France pulls last gold held in US
mining.com
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French-US monetary history after WWII:
Under the Bretton Woods agreement (1944-1971), the US dollar was the world’s reserve currency, and it was pegged to gold at $35 per ounce. Other countries pegged their currencies to the dollar.
around 1965, De Gaulle initiated a systematic, aggressive policy where they converted USD into physical gold every time French acquired USD from trade, then French Navy picked those gold bullions from NY. By 1971, the US gold reserves had decreased so much that they did not cover the dollars circulating globally and Nixon "closed the gold window,"
https://en.wikipedia.org/wiki/British_Empire#/media/File:Bri...
Funny how much his pathetic 5 years in office keep on giving.
De Gaulle started this 'policy' in 1965 and it's mainly the current leadership situation that's been a problem—60 years later. So to a certain extent the policy in question was 'wrong' for decades. How "right" can you really consider them when it was a problem year after year, decade after decade:
* https://en.wikipedia.org/wiki/Henny_Penny
It reminds me of the folks that keep saying there will be a major crash on Wall Street year after year after year… and then it just happens to be occur.
* https://awealthofcommonsense.com/2023/12/rich-author-poor-re...
There just happened to be a whacko that got into the White House, but if ~70k (out of >100M) had gone the other way in 2016, Hillary Clinton would have won and the world would be a different place. (See also ~500 votes in Bush versus Gore.)
I'd be curious to know the 'insurance premium' that was paid by France every year and the total.
My counter to this is that such an occurrence was increasingly likely starting around the time the massive US Evangelical base was essentially fully captured by (and became a wing of) the Republican party. It was more and more obvious over a period of at least 40 of those 60 years you mention.
But if you prepare for a crash to happen at some point, that's just good sense. Only a fool would think that there would never be a crash. If you arrange your finances to withstand a crash, and there's eventually a crash, then that was the right thing to do even if it took a long time.
Ensuring the independence of your nation is more of the second kind. And it pays off even when there isn't an outright crisis. The policy wasn't "wrong" for decades. It was fine the whole time.
For which France was helped by the UK, so it certainly would make sense if France helped the europe and uk to build its own nuclear deterrence.
But if it tries to it’s also a problem?
NATO was explicitly built to keep Europe in line. That worked to the benefit of everyone, until national security intrests and land expansion put a stop to it.
The dude was a visionary for many things, but I didn't know about this. Borderline prescient. What a guy.
But the point is that "economical efficiency" is not the only metric that matters, stability and power do not come cheap.
We need to promote holistic thinking considering multiple dimensions and not just one where academics are proficient in.
France could do it as it is a rich and big country but smaller countries do not have a viable choice. This reasoning could have been applied to France too in another universe.
It's a balance impossible to totally tilt one way or another.
So no amount of extra information could help when it's matter of opinion at the end of the day
An economist saying a national-security measure costs this much is fine. Where it goes off the rails is in turning costs into damnation without accounting for what one gets in return. In an attention-driven media environment, that sells.
He was a patriot and very pragmatic. He knew France had been diminished. He had no time for delusional ideas.
I couldn’t find any clear news source or academic reference to that event. I see a lot of references on gold buying/selling sites mostly. I would imagine a Fench Navy ship docked NY and loading tons of gold would make quite a stir.
Moving tonnes of gold doesn’t look like huge pallets of gold with tarps over them like a James Bond movie. It looks like a handful of supply crates.
I imagine that the French Navy visits NY ports of a regular basis. Pretty normal for Navy’s to sail into the ports of allies during peace time. There would be nothing unusual about a French Navy vessel sailing into NY loading up with some supplies and leaving.
https://en.wikipedia.org/wiki/History_of_the_trucking_indust...
"The postage cost him $2.44, plus $142.85 for $1 million worth of insurance." —https://about.usps.com/who-we-are/postal-history/hope-diamon...
Whether the exact ship was a battleship or a destroyer might make the search result.
It happened though. Here are the sources for it:
- https://en.wikipedia.org/wiki/Nixon_shock#Criticism_and_decl...
- https://www.thegoldobserver.com/p/how-france-secretly-repatr...
- https://www.elibrary.imf.org/view/journals/001/1994/128/arti...
Your source confirms it as well:
> Involving the French Navy was considered, but that would have blown the operation’s cover. Instead, BdF used ocean liners from the Compagnie Générale Transatlantique
So it was multiple trips and in commercial liners.
You've probably driven past more than a few.
1963: Operation Empty-the-purse ("vide-gousset")
It was also by warship that De Gaulle planned to conduct "Operation Empty-the-purse" in 1963, the code name for the repatriation of French gold deposited at Fort Knox in the United States (1). More than 1,150 tons—the result of converting French dollars into gold, a decision made by De Gaulle in response to the lax monetary policy of the United States—were being used to finance a growing trade deficit through the printing of money.
Valéry Giscard d'Estaing, then Minister of Finance, recounts (2): "De Gaulle was getting impatient and asked me at every meeting: 'So, has that gold finally come back?' One day, he told me: 'We need to move much faster: we're going to send the navy cruiser 'Colbert' which will bring back all the gold that's still there.'" “I told him that if we did that, we would alienate American public opinion forever.” Ultimately, De Gaulle abandoned the Colbert plan, and French gold returned from the United States in small quantities. Not for very long, it's true. The events of May 1968 and the ensuing monetary crisis depleted the reserves, which fell from 4,650 tons to 3,150 – 1,500 tons had crossed the Atlantic again to defend the franc, which De Gaulle refused to devalue.
> Ultimately, De Gaulle abandoned the Colbert plan, and French gold returned from the United States in small quantities.
So I think the story about the warship got twisted from a plan or threat to "it actually happened". Doing it in small quantities over a few years was the right way, indeed. Looking back it seems like it didn't make many waves in the news at the time, so Giscard was absolutely right.
[1]https://archives-historiques.banque-france.fr/ark:/56433/115...
[2]https://www.lesechos.fr/finance-marches/banque-assurances/st...
Based on some sibling discussion it seems it just never happened. It was multiple shipments, over many years, going over commercial liners. It may have well been armored trucks but they just didn’t all do it at once. It worked well that it didn’t create much of a media uproar.
