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?
-- 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.
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."
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.
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."