The gold in Fort Knox has gone bad. What does this mean for an investor

The main thing in the material:

• A significant portion of Fort Knox gold may not meet modern liquidity standards, which calls into question the possibility of its use in international settlements

• The problem is not the volume of reserves, but their "speed" — the ability to quickly turn into liquidity during a crisis

• Central banks are not abandoning gold, but they are changing the structure of reserves — they are improving the quality of bullion and returning it to their control

• The gold market is segmented: the premium goes to the metal with high breakdown, transparent history and accessible jurisdiction

• The investor needs to understand that the protective properties of gold depend on the form, quality and access to liquidity

The bulk of the US gold reserves stored at Fort Knox are unsuitable for use in international settlements. Analysts came to this conclusion in April after examining historical data from hearings in the House Financial Services Committee. The discussion around Fort Knox has raised the question of gold's real ability to be a defensive asset in a crisis. Against this background, central banks are changing their behavior: they are returning gold to their control and using it not to accumulate, but to solve current problems. Izvestia investigated what changes in such conditions for an investor who is used to considering metal as universal insurance.

What Fort Knox keeps

The American gold reserve — about 8.1 thousand tons (or 261 million troy ounces) — is the largest in the world. This figure has remained unchanged since the 1970s. About half of this volume is stored at Fort Knox. In 1973, the accounting value of an ounce was set at $42, which has not changed since. In terms of market prices, the United States has gold reserves of $1 trillion, but the Treasury Department estimates them at only $11 billion. This huge difference has long fueled debates about the adequacy of accounting and management of a valuable asset.

In addition, the gap between reporting and reality reinforces calls for an independent audit at Fort Knox. The last demonstration audit, during which the public was shown what was inside one of the 15 Fort Knox vaults, took place in 1974. But there was no complete reconciliation of the ingots and analysis of their characteristics at that time, it was more a media spectacle. However, the Ministry of Finance announces annual non-public inspections of Fort Knox. Due to the opacity of the system, for almost half a century, Americans have expressed concern that there is actually no gold in Fort Knox or there is less of it than the Mint claims.

It is known that most of the gold in Fort Knox is standard bullion weighing 400 ounces. The vault has not been replenished with gold for many years. Also, bullion was not exported from it. It is estimated that only about 17% of the ingots meet modern standards. 64% of the sample is from 899 to 901, and another 19% is from 901 to 917. According to experts, most of the gold in Fort Knox is melted—down coins seized from the population during the Great Depression. The quality of this metal is significantly lower than that of high-grade gold. And it may take a long time to bring illiquid ingots up to modern requirements (a sample of at least 995 is needed). The refining process, in which ingots with a low sample are brought to a higher level, is called refining. After processing, gold returns to the market as a full-fledged liquid asset. Recycled gold accounts for approximately 25% of the global supply.

Get out of control

Since the middle of last year, the French central bank has sold 129 tons of "old" gold, which was stored at the Federal Reserve Bank of New York, and replaced it with a higher-quality metal that will remain in France. At the same time, the French sold bullion in the United States at a high market price (in 2025, the price of gold set 53 new records), and bought it in Europe at a time when prices were falling. As a result, Paris made a profit of $15 billion and at the same time brought its gold out of the control of the United States without diplomatic provocations and the cost of safe transportation. The total volume of France's gold reserves remained unchanged after the transactions and amounted to approximately 2.4 thousand tons, and now the entire reserve is located in a Parisian vault. That is, the balance has not changed, but the liquidity of the metal, control over it and the level of political risks have changed. France has actually converted "slow" gold into "fast" gold.

Some European countries, such as Germany, are also discussing the possibility of returning gold stored in New York amid the unpredictability of US policy. There are 1.2 thousand tons of German gold in America, which is about 40% of all German gold reserves. Earlier, Berlin had already returned almost 700 tons of metal from New York and Paris.

The Reserve Bank of New York holds approximately 6.3 thousand tons of gold, which belongs to more than 30 foreign central banks. It remains the world's largest gold depository. However, if the trend towards repatriation of reserves increases, this may signal a weakening of the role of the United States as a global financial haven by default, with consequences for the dollar, markets and investors.

