Hurricane's aftermath gives NY Fed a rationale for suspending access to gold vault
Did all those gold swap documents get wet too?
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About That Gold Stored in Flood-Prone Lower Manhattan
By Nick Summers
via Bloomberg Business Week
Sunday, November 4, 2012
As New York City continues to dry out in the aftermath of Hurricane Sandy, the financial world is reconsidering just how smart it is to place critical pieces of infrastructure in flood-prone areas. Citigroup's waterlogged building at 111 Wall St. will be unusable for several weeks, and two critical Verizon Communications facilities suffered extensive flooding during the storm.
At least the material at those sites is replaceable. What about the nearly 15 million pounds of gold bricks stored at the New York Fed?
They're safe -- and will be, in theory, should floodwaters return. The bullion is so heavy that its vault sits 80 feet below street level, and 50 feet below sea level, on the bedrock beneath Manhattan. Though the bank's fortress-like building is located far downtown, close to where other financial institutions sustained water damage, the property at 33 Liberty St. sits in the city's evacuation zone C, where residents are told to expect storm-surge flooding only from major -- Category 3 or 4 -- hurricanes that hit the New York harbor.
... Dispatch continues below ...
Opinion Around the World Is Changing
in Favor of Gold -- Find Out Why
When Deutschebank calls gold "good money" and paper "bad money". ...
When the president of the German central bank, the Bundesbank, pays tribute to gold as "a timeless classic". ...
When a leading member of the policy committee of the People's Bank of China calls the gold standard "an excellent monetary system". ...
When a CNN reporter writes in The China Post that the "gold commission" plank in the 2012 Republican platform will "reverberate around the world". ...
When the Subcommittee on Domestic Monetary Policy of the U.S. House of Representatives twice called on economist, historian, and gold standard advocate Lewis E. Lehrman to testify. ...
World opinion is changing in favor of gold.
How can you learn why and what it will mean to you?
Read the newly updated and expanded edition of Lehrman's book, "The True Gold Standard."
Financial journalist James Grant says of "The True Gold Standard": "If you have ever wondered how the world can get from here to there -- from the chaos of depreciating paper to a convertible currency worthy of our children and our grandchildren -- wonder no more. The answer, brilliantly expounded, is between these covers. America has long needed a modern Alexander Hamilton. In Lewis E. Lehrman she has finally found him."
To buy a copy of "The True Gold Standard," please visit:
The New York Fed is tight-lipped about how it secures the planet's largest concentration of gold, referring questions on the subject to a brochure --
-- published on its website. The pamphlet claims that the vault is protected by an "airtight and watertight seal" created by lowering a 90-ton steel cylinder just three-eighths of an inch into a 140-ton steel-and-concrete frame -- an effect "similar to pushing a cork down into a bottle."
Other security measures include closed-circuit video feeds, firearms training for guards, and the weight of the gold itself. At 27 pounds per bar, it's hard to smuggle one out in a pocket. "The bank's security arrangements are so trusted by depositors that few have ever asked to examine their gold," the New York Fed writes.
That, obviously, has helped fuel a string of conspiracy theories -- the gold isn't really there, isn't really gold, or is otherwise suspect. The Los Angeles Times reported in August that the federal government was conducting its first audit of the bullion it stores beneath Liberty Street, drilling tiny holes into selected ingots and analyzing the metal.
Ordinarily you'd be able to eye the gold bars yourself. Some 25,000 visitors tour the bank's vault each year. Those visits, the bank says, have been canceled indefinitely "due to the aftermath of Hurricane Sandy."
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