France pulls last gold held in US

Feels like one of those stories where the headline makes it sound geopolitical, but the details are mostly about accounting and logistics

I doubt recasting them is cheap?

No. Firstly the gain is to a certain extent a matter of accounting. The most accurate method of accounting is “mark to market”. So if you have some gold and you think in dollars, then every day you look at how much gold you have and you look at the price of gold in dollars, you multiply the two and the difference between that value and the value you got to the previous day is your “mark to market pnl”.[1] This means you have a very accurate valuation for your asset but the downside of this approach is that your pnl is very volatile as the gold price moves around. This is the approach taken for most assets by most wall st firms. In fact at JPMC and Goldman it’s not stretching a point too far to say mark to market is nearly a religion. In this methodology there is no such thing as “unrealised” pnl.

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.

From Franceэs perspective, they were just playing by the rules

Like most off the cuff Trump remarks - it made headlines for a while but nothing came of it, it’s not in Project 2025 and Musk fell out of favor with Trump for whatever reason. The combo of Musk and Trump was just dry kindling for the forest fire of baseless conspiracy theories with no founding in reality - like “omg, government incompetence lost the gold, Biden stole the gold after Trump didn’t lose in 2020” since Minchin told Trump what he saw in 2017 and Minchin posted interior photos of Knox with his wife at the time on social media. Since it disappeared from news after the remark and there is no one in current Trump admin who would pass up an opportunity for internet karma, a reasonable person can conclude it was just another bit of flooding the zone with information - credit where credit is due - several strategies executed by Trump that were outlined in Jacques Ellul seminal book - Propaganda.