On the menu today: Is today’s newsletter discussing storing gold in underground vaults just to justify some Die Hard with a Vengeance jokes? Yes. But there are real benefits to the United States being widely perceived as a safe place for central banks to store their gold, and recent years have witnessed an accelerating movement of gold out of the Federal Reserve Bank’s depository deep underneath Manhattan. Late last week, the new-ish Venezuelan government and the opposition appeared to agree to move Venezuela’s gold from London to the U.S., and that’s just one of several incremental signs of improvement in that country. And at the end, Sydney Sweeney! Read on.
Accepting Venezuela’s Gold Reserves . . . with a Vengeance
Eighty feet below 33 Liberty Street in New York City, 50 feet below sea level, on the bedrock of Manhattan Island, lies the vault of the Federal Reserve Bank of New York, the world’s largest known depository of monetary gold. As of 2024, the vault housed approximately 507,000 gold bars, with a combined weight of 6,331 metric tons. The value, as of this writing, is roughly $900 billion.
This gold inside the vault does not belong to the New York Fed or the Federal Reserve System. Only a small fraction of it belongs to the U.S. government; as of 2017, the vault held “about 5 percent of America’s roughly $11 billion in gold reserves and coin.” The New York Fed acts as the guardian and custodian of the gold on behalf of account holders, which include the U.S. government, foreign governments, other central banks, and official international organizations. No individuals or private sector entities are permitted to store gold in the vault.
The infamous Simon Gruber was incorrect when he scoffed, “Fort Knox is for tourists” — you can’t visit the bullion depository — but the New York Fed’s vault does indeed have significantly more gold than Fort Knox in Kentucky, which has 4,583 metric tons.
If you’re wondering about the security:
Gold bars are transported by elevator from street level to the vault’s basement location. Once inside the vault, the bars become the responsibility of a control group consisting of three representatives: two members of the New York Fed gold vault staff and one member from the New York Fed internal audit staff. These three individuals must be present whenever gold is moved or a compartment is opened in the vault — even to change a light bulb. This helps ensure proper safekeeping and maximum security for the gold.
And, if the reporting of the Financial Times is correct, the New York Fed’s vault is about to get another $4 billion in gold that belongs to the Venezuelan government, and that had been stored in the Bank of England’s underground vaults on Threadneedle Street. The Bank of England is the world’s second-largest keeper of gold.
Venezuela’s gold has been in dispute since 2019, when the U.S., the United Kingdom, the Organization of American States, and other countries recognized National Assembly President Juan Guaidó as the interim president of Venezuela, in line with the Venezuelan constitution, not Nicolás Maduro. Because the U.K. no longer recognized Maduro as the legitimate head of government, his regime could not access the gold. Maduro’s regime battled this decision in U.K. courts for years, but the courts consistently ruled that he had no legitimate claim to the gold.
Now it appears that the Venezuelan government, headed by Maduro’s former right-hand woman Delcy Rodríguez, and the opposition are close to an agreement that would allow Rodríguez’s regime to gain legal control over the gold but would not be allowed to immediately sell the holdings; the gold would be used as collateral for borrowing by the government to fund spending, including for reconstruction from June’s devastating double earthquake. This is a small but good sign for Venezuela’s future, and I’ll address that aspect more later in this newsletter.
In a way, Maduro is almost getting reunited with that gold he sought; once the gold is transferred to the New York Fed, it will be less than four miles from his current residence, the Metropolitan Detention Center in Brooklyn, where he is awaiting trial on charges of narco-terrorism conspiracy, conspiracy to import cocaine, and possession and use of machine guns and destructive devices.
You might be wondering, “Why does it matter where Venezuela stores its gold?”
A country’s central bank storing its gold reserves with another country signals a degree of trust and alignment. The custodian nation, in turn, treats this as a mark of confidence in its financial and legal system. Nobody’s itching to store their gold in Yemen, or Afghanistan, or the Congo.
And as seen in the case of Venezuela’s gold in London, the country holding the gold gets something of a veto over withdrawals. If the country holding your gold no longer sees you as the legitimate government of a country, they can and will deny your regime access.
There’s been a trend of countries’ central banks moving some of their gold reserves back within their own borders. In 2024, 41 percent of central banks stored some of their gold domestically. That number is now up to 59 percent.
The World Gold Council is an international trade association for the gold industry. Each year they conduct a survey of central banks, and this year’s survey “found that only 14 percent of central banks now store gold at the New York Fed, down from 17 percent the previous year.” London is seeing a similar shift: “The Bank of England, long considered the New York Fed’s chief rival as a gold custodian, also saw its share of central bank gold slip from 64 percent to 57 percent, suggesting the repatriation trend is broader than a simple New York-to-London transfer story.”
Sometimes the gold isn’t physically transferred at all; a central bank sells it in the country where it is currently held and uses the profits to purchase gold in another country or at home.
Earlier this month, the “Dutch central bank moved about 86 metric tons of gold from New York and Ottawa to London, citing rising geopolitical risks and the need to strengthen ‘crisis preparedness.’”
The French no longer have gold in that vault underneath Lower Manhattan. “France also removed its remaining gold exposure from the New York Federal Reserve between July 2025 and January 2026, although Bank of France Governor François Villeroy de Galhau said at the time that it was not politically motivated.” France’s gold is stored in a massive underground vault known as La Souterraine, located 88 feet beneath the streets of Paris, directly under the Banque de France’s headquarters.
Last July, Serbia announced it was relocating all its gold reserves — valued at roughly $6 billion — to Belgrade.
