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Comment by worldvoyageur | Hacker News Reader

The US gold would have been on the books at the original purchase price, so something like US$35 from 1910 (when a penny had a purchasing power of 38 cents now). Having deemed it more efficient to sell that gold and buy the same amount to replace it, the new gold is on the books at the 2026 purchase price. As the 2026 money price is far higher than the 1910 price, the value on the books shows a dramatic realized capital gain.

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.

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That makes more sense, thank you! Though do gold assets on the books really never get adjusted? I guess that's up the central bank to decide but I would find it surprising.

It's the rules of how they must account for the value of the gold they have. Gold is valued at the price paid. Then, it is valued at the price sold. If there is no sale for more than a century, it stays on the books at the price paid. Once a transaction happens, the numbers update. Then, the gain that everyone knows is there is 'realized'. It's like if you mined Bitcoin in the early days. Your gain is only 'realized' when you actually sell it. Until then, it is only theoretical.

Mark-to-market accounting systems are one way to deal with this quirk, but they create their own issues.

What I was trying to get at is that there are other ways to update asset valuations besides daily (market-to-market) and once (price paid) – those are just the extreme ends of a spectrum. What makes sense really depends on the asset class and how long you're holding the positions. As for "It's the rules", I'm aware that there are strict accounting rules for companies and regular banks, but do those really apply to the central bank in the exact same way? (A central bank typically operates on a much longer time scales.)

If the central bank doesn't follow rules, who would trust it? The central bank's entire purpose is to put national trust into individual banks; both assuring investments (accounts) and establishing base (prime) loan rates.

A central bank answers directly to the government, not the judiciary. But it still answers to power, and follows established rules.

I'm not saying it shouldn't follow rules, I said the rules might be different.

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.

Mark to market versus mark to book accounting for central bank gold reserves is an endless source of crank adjacent debates.

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