In this context, the discussion about the quality of gold in Fort Knox takes on additional weight. If a significant portion of reserves does require processing, this does not directly undermine the system, but reduces its operational flexibility.: that is, there is physically gold, but the ability to quickly use it in international transactions is limited. This does not lead to a crisis in itself, because the dollar system is not based on gold, but weakens one of the last levels of protection, which has historically been considered unconditional. Taken together, these factors indicate a shift from absolute trust in the American financial infrastructure as the anchor of the system to a conditional one, where not only the volume of reserves is important, but also their quality, availability and jurisdiction.

The role of gold in the crisis

Against this background, there is a difference between the "price of gold" and the "price of specific gold." Metal that meets the standards and is located in an accessible jurisdiction begins to receive a premium. Metal that needs to be refined or is located outside a convenient infrastructure is discounted. This has already happened during periods of crisis, when physical gold with guaranteed delivery was trading more expensive than exchange-traded gold.

Gold is a tool that is used during periods of instability. This is not a passive reserve, but an asset that should provide liquidity when the market loses it. That is why, at times of pressure on currencies or the financial system, central banks can switch from accumulation to use — then they sell metal or conduct operations against its collateral.

Turkey has become one of the most notable sellers this year — according to analysts, its official gold reserves decreased by 131 tons in March. Russia's reserves have also decreased in recent months, by about 22 tons since the beginning of the year (up to the values of March 2022). This is not a strategic rejection of gold, but a reaction to local stress — an attempt to maintain liquidity within the system and reduce pressure. This fact can be considered as an important reversal: in previous years, gold was considered as an asset of accumulation and diversification. It is now increasingly used as a tool for managing current risks. In such situations, it is not the presence of gold on the balance sheet that becomes critical, but the ability to quickly turn it into liquidity. If some reserves require refining, relocation, or additional checks, this reduces their value.

What does this mean for an investor

The gold market is moving towards segmentation. The "first echelon" is being formed — a high—grade metal with a transparent history, a recognized standard and a clear jurisdiction, and the "second echelon" is everything else. The gap between them will grow not so much through price, but through the terms of transactions, the speed of sale and the requirements of counterparties. In a crisis, this turns into the difference between an asset that is accepted immediately and an asset that requires confirmation before the transaction.

The Russian reality differs from the global one. After 2022, due to sanctions, Russian gold lost its automatic entry into Western infrastructure. Supplies have shifted to the East. At the same time, the metal itself remains highly reliable and meets international standards. Within the country, gold works as a full-fledged asset. But outside of this circuit, its liquidity becomes conditional.

For an investor, this story changes the basic logic. If gold meets the Good Delivery standard, is under direct control, and can be sold quickly without a discount, it is indeed a protective asset. He's working in a crisis. If at least one of these parameters is violated, the asset is transferred to another category. It can grow in value, but it loses its main function — instant liquidity under stress.

In practice, this means that an investor should evaluate gold in the same way as any other financial instrument — through a use case. An ingot purchased from a bank and stored in the same system can be sold almost instantly. The same ingot, once outside this infrastructure, already requires proof of origin, verification, or is sold at a discount. And if we are talking about a metal outside the standard — for example, jewelry — it falls out of the category of an investment asset and turns into a raw material that must first be brought to a market form.

If the horizon is long and there is no task to exit the position quickly, the investor can afford to hold not only standard bank bullion, but also less liquid forms, such as investment coins or small bars. In this case, it becomes possible to extract additional income: buy such metal cheaper, bring it into market form, find a buyer and sell it more expensive. But such a strategy requires time, understanding of the market, and access to infrastructure, such as refining or resale channels.

The main trap is to mix these approaches, for example, by buying illiquid gold and expecting it to work as insurance. In reality, these are different asset classes with different crisis behaviors. The same applies to "paper gold". In quiet times, such tools look like a complete replacement for metal. But under stress, their liquidity depends on the infrastructure and the counterparty. This is a different logic of risk. As a result, an investor may believe that he has protection, whereas in practice he only has a claim on an asset whose behavior in a crisis may differ from physical gold.

The abstracts contained in the text are not an investment recommendation, but an editorial opinion.