So yes, if you need to move national quantities of gold/silver across the ocean, then for legal reasons, it is best to ship it via your navy.
The system was conceived with the primary goal of maintaining balance of payments equilibrium for all countries at the expense of economic growth and liquidity. It had become clear that if a country wanted its currency to be the world reserve currency it had to run a balance of payment deficit. And the United States clearly wanted its dollar to be the reserve currency unbridled by any balance of payment constraints.
If the United States had balance of payment surpluses as it had in the early years, the system lost liquidity (other countries wanted to buy U.S. exports but had neither gold nor dollars to do so), reducing the surplus. And if the United States had balance of payment deficits, well, gold would flow out of the United States, and the United States could not meaningfully increase public debt or spending.
You'll get a bear economy, leading to the eventual deflation and collapse.
Fun fact: it was not hyperinflation in Weimar Germany that led Hitler to power but _deflation_ because of its insistence on sticking to the gold standard.
Do you have a source for this? AFAIK https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_R...
I personally edited this very Wikipedia article several times, but my changes got reverted by goldbugs who want to memory-hole it.
This article has a nice explanation: https://www.hertie-school.org/fileadmin/user_upload/20191101...
If you don't believe the numbers from it, they can be corroborated easily.
And most importantly, the deflation was directly caused by Germany's insistence on staying on the gold standard. And this has been an almost ironclad law: large countries that insist on gold standard end up with stagnating economy.
If you want another interesting tale from the opposite side of the spectrum: https://en.wikipedia.org/wiki/W%C3%B6rgl#The_W%C3%B6rgl_Expe... - it's a town that was issuing "decaying" money in 1930-s and this helped to revitalize its economy.
Another example often cited by Paul Krugman was Washington's childcare coöp, but it's a bit too small-scale.
Just because two things are correlated in time, doesn't mean they are necessarily causally linked. Surely there are multiple factors at the same time behind the rise of a demagogue. In the case of Hitler the grievances of WWI played probably a much bigger role than economic problems.
Economic problems was a big part though, the 1929-33 great depression. It features heavily in political literature pushed by the Nazi party leading up to takeover. You know, like "Arbeit und Brot", etc.
Countries used gold or metals either directly as currency or to back paper currency for hundreds of years. If their governments overspent they collapsed.
Saying you need inflation or you get hitler is pretty wild.
Not really. You need inflation, or you end up with stagnation.
https://en.wikipedia.org/wiki/W%C3%B6rgl#The_W%C3%B6rgl_Expe...
That's what inflation does, everyone gets paid less, but they don't realize it because they just see the same number coming in and more going out.
And then because of that, somehow noninflationary currency results in hitler in 8 years (even though it was used for hundreds of years).
I think you should look at the other end, which is governments going broke and not being able to inflate their way out of it.
It did not. The economic system that was in place for hundreds of years kept the population in a permanent state of depression. Most people had barely enough money to buy necessities.
The economic growth exploded, surpassing _millenia_ of innovation within mere _decades_ once we got rid of the golden chains.
But I guess that you fancy yourself being landed gentry and not a landless serf?
Says who?
people had barely enough money to buy necessities.
Where are you getting that? I think you're confusing and conflating all sorts of things like human advancements with inflationary money. I'm sure what you're saying makes sense if you think every invention, discovery and gain of knowledge was from people having their money inflated, but there isn't any evidence of this, it's just you restating it.
The economic growth exploded, surpassing _millenia_ of innovation within mere _decades_ once we got rid of the golden chains.
That really only happened in the 70s, it wasn't exactly the dark ages before that.
Err... Have you ever studied history?
> Where are you getting that?
From learning the basics of history? Before 1900-s famines were common, and most people were illiterate.
> That really only happened in the 70s, it wasn't exactly the dark ages before that.
Got it. You live in an imaginary world.
In reality, the first inflation happened when the European civilization established contact with South America. It rapidly expanded the monetary base and provided an impetus to economic development.
Then paper money (and equivalent debt-based mechanisms) were invented and became popular, and this turbocharged everything.
I just explained history to you, you realize being patronizing and repeating yourself isn't evidence right?
From learning the basics of history? Before 1900-s famines were common, and most people were illiterate.
Do you think the printing press, the engine and large scale agriculture might have more to do with food and literacy than inflation?
All those problems were solved before the US went off the gold standard anyway.
In reality, the first inflation happened when the European civilization established contact with South America. It rapidly expanded the monetary base and provided an impetus to economic development.
You realize this doesn't make sense right? This idea that printing money somehow leads to all human advancement is bizarre, even for someone who is ignoring all the things I said before. If two cultures crossed oceans do you think the advancement might come from international trade or do you think some tribe in the jungle could make up a currency, start printing it off, then go straight on to skyscrapers and video games?
All this is just a gish gallop anyway, you never bothered to explain how not having inflation "causes hitler in 8 years" even though it's only been the last 50 years that we have been off of backed currency.
You also didn't confront the fact that anyone can put their money in stocks, bond or gold and essentially have a deflationary currency but they still spend money anyway.
no growth that whole time, other than when you go to war and expand your gold supply by taking somebody else's.
the positive sum present is much better than the zero sum past
No, it was pretty much up until the early 1900s
Otherwise this happens.
https://fred.stlouisfed.org/series/M2SL
This is the origin of the entire white collar world and all of its odd bedfellows, and it will die in our lifetime. All of our jobs will go with it, unfortunately.
I fundamentally disagree. Value comes from building stuff not from hoarding. I maintain my intense dislike for gold. And I grant that it had the property of having most people on this earth consider it the peak of value. Sure common belief is a useful property. But I disagree that it's a positive outcome or that there couldn't be many many other variations except gold.
If we had the technology to maintain 0% inflation, we would do that. We can't, and rather than risk deflation we instead target low positive inflation. This is because deflation leads to nightmare spirals where people start stuffing money into their mattresses instead of investing in useful things because holding has risk-free guaranteed returns that the unpredictable real world can't match.
The amount of gold being mined is not sufficient to keep up with economic growth and gold is therefore inherently deflationary. It's not a good way to store value, because a coin that's going to double in value over two years or whatever is obviously not a stable store of value.
