maintaining substantial reserves there, indicating a broader reliance on the Fed’s vault.
Indeed, several countries have already embarked on the process of gold repatriation in the past, setting a precedent for the current discussions.
The Netherlands, for instance, initiated its repatriation efforts in 2014, significantly reducing the portion of its reserves held at the Federal Reserve from 51% to 31%. Germany also undertook a partial repatriation of its gold bars during that period, though a considerable amount still remains within the Fed’s vault.
Eichengreen attributes these earlier moves to pressing economic concerns: “That was a time of the Greek debt and euro crisis, and Europeans wanted the certainty that their currencies and bank deposits were backed by something tangible.”
Decades prior, in the 1960s, French President Charles de Gaulle made a decisive move, opting to bring home his nation’s gold bullion stored at the Fed.
According to various historical accounts, De Gaulle was presciently concerned about a sudden devaluation of the dollar, especially given the U.S. dollar’s direct linkage to gold within the Bretton Woods system.
History ultimately vindicated his foresight. In 1971, U.S. President Richard Nixon abruptly ended the dollar’s convertibility to gold, effectively dismantling the entire international monetary system that had been painstakingly established after World War II.
France, having already repatriated its reserves, found itself in a far more advantageous position compared to countries whose gold bars remained in New York. These nations saw a substantial portion of their dollar-denominated wealth diminish in value almost overnight.
The Costly Endeavor of Repatriation
The Fed’s Gold Vault currently holds a considerably smaller volume of gold compared to its peak. Data from the Federal Reserve reveals a steady decline in the international gold reserves stored in its New York vault since 1973, when holdings briefly surpassed 12,000 tons.
Despite this, the notion of continuing to store European gold in the U.S. still finds staunch proponents.
Clemens Fuest of Germany’s IFO Institute for Economic Research, for instance, cautioned The Guardian that repatriating gold “would only add fuel to the fire of the current situation” and could precipitate undesirable consequences.
Several experts underscore the critical independence of the Federal Reserve from the Trump administration, asserting that this autonomy would prevent the U.S. government from taking unilateral action against the gold. These experts also highlight the substantial costs, intricate logistical challenges, and inherent security risks involved in transporting such incredibly valuable cargo across continents.
Conversely, the deepening doubts surrounding the Federal Reserve’s reliability as the custodian of European gold threaten to create yet another fissure in the decades-old global order.
Eichengreen explains that while such withdrawals “would not have a very significant financial impact on the United States,” the custodianship of gold has historically functioned as a global public good. He notes that the U.S. has offered this service freely—much like the NATO security umbrella or the dollar’s role as a global currency—in exchange for fostering friendly relations and trade partnerships.
He adds, “This [Trump] administration does not believe that the United States should provide services for free—which cultivates doubts among allies about the security of their deposits. Yet, this is something important when the U.S. needs their support, for example, in a war in the Middle East.”
As of now, there are no recorded instances of any European nation deciding to repatriate its gold during a potential second Trump term.
Nevertheless, the words of Christine Lagarde, head of the European Central Bank, delivered in a speech last year, may still resonate in the minds of some leaders:
“In the history of international monetary systems, there have been moments when seemingly unshakeable foundations begin to tremble.”
Image design by Caroline Souza from the BBC News Mundo visual journalism team.