The Bank of France sells all gold bars held in custody in the U.S., shifting gold reserve strategy and achieving a three-way win

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Source: Cailian Press

Central banks around the world are building a dollar hedging value system dominated by gold, which is also one of the main reasons for the repeated record highs in gold prices last year.

However, during this process, some analysts have warned about the risks of concentrating gold reserves in the New York vaults of the United States, especially in light of the U.S. government’s threats to annex Canada and Greenland. Nevertheless, the Bank of France may have found a three-win solution.

As part of the announcement for fiscal year 2025, the Bank of France disclosed a special project: it sold its gold reserves held in U.S. custody and then bought back a corresponding amount of gold in Europe. This move ensured that the bank’s gold reserves at the beginning of 2026 remained consistent with those at the start of 2025, while also generating significant foreign exchange gains due to price differences during buying and selling.

According to the bank, this transaction mainly took place from July last year to January this year, with capital gains from gold bar trading resulting in a net profit of 8.1 billion euros for the Bank of France in 2025. In 2025, this special foreign exchange income totaled 11 billion euros.

Reducing Dependence

The gold clearing at the Federal Reserve Bank of New York did not provoke opposition from the U.S. government, and it allowed the gold to be taken out of U.S. custody, saving high transatlantic transportation costs, and even earning a small profit.

This project involved 129 tons of non-standard gold bars, accounting for 5% of the total gold reserves of the Bank of France. These gold bars have been stored at the Federal Reserve Bank of New York since the late 1920s. Selling this batch of gold bars means that the Bank of France has now centralized all its gold reserves in the La Souterraine vault in Paris, totaling 2,437 tons of gold bars.

This may provide some strategic reference for Germany. Germany has the second-largest gold reserves in the world, and some economists have called on the German government to withdraw its gold reserves from the U.S., citing concerns over unpredictable policies under Trump and potential harm to German interests.

Currently, the German Federal Bank holds about 1,236 tons of gold in the U.S., accounting for approximately 37% of its total gold reserves.

However, Francois Villeroy de Galhau, Governor of the Bank of France, emphasized that the decision to keep gold bars in Paris rather than New York was not motivated by politics. The reason for the transaction was that the European gold bought was of higher standard—more refined and easier to handle than the older gold bars stored in New York.