You can argue about corrosion resistance or whatever other physical properties gold might have, but unless the civilization collapses you will find just as much luck storing your wealth in the database of a major bank. Needless to say, designing a civilization around the idea that it could collapse at any moment is unnecessary and expensive.
I don't think this is quite right. My understanding is that a low positive inflation would be targeted anyway, because it stimulates the velocity of money; i.e. there's a downside to hoarding, since you need to beat inflation to come out on top. So people will be willing to invest to at least some extent in risk assets, or to buy things now rather than later.
Which, yes, makes inflationary spirals possible, but they've proven less damaging. The inflation numbers seen in regimes that actually collapsed as a result are absolutely dizzying; whereas the deflation seen in the Great Depression was... significant, but not nearly comparable.
Low interest rates are a good thing because they allow people to explore new ideas and new businesses - the entire modern tech industry would not exist without ZIRP because the scale of investments has only gone up as technology has advanced.
That's not what's happening currently. Inflation has driven up prices to the point where people can't afford to spend. They're forced to cut back on spending just to keep a roof over their head and food on the table. Inflation promises that things are cheaper now than they ever will be, but that just means that anything you can't afford you either have to go without or take an even bigger hit to your wallet after trying to save money at a rate faster than prices are increasing. That sort of thing leads to less spending.
Credit cards were the solution for many Americans for a very long time, but that was never sustainable and now the US has record amounts of household debt and homelessness.
Deflation makes things more affordable and so people buy more. Yes, they could horde all their wealth, but you can't eat money and it isn't much fun. When times are good why would anyone bother going without when they can easily get what they want today. Consumerism is strong enough to keep people buying things. Decreasing prices gives consumers confidence that they can make risky purchases and investments.
The problem with zero interest rate is that it doesn't incentivize better ideas. Why would you work to increase productivity if capital has no cost?
The period 2016-2021 was one where interest rates were the lowest, sometimes even negative, and you saw companies hiring endlessly, and acquiring competitors with no intention of doing anything their their products.
It is very hard to compete on talent and good ideas in such an environment when your all competitors are burning through loaned and venture capital (which itself is also largely loaned at some point).
Gahhh. Stop taking your economics advice from bitcoin bros and goldbug weirdos. They don't know how anything works and don't want to learn. It's like taking legal advice from sovereign citizens. It's not even that difficult to understand why it's a terrible idea!
High inflation is bad, sure. Deflation is an economic nuke. You know those people who spent like a whole bitcoin buying pizza way back when? "If I'd just held onto it, I'd have $HUGE_NUMBER now".
Yeah. If your money goes up in value, you have a huge incentive to stockpile it and not buy pizza. It's not just Dominos that loses out. All of the people and suppliers that go into pizza do, too. You need people to spend and lend to have liquidity and money flow.
> we find more gold every day, so there is an easing already happening naturally
That's not how that works. You're tying your entire country's economic growth to the production output of a single mining industry. Gold is not distributed evenly across the globe, either.
And yeah, we did all that in the past, and it caused deflation, which caused numerous financial panics [0], broke the British economy [1] and after two world wars, the US ended up with like 70% of the world's gold [2].
[0] https://www.federalreservehistory.org/essays/banking-panics-...
[1] https://en.wikipedia.org/wiki/Financial_crisis_of_1914
[2] https://www.imf.org/external/np/exr/center/mm/eng/mm_dr_01.h...
--
TL;DR: Tying your entire country's economic growth to the production output of a single mining industry is stupid and we don't do it for very good reasons. Everything is a conspiracy if you don't know how anything works.
How is it good for an economy to have a small subset of individuals hoarding wealth through property, artwork, and offshore bank accounts - not spending it in the economy from which they extracted it? "Job creators" is a farse, the subset who you can point to who ACTUALLY create(d) jobs a-la Page and Brin have long since stepped away from that job creation and have joined the ranks of: number go up.
A lot hinges on this being true, but being deflationary is not unique to gold. It is also true for a lot of other things, including stocks. Yet we think it is good that regular people spend their earnings on stock, and it is generally considered to be one of the things which made American economy uniquely strong. So much so that other countries seek to mimic it.
The argument should cut both ways: A strong stock market which is deflationary should lead to economic stagnation. Why buy a pizza today when you can buy S&P500 and buy two pizzas tomorrow?
Reality seems to disagree here. People buy what they need and want, today, and whether the rest is stored in fiat currency, stocks, or gold seems to matter very little for economic productivity.
I...don't think you know what stocks actually are. Your argument doesn't make sense because stocks are the literal exact opposite of a deflationary good lol.
Companies issue stock to raise money. If you buy stock from a company, you're giving them that money in exchange for a small stake in ownership.
It gets more complicated with stock markets and all the other stuff, but the heart of it is taking money that would normally sit for decades doing nothing and giving it to those who can use it right now.
> Reality seems to disagree here.
It only does if you don't know how things work and don't want to learn lol
There is certainly some misunderstanding here, and I am unsure about where it is. Perhaps another example could have been more clear.
When you "buy the S&P500" you do not buy stock from companies. No S&P ETF takes part in private placements or IPOs. They buy "used" shares on the open market, with the single intention of selling it on the open market to someone else.
When you buy the S&P, at no point do you give money to any of the S&P companies (except perhaps a small fee to the ETF issuer, most of which are public companies, but let's not split hairs about that).
There are of course other methods of buying the S&P500, such as tracker certificates, but they only add layers of indirection to the above, they do not change the fundamental facts about it.
> you don't know how things work and don't want to learn
I am not sure how to respond to this.
A national border is silly as a physical reality; it is just a cartographic whim. These invisible lines, drawn by long-dead men, pretend that the lithosphere is fundamentally different on one side of a coordinate than the other.
Fiat currency is silly as a store of value; it is just a digital ledger or a piece of cotton-linen blend. Its "worth" is derived entirely from the collective hallucination that a central bank’s promise is more substantial than the paper it is printed on.
No, not in effect, no one is talking about physically exchanging gold coins, so it doesn't make sense to say "there isn't enough".
but they want them to be tethered as a proxy. Why?
That's a completely separate issue. People want to not have to deal with inflation where they are on a treadmill of needing to get paid more to support the fact that companies can raise their prices easily.