Earlier this month, Krishan Gopaul, a senior analyst at the World Gold Council, wrote that the movements indicate central banks don’t just want to make sure their gold is safe; they want to make sure it can be easily sold or traded in a hurry:
Recent transfers should therefore not be interpreted, by themselves, as evidence that central banks are preparing to sell. Instead, these examples illustrate how the location of gold has become an important part of active reserve management. Future adjustments may also involve a wider range of hubs: Singapore has announced planned vaulting services for foreign central banks and sovereign entities, while Hong Kong is expanding its gold clearing, settlement and storage infrastructure. But the emerging picture is one in which security alone is no longer enough. For some central banks, gold must also be accessible, tradable and distributed across locations that remain dependable under stress.
Some analysts argue that the transfer of gold from New York or London to home countries reflects central banks looking warily at the experience of Russia. Russia’s central bank doesn’t store any of its gold abroad. But after the full-scale invasion of Ukraine in February 2022, the U.S. and its allies froze anywhere from $280 billion to $330 billion worth of Russian foreign exchange reserves in their jurisdictions. The thinking goes, if the world could unite quickly to freeze Russia’s assets, how can any country be absolutely certain they’ll always have access to their gold, sitting in some other country’s underground vault?
Russia is selling portions of its gold reserves to raise cash. In fact, since the start of the full-scale invasion, they’ve sold quite a bit. Russia’s National Wealth Fund “held 405.7 metric tons of gold before the full-scale invasion of Ukraine.” As of this September, Russia’s National Wealth Fund is down to 131.5 tons of gold.
At the risk of sounding like I’m plugging Three Martini Lunch podcast sponsor Noble Gold Investments, the upside of gold is that it’s always going to be worth something. Currency could theoretically lose all or almost all its value — these days, one dollar will get you about 2.1 million Iranian rials — but someone out there will always be willing to buy your gold. And over the past three years, gold prices have mostly gone up. I mention this not because I’m urging you to buy gold — talk to a trusted financial adviser about that sort of thing — but to explain why countries’ central banks usually keep some gold reserves. Not every country does; Canada and Norway don’t have any. The U.S., Germany, Italy, France, and China are the top five holders of gold reserves.
Oh, and on the day when that Venezuelan gold gets moved to its new home in New York City . . . beware of anyone who wants to play, “Simon Says.”
Incremental Improvements in Venezuela
As for Venezuela’s future . . . the country would be better off with free and fair elections, a new regime selected by the people, the rule of law, an independent judiciary, respect for human, individual, and property rights. Under Delcy Rodríguez, the country remains extremely far from that.
The United Nations concluded last week, “Following the US military rendition of then-President Nicolás Maduro in early January, state institutions responsible for repression, gross human rights violations and crimes against humanity remain fundamentally intact.”
But there are incremental signs of improvement.
- Last week, Human Rights Watch visited Caracas and met with Rodríguez. Federico Borello, deputy executive director of the organization, said, “Interim President Delcy Rodríguez has overseen a pause to the most overt forms of repression in Venezuela. But in this fragile political moment, these gains will only become sustainable with robust institutional reforms and the release of all political prisoners.”
- The Venezuelan NGO Justice, Encounter, and Forgiveness has confirmed the release of 83 prisoners; 72 are confirmed political prisoners, and the other eleven are undetermined; the organization says 448 political prisoners remain detained in Venezuela. While Rodríguez’s regime said it was shutting down the notorious El Helicoide prison in Caracas, in June Justice, Encounter and Forgiveness stated, “Our updated records confirm that at least 25 political prisoners remain detained in these facilities.”
- There is a first step toward less government censorship of the media: “VE Sin Filtro, a digital rights organization, confirmed that 17 news sites had been unblocked and that they were accessible through different internet providers. It added that 188 websites remain inaccessible, including 79 news portals.”
- Earlier this month, Paraguayan President Santiago Peña visited Venezuela and talked with Rodríguez; Paraguay “had historically one of the fiercest critics of Venezuela’s ruling socialist party.”
- Nobel Prize winner María Corina Machado is planning to return to her home country to push for new elections; she has been in exile for nine months. “Members of her party, Vente Venezuela, have gradually emerged from hiding in recent months. In June, young activists aligned with her movement staged ‘Elecciones Ya’ rallies in 16 states as part of an effort to rebuild street-level organization.” She recently endorsed Ohio Senator Bernie Moreno’s idea to make Simón Bolívar’s birthday, July 24, 2027, the date of the next Venezuelan national election.
And while it’s going to be a long, long while before Venezuela can increase its production on the scale that the president envisions, refilling the U.S. Strategic Petroleum Reserve, there are signs of U.S. and foreign oil companies taking some first steps to expand their operations in the country.
- The Wall Street Journal reported ExxonMobil is close to signing a preliminary deal to explore investments in several Venezuelan oil fields.
- Chevron announced earlier this month “plans to more than double the number of oil rigs it operates in the country as part of its five-year plan to increase output.”
- Italian energy company ENI announced a 25-year agreement securing exclusive operatorship of Venezuela’s giant Junín-5 heavy oil field.
It’s still too early to declare Venezuela a Trump administration foreign policy success story. But there are some key indicators pointing in the right direction.
ADDENDUM: Over in the Corner, Lauren Veldhuizen writes about the latest controversy surrounding Sydney Sweeney, and brings the heat:
The current outrage suggests that some women reserve their righteous fire of feminist condemnation for only the hottest and the most Republican women among us. The way they’re reacting, you would think Sweeney had strangled her three children — too soon?
Let us also note that our photo department selected the most modest and demure photo of Sweeney possible. I thought the whole point of these so-called “controversies” was so websites and television news could serve up more cheesecake than those factories!