I think my point still stands. If you can't create more gold [1] and you say - I am pegging 35 dollars to an ounce of gold. Then you are limiting the amount of dollars to the mass of gold[2]. The money works as an IOU for gold. You aren't exchanging pieces of gold, but the idea that you have 35$ is as if you have 1 ounce of gold, _that is what people pine for_. It's effectively, an IOU for 1 ounce of gold that you keep in a safe. Yes. I think the point still stands that in effect, that's what people are asking for.
[1] - You can, but it's a much slower process, deff rate limited, it's actually what people really seem to like about gold.
[2] - Yes, I am aware about the concept of fractional reserve, but that's exactly the part that goldbugs want to avoid.
I'm not sure what point you are making, it seems like you're just describing a gold backed currency and repeating the same things multiple times.
If you aren't using gold directly how would there ever be "not enough" unless a penny became worth too much? People did this for hundreds of years, this isn't some theory or experiment, it's basically how the world worked for most of human history.
If you peg an amount of money to a mass of gold, would you or would you not limit the amount of money in existence?
There is already a quantifiable amount of money in existence, can we at least establish that?
there’s no economic growth
Printing money doesn't create economic growth, it just inflates assets and depresses nominal wages.
money is worth more when you don’t spend them
People say this stuff like it's gospel, but if someone understands currency dynamics in the first place they would have their money in investments, which already should appreciate and act like a deflationary currency. People can already buy stocks and leave money there to get more valuable, so why does anyone spend money now?
You also have to figure out why it already worked for hundreds of years. People act like it would be an experiment. Floating currency is the experiment and it has lasted 50 years so far. Currency has lost almost all of it's value from before the 70s and minimum wage is a fraction of what it was nominally while asset prices are sky high, then people wonder why people can't afford a house or beef or gas or just to live alone.
Buying stocks hoping that it would appreciate doesn’t work when there is no economic growth. So we are back to square one.
And for hundreds of years we didn’t have the same kind of international trade, or the same financial markets. One must wonder whether a new kind of currency must accompany a new era of economy and trade.
Currency losing almost all its value is by design. Modern economists target a 2% inflation rate. This means currency is supposed to lose value. It’s another mechanism to encourage spending to increase economic growth.
Who told you that?
Households must be incentivized to spend
Says who? What about governments and companies? People are already incentivized to spend because they need things.
Buying stocks hoping that it would appreciate doesn’t work when there is no economic growth.
You're contradicting yourself and going around in circles. If there is "economic growth" according to you, then stocks will go up, which means they end up being a deflationary currency, which means people will put there money there and not spend it.
They already go up due to inflation, people do buy stocks and other liquid assets, people still spend money anyway.
Also, gold still exists. By your own logic, because anyone can still buy gold or gold futures they should park their money there and never spend it.
Currency losing almost all its value is by design.
It is by design by governments and for governments. No person wants an inflationary currency, governments want it because they can they can borrow and print money they don't have and hand it out to people who in turn help with political power.
People don't want their currency to inflate away unless they own a business that can raise prices while their employees make less nominally.
Why? If you and I earn $100 per year, every year, that means there is no economic growth. We spend half of it on food, clothes, and other necessities and buy stocks with the other half, stocks will go up in value.
An non-growing economy has aspects of a zero-sum game. Speculation can still occur, and can continue unbounded. Stocks, gold, bitcoin, have historically all been deflationary.
[1] Which is backwards in your reasoning anyway. If you're a foreign power wanting to hold dollars, and dollars are physical gold coins, then you quite literally need to move them physically out of the country, right?
The problem here is, what if the demand for dollars increases?
In principle the US would get more gold and mint more currency, but gold is a finite resource. "All the gold ever mined" is around 200,000 metric tons, ~32k troy ounces per metric ton is ~6.4B troy ounces.
In 2022 (just before the recent gold rally) the price was ~$2000 per troy ounce, i.e. "all the gold" was worth ~$13T. Meanwhile the M3 money supply in the same year was ~$20T. What happens if you try to buy $20T worth of gold to mint currency when only $13T worth has ever been mined, and not all of that is even on the market? The answer is that you can't, so instead the result is deflation, which is bad.
Or to put it a different way, what do you think the economic effect of the recent gold rally would be for a country whose currency was still pegged to gold? It just got way cheaper to import foreign products than buy domestic ones, and way more expensive for foreign countries to buy your exports, so how's the unemployment rate looking? The amount everyone owes on their mortgage hasn't changed but the nominal value of their houses just got cut in half so now they've lost their jobs and are underwater. What happens when they start to default and foreclosures don't allow the banks to recover the principal?
The price for gold and dollar would rise, until the worth of dollars is as high as the demand is?
The name for that is deflation.
The primary function of money is its trade value, to "lubricate" the real economy to let goods and services flow. When the value is unstable, people are inclined to not spend or not accept that currency, which contradicts the free flow of it and in severe cases harms the economy.
Crypto'currencies' have the same problem. By nature, they are no currency but investment for which instability is required. No crypto bro would hype their 'currency' because there would be no pumping. Arbitrage trades are considered being for fools or insiders.
Bitcoin has the same problem. There is no inherent reason you can't have a cryptocurrency where there is no maximum number of coins to ever be mined and instead the limit is that mining them requires a fixed amount of computation.
That would give you the characteristics you want from a medium of exchange, because there is a rate limit on how much can be created (doing so requires e.g. electricity). Then the value is relatively stable, if you accept it as payment on Monday it would still be worth around the same amount on Friday, but the long-term result is a slow reduction in value on multi-year timescales as compute gets cheaper, so you don't get the speculation that results in high volatility and it doesn't strongly compete with real economic activity for investment resources.
The argument you'll get from goldbugs and whatever is that nobody would want a currency which is inherently inflationary like that, but that's clearly contrary to evidence. Most government currencies are inflationary, even on purpose, and it doesn't matter as long as the rate of inflation isn't so high that people holding it transiently for use as a medium of exchange are losing a significant amount in that short period of time. Especially when the rate of inflation is predictable (the rate at which computers get faster is reasonably consistent) so that anyone entering into a long-term contract denominated in that currency can reasonably predict its future value on the delivery date. Or people could just use it as a medium of exchange and denominate their contracts in something else.
How cryptocurrencies are mined is secondary in that regard too because their values is also purely based on perception, since there is no large authoriry backing that currency by eg. demanding , spending and regulating it.
That sounds benign until you realize that is: deflation. It incentivizes everyone to hold their dollars instead of spending them, and parasitically gain from gold's increasing utility use as currency by others.
This further decreases dollars available on the market to use in trade, further increasing their value. Which ... yes this can be an economic death spiral. Or at least, a strongly growth conflicted world.
A world in which you can make 5-10% a year by avoiding economic activity or investment is not a healthy world.
(And you can't increase gold supply to counteract this, because gold supply is also always balanced against the cost of extracting gold. Unless everyone else on the planet except the US government is prohibited from mining gold, there is no play there.)
Investors in those things haven't caused an economic death spiral. It's considered shrewd and good business to buy and hold things that are seeing increasing demand.
> This further decreases dollars available on the market to use in trade, further increasing their value.
... thereby reducing the amount of dollars required to trade a given amount of other things. Where does the spiral come from?
But yes, sophisticated investors do make money on under utilized land. Parasitically.
And it is an economy damper. Under utilized land is poor economic optimization by definition. Not to mention the undertow it creates, in terms of unproductive scarcity, for people who actually need to utilize land - whether that is for homes or businesses.
The solution, as economist Henry George pointed out, is to tax land, but not the property on it. Tax the exlcusionalry holding of a limited resource, don't tax productive value created by people.
Taxing land and not property isn't as simple as taxing both, but it isn't rocket science either. There are lots of standards and practices, because distinguishing between the two is important for many reasons.
The irony of taxing property, the stuff that makes land productive, is that it is a wealth tax that hurts rich and poor alike. A poor person, unemployed, who spends their time bereft of reliable income improving their own home will now be taxed on the value added - every year for the rest of their lives or until they sell or lose their home. That is a very perverse situation.
So yes, the taxation situation that subsidizes under utilized property, which is also parasitically rewarded by gains in value far exceeding the lower taxes they pay (for having no development to tax), is continually damaging the economy.
All that said, Bretton Woods matters because people look at the gold standard as a time when wages in the United States rose. Like that's why Bernie Bros on HN care. It's the same reason they oppose globalization: me me me. So it's worth knowing why it was flawed. They don't comprehend that before and after Bretton Woods, hourly wage charts measured a fundamentally different thing.
I think it's better to attack the charts - I mean, you're responding to a Charts Guy, a guy who's like, look at this Gold Denominated Chart guy - because that's what their brains work on. Don't worry about economics. These guys are not economists. They are Charts. The real attack on their worldview is that, well, just because the year in the X axis is an increasing, doesn't mean that you can compare a bigger year to a smaller year. They would really like the world to be ordered that way, but it's not, and taking leadership on convincing them of that is very hard.
This is, like, one of the few things economists -- even most of the crazy ones -- agree on.
Deflation is bad for the elites and politicians, and good for consumers. When the former are running the show, of course they will claim that deflation is the worst thing ever, despite the immense harm inflation inflicts on the average person. And if you spend like 5 minutes pondering the justification for why that is, you'll see it's mostly BS.
Hahahaha no. Other way around. I assume you meant "consumers" as a short hand for "normal people" and not its actual meaning of "people who need to buy things on a regular basis" because you do not want to be a consumer in a deflationary market. You're constantly having to piddle your wealth away because you're forced to exchange money for goods and services. Like food and shelter.
Deflation means no access to modern lending because there's no incentive to do anything with money except hold it. That's fine if you're already wealthy, because either you have it on hand, have assets for collateral, or can call in a favor. If you're not wealthy, you're just fucked.
Having easy access to debt is, overall, a phenomenal thing for the non-wealthy. Can you abuse it? Yup. Can it be predatory? Sure. Does it mean the average person gets access to capital without access to generational wealth or decades of saving? Absolutely. The middle class kind of doesn't exist without it. See also: The Ability to File For Bankruptcy is Good, Actually.
> And if you spend like 5 minutes pondering the justification for why that is, you'll see it's mostly BS.
I'm always a fan of examining things, but there's a prerequisite. You need enough education, critical thinking skills, and maturity to understand why you start at the null hypothesis: any "Secret Knowledge They Don't Want You To Know" theory is conspiracy bullshit.
And enough cynicism to know when people start talking about "elites and politicians" like they're one homogenous lump of evil agenda, it's usually a shibboleth for other, ah, less socially acceptable beliefs.
The gold bugs are almost entirely on the right. The left are far more likely to be MMTers.
see, i don't want to generalize about left and right. it's much simpler than that. look at what this thread is actually about: "chart for $/GLD is going up and to the right, therefore, gold good." okay? it's not complicated. it's not left vs right as much as it is, for every 1 person who's like, "things are complicated, economics are interesting, let's talk about it" there are 19 who live day to day in a relentless grind, and get-rich-quick is literally their only apparent salvation. they want the world to be ordered where they are a Green Wojack, where some random bet or gamble makes them a ton of money. that's why we're talking about it, not to figure out economic policy. same reason we talk about cryptocurrencies and startups. to most regular people - and programmers are regular people - it's about, $$$.
it is a totally valid complaint to say, "floating exchange rates do not produce charts that go up and to the right." I mean, that's their problem! They made the wages per hour chart stop going up and to the right! It's not that they are bad policy!
Do people on HN care about joe schmoe hourly worker? No. You can certainly make tons of money trading currencies, but look, these people are not trading. They're gambling. This class of get-rich-quick person likes: real estate, cryptocurrency, gold, startup stock... are you getting it?
You are making it about, "neoliberal dogmas" and "gold bugs" or whatever. Trust me, those people are not the morons. The gamblers are 10x as stupid. They are the antagonists.
Bretton Woods was sabotaged by the US and the USSR through the single vehicle of https://en.wikipedia.org/wiki/Harry_Dexter_White. Without a Bancor, the entire system simply became a mechanism to exploit the poor.
The only real gain is that you have gold in the US custody and the US can be tempted to just use it without telling you anything.
In other words, you had "paper gold" or "virtual gold" that the US can confiscate anytime, for example after invading Greenland, blackmailing France to do nothing.
You gain custody of what is yours.
"In 2025 and at the start of 2026, while the volume of gold reserves remained unchanged, the Banque de France had to align a residual portion (5%) with technical guidelines, resulting in a significant realised currency gain. This exceptional foreign exchange income totalled EUR 11 billion for 2025."
-- the keyword here likely being "realized"
If they held it for 100 years and finally sold it, then profit/loss is realized now
Edit: wtf is going on with you for downvoting a question…
Now they still have the same amount of gold but they "realized" a gain of 11 billion. They don't have that much cash left after the repurchase but now they say they have X Euros worth of gold which is 11 billion more than before.
So no they didn't make a profit from this as gold is higher on both sides of the Atlantic than last time they did their accounting updates.
Why was it worth “X minus 11 billions”?
And let's say that I regret it. I decide that I really want to hold some gold, so I take the $470,000 and buy another 100-ounce gold bar.
The situation was that I had a gold bar worth $470,000 with a taxable basis of $3500. Now the situation is that I have a gold bar worth $470,000 with a taxable basis of $470,000, and I owe the IRS taxes on $466,500 of capital gains.
TL;DR: Selling and re-buying the same asset gives you the accumulated gains, and resets the price basis.
They opted to do so because it's just more efficient. It takes a lot of efforts to physically move 129 tonnes of gold after all. And as a side effect of this relocation project, they ended up recording a capital gain. It's nothing-burger.
My guess is that the choice to sell rather than transport was also due to using the (at the time) price divergence between US and European markets. (arbitrage + not having to pay transport + refining)
That's it. It has nothing to do with whether your RAM is stored in New York or Paris.
If you're a fund that holds RAM in some indirect manner (like you hold hypothetical RAM futures) then it depends on whether your country's laws ask for market-to-market value for that specific kind of security.
However, that doesn't mean there isn't profit possible, even over a supposedly super-liquid asset like gold.
Another approach is “historical cost” or “cost basis” accounting. In this approach you officially hold assets at the price you bought them, and only realise pnl when you dispose of them. This means you don’t get pnl volatility from marking to market and then you get a big lump of pnl when you sell.[2] Until you sell or otherwise crystalize the pnl, the profit is “unrealised”, which is just an imaginary amount that you may or may not get but you look at in your brokerage statement and smile if it’s green or frown if it’s red. The advantage of this method is you don’t get the pnl volatility and you can wait until an advantageous moment to take the profits. The downside is if you want to, you can deceive yourself by holding these assets at a valuation that is unrealistic and store up pnl pain for the future. This methodology caused a lot of problems in the 2008 crisis with institutions holding bonds at prices that they could never hope to sell them.[3]
“Moving” the gold from NYC to Paris may not (for practical reasons) have involved actually physically taking the bars from one place to another. They may have found a buyer in NYC and then bought some bars on the IME in London and had them delivered to Paris. (This would clearly have required crystalizing the profit if they were holding them at historical cost). It sounds from a brief read of the article as if the bars were in some non-standard format so they may have had them melted down and recast, which would have required an assay and so would have triggered a new valuation, realising the profit. Assuming they were holding them at historical cost, which it sounds like they were.
[1] Technically, if you sell some gold during the day, then the pnl on the portion you sold is “trading pnl” and the pnl on the remainder is “mark to market” but whatever. It’s pretty much the same for the French reserve bank which has gold and thinks in EUR, except they not only have gold MTM pnl but also FX pnl in the EUR/USD rate (because gold prices in USD but they think in EUR).
[2] Or do some other event which requires valuation. There are rules about this kind of thing.
[3] When Lehman collapsed they had bonds marked at 100 that were trading at less than 40 cents. One weekend I’ll never forget I got a call from a very senior partner and was asked to value the European part of that portfolio as part of the US regulators frantic attempts to find a buyer for Lehman before the market opened.
France upgraded their gold bars to a new standard and as they were doing that, gold has appreciated massively in price, so France has the new shiny easier to trade bars, and the USA has the old harder to trade bars.
[] they sold their 'non-standard' (seems to be bars below the modern purity standards) US reserves, and replaced them with new reserves purchased elsewhere which are now stored in France. As the price of gold continued to rise as they did this, they ended up making a bunch of dinero while also centralizing their reserves.
sounds like a gain to me.
If you buy something for $10 and sell at $15, you realized a gain of $5. If you then buy at $15 and sell it at $15, you realized a gain of $0.
But they didn't just move gold bars around, is my point, and in what they did (sold, rebuy) there indeed was an opportunity to make a gain.
For example, imagine there's some German-owned gold in a UK bank vault, the owners sell it to a UK broker who sells it to a Chinese investor? The physical bars don't move, but on paper it's been imported to the UK then exported.
But a lot of people looking at export figures are expecting to learn things about the manufacturing industry, and picturing exports as washing machines, cars and computer chips - which imply lots of well paid jobs for skilled labour. So the UK reports import/export figures with 'non-monetary gold' listed separately.
(The fact flows of gold are highly volatile allows a classic bit of political sleight-of-hand - if you include gold, UK exports are both up and down since Brexit, depending on the pair of dates you choose)
EDIT: Wow, gold prices!
They had a deficit last year, so they can probably avoid to pay tax this year by balancing last year loss with this year profit.
Correct. A better way to put it is you shorted the USD. Which is a smart move at any rate. So a gain indeed.
If the US holds 100 tons of gold on behalf of another country and possesses that full amount, it isn't paper gold.
Derivatives are where paper assets come into play. You buy the right to own 100 tons, for example, and whoever owes you that either owns only a fraction of their total liability or plans to buy it when delivery is requested. That's an over simplification of a much more complex market, but the key is that "paper gold" owed doesn't exist in the full amount.
I see a lot of comments like this but I just can't get my head around what you are trying to prove (or disprove).
Every definition of gain (or loss for that matter) implies that the same amount of _something_ is now worth more (or less) than when you bought it.
Following you logic, if I buy a share of MSFT at $10, sell it for $100, there is no gain because I still have 1 share of MSFT?
(I know share rehypothication exists, but it shouldn't)
Before you sold it you had unrealized gains, after you sold it you had realized gains, after you bought it again you have the same gains but materialized as shares.
What if you're at war, you can't risk to get your gold out and the US doesn't sell you anything because.. you can't pay?
If your solution is to "write France's debt on a piece of paper and hope they honor it", I've got some news to tell you about the system you just "invented."
> But instead of refining and transporting the gold, it opted to sell the bars and purchase new bullion in Europe. […] Due to rising gold prices, the move helped the bank to generate a capital gain of 13 billion euros ($15 billion),
And how does a 10% market shift lead to gaining $15b, roughly the value of 100 tons of gold, from the sale and re-purchase of 129 tons of gold?
This math ain't mathing.
The mining.com quote is classic weasel phrasing, seemingly meaningful yet disturbingly ambiguous:
Due to rising gold prices, the move helped the bank to generate a capital gain of 13 billion euros ($15 billion), bringing it to a net profit of 8.1 billion euros for the 2025 financial year after a net loss of 7.7 billion euros in 2024.
Just as, say, one guy helped four others push a car back up on the road.
We've been given, accurately or not .. likely true, figures on how the bank did over a period, we've also been told the gold movements helped with that ... so they almost certainly kicked in at least $1.
Keep in mind that 129 tons of gold is worth just a bit more than $15b, so small market fluctuations on the scale of 10% isn't enough by itself.
They then sold the 129 tons gold in the US vaults for $16 billion. That gold was originally purchased I'm guessing many decades ago for $1 billion. The have a book profit of $15 billion and still have 129 tons of gold.
They captured some of the appreciation in gold value as a realised profit on their books.
Their balance sheet did not change, just their income statement
Second thought: The numbers don't seem to check out: 129t are 4,147,456.307 troy ounces (1 troy ounce = 31.1034768 g). The total gains of 15e9 USD would thus correspond to gains of $3,616.68 per troy ounce, which seems excessively high, given that today's gold price is at ~$4,712. Even if they sold everything at the current all-time high of $5,589.38 on January 28 (and that's a big if), they would have had to buy for not more than $1,972.70, a price we last had in fall 2023.
They must have had an exceptional crystal ball!
No gain would have shown for the gold that was simply moved, even though in this case the buying and selling was simply a more efficient way of doing the equivalent of moving the gold.
Gold that was simply moved wouldn't show the same gain.
Mark-to-market accounting systems are one way to deal with this quirk, but they create their own issues.
A central bank answers directly to the government, not the judiciary. But it still answers to power, and follows established rules.
A balance sheet becomes pointless if some assets are valued at today's prices, while other assets are valued at their price from 100 years ago.
They monetized an existing accounting/revaluation gain by selling older, non-standard bars and replacing them with compliant bars, while keeping the overall gold quantity unchanged. That is not the same as "we moved gold home and earned $15B on the move."
In simple terms:
- You buy x of gold at $10
- You sell it much later for $100
- You made a profit of $90, and you hold $100 of cash
- You rebuy x of gold for $100, back to the same gold exposure, but on the books, you have $90 of profit
What is poorly written or misleading here...?
That just looks like a normal capital gain to me.
"Due to rising gold prices, the move helped the bank to generate a capital gain of 13 billion euros ($15 billion), bringing it to a net profit of 8.1 billion euros for the 2025 financial year after a net loss of 7.7 billion euros in 2024."
I would have thought the audience here would understand something as straight forward as a capital gain.
The capital gain is just a by-product, standard financial stuff, but apparently broke HN readers brains.
Sounds like you agree with me, France has the same amount of wealth in gold that they had last week.
> Sounds like you agree with me, France has the same amount of wealth in gold that they had last week.
What did I miss?
"The overall size of France’s gold reserves still remained unchanged at roughly 2,437 tonnes, which are now entirely held at the BdF’s underground vault in La Souterraine."
Is this some special form of French accounting, where the gold becomes more valuable when it returns to French soil?
This would mean they sold low and bought high, right?
In reality the article is attempting to account for a capital gain pnl accounting for taxes.
They have ~same amount of gold between both years and it doesn't look like they took extra market risk.
Seems counterintuitive to me. This would only make gains when they bought the new gold before selling the old, or when there's some arbitrage going on between Gold/USD, Gold/EUR and USD/EUR.
If they first sold the old for USD, then bought the new for USD, with a rising gold price, they'd miss the price-gain during the time between the trades, when they held the USD. It'd be a loss, not a gain.
If there's some arbitrage going on, then I highly doubt that brings $15B gain. The differences would have to be huge.
I think the (author (AI)) writing that article is simply mixing up stuff. I think this gain is not a cause-effect of the conversion, merely the gains from rising gold prices on the gold it holds over that period.
Different gold, and two financial transactions, accounts for the financial gain.
a) they bought the gold long time ago for basically nothing and had it on their books valued at basically nothing
b) they sold it now (in the US) for around $15b and thus for accounting purposes realised a $15b gain
c) they bought it back (in France) for around $15b and will have it on the book now valued at $15b.
The fact that the gold price rose over the course of b) selling and c) buying doesn't matter (despite what the article implies). That the gold price rose between a) the original purchase and now b)c), that's what resulted in the profit.
Nah it's just regular realized gain (delta between acquisition price and selling price).
https://www.banque-france.fr/fr/actualites/resultats-2025-de...
(so it's kinda irrelevant, it's just they have to put it in their books)
If it was a lower purity, then when they sold the 129 tons, they would not have obtained 129 tons of "higher purity" gold and still turned a profit. They would have gotten fewer tons of gold. Your logic has the wrong sign.
Also, the fact that gold prices are rising means when France sold the gold and then purchased it later, the higher price to obtain the same quantity of gold would mean they incurred a loss, not a profit. Here, too, your sign is wrong.
Finally, at current prices, 129 tons of gold is worth $19 Billion dollars in total. It seems hard to believe that short term price declines (which is what is needed to turn a profit) would be such that gold fell over 80% in value, which is what would be needed to sell 129 tons of gold, then wait a while and buy 129 tons of gold, and end up with a profit equal to over 80% of the price of gold in question.
Moreover, rising gold prices would cause the French to earn a loss, not a profit
Using the French spelling of région but the wrong word order doesn't make sense.
On top of this, this is physical gold, so location of the gold must play into it as well.
The US could re-create the same “gain” by selling and repurchasing their gold. Fundamentally doesn’t really matter.
If Turkmenistan can have it, why not the US?
https://en.wikipedia.org/wiki/Neutrality_Monument
(Though it no longer rotates.)
They had better act fast, before an executive order prevents that from ever happening.
It's worth noting that the stated reason here isn't because of, say, US instability but rather "standardizing" the gold. It doesn't say what that means but I assume France is basically selling some New York held nonstandard gold to "standard" gold held in France. "Standard" here probably means a given size and purity. Yes, there are different purity levels to gold. So think the heavy bullion bars you see on movies.
[1]: https://www.brookings.edu/articles/how-the-france-backed-afr...
Most of us with career-track jobs use electronic deposit to an account at a bank, and keep things there. The account is "yours", and the trust is established over time--most people using most banks continue having access to their deposit of record most of the time. When that fails, you get a bank run--which is systemically undesirable, but also ends with people not having "their" money. They thought it was theirs, but it turned out not to be.
If your bank started publishing poorly-written notices about how they'd terminate accounts and retain holdings for certain customers based on arbitrary behavior, and kept changing that definition, would you leave "your" money there--even if the only alternative were to purchase precious metals and lock them up yourself?
> Net income from assets denominated in euro rose by EUR 2 billion, driven by an increase in outstandings. Income from assets held for own account rose by EUR 12.2 billion as a result of an exceptional item. In 2025 and at the start of 2026, while the volume of gold reserves remained unchanged, the Banque de France had to align a residual portion (5%) with technical guidelines, resulting in a significant realised currency gain. This exceptional foreign exchange income totalled EUR 11 billion for 2025.
> Net operating expenditure remained under control, falling to EUR 831 million from EUR 888 million in 2024. Since 2015, net operating expenditure has fallen by an average of 4.1% in volume terms.
> Overall, after transferring EUR 5 billion from reserves and booking a corporation tax charge of EUR 1.5 billion, net profit for 2025 totalled EUR 8.1 billion.
> A total of EUR 0.4 billion of this amount has been allocated to the special reserve, in accordance with regulations, while the remainder has been used to clear the deficit in retained earnings (EUR 7.7 billion) that was left after the allocation of the net loss in 2024
> After clearing these past losses in their entirety, the Banque de France’s net equity – comprised of own funds plus unrealised capital gains on asset holdings – is now extremely solid at EUR 283.4 billion, up from EUR 202.7 billion in 2024. The Banque de France’s net equity includes a revaluation reserve of state gold and foreign exchange reserves (RRRODE) of EUR 11.4 billion, to cover future monetary expenses
I assume that this increased equity makes selling bonds a bit easier?
From: “Net profit of EUR 8.1 billion, enabling the clearing of losses carried forward” https://www.banque-france.fr/en/press-release/net-profit-eur...
This is not what they're doing.
They're just re-asserting their sovereignty over their property, a smart move in the current geopolitical climate.
I'm actually surprised the utter dumbass they have at the helm over there managed to cook up such a smart move.
Vietnam war: i sleep
CIA regime change: i sleep
MKULTRA on its own citizens: i sleep
five-eyes global surveillance network: i sleep
orange man saying canada/greenland joining as the 51st state would be neat: real shit
The keyword here is allies.
To add to France's problem: in 2024 the PIB growth was 1.2%, which doesn't even counter inflation. And it's been like that since 2008: inflation adjusted in USD, no growth (while both the US and China's GDP inflation-adjusted skyrocketed).
The EU, and the eurozone in particular, is totally losing the plot: 1 company in the top 50 companies by market cap, ASML (and it's not french).
One.
The last time they asked for their gold back Nixon "temporarily" ended the convertibility of the USD to gold.
So on the surface level this is politics in the sense that it marks the end of a long process between two countries.
Deeper, it is very political in that some entity wants to normalize and for us to be thinking a lot about the future of American isolationism.
This isn’t reddit. This is a technical forum. We talk about cool tech stuff.
Still, a win does signal a dumb process behind the trade as the smart move would be to hedge with future options and/or futures.
But then again, maybe they did hedge the trade and it's just not the right time or place to report it.
(1784 tons moved to standardized holding over the years, 134 tons are now left to convert -- all stored in Paris)
I'd read the article, but the site seems to be down.
1. The bars were of an old variety and therefore not standard tradable.
2. Transporting them, refining them, and recasting exceed the cost of selling kind #1 and obtaining kind #2
Here's one such link though it appears there's some primary source everyone is rewriting: https://www.rfi.fr/en/france/20260404-french-central-bank-ne...
It appears that the gain mentioned is a realization of their asset value. I would also speculate that what happened is that they wanted LBMA bars because those are a standard variety and therefore easily tradable. An arbitrary LBMA bar is generally fungible. I would also speculate that they held many bars in the US from ancient times. After 2008, they repatriated 200-ish tonnes and 'upgraded' them (which I would speculate again is 'ensured they were LBMA-standard').
https://www.moneymetals.com/news/2024/10/05/why-france-repat...
These articles all have the flavour of the game of telephone common in this style of article where the currency that the gain is in changes wording, the motivation seems to shift, and phrasing lacks real detail instead relying on 'upgrading' and 'refining'.
I wish there were a good LLM agent that were capable of tracing all this back to the real original source that spawned all these things, but the information environment is currently full of smoke and getting real news is quite hard.
I can't realistically conclude whether this was politically motivated or not. The original motivation is sufficiently strong on its own, but it is completely normal for governments to move something to be earlier, or to do a marginal thing if there is other gain.
[1] https://www.banque-france.fr/fr/actualites/resultats-2025-de...
* mainly by Russia and people on their payroll that is.
FBRICS
it was tongue-in-cheek dude.
literal people are a hoot.
As I hate our government I don't play by their rules.
Besides, Holland is shorter and easier to pronounce.
The Quebecians also inherited the chauvinism of the French (similar to the Wallonians in Belgium) so for them it's a huuuuge issue. But we don't really have that kind of nationalism.