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The Bank of France (BdF) recently announced it had repatriated all of its remaining gold reserves from New York by selling their out-of-date bullion at market value and purchasing the same amount of European minted equivalents and storing them in Paris.
The gold amounted to 129 tonnes, or about 6% of total reserves, and the appreciation in the gold price allowed them to make a €11 billion profit on the gold, which will be used to fully offset losses carried forward on the bank’s balance sheet of €7.7 billion that were recorded in the 2024 financial year.
Rather than transporting and refining the gold, the BdF opted to sell it for the purchase of new bars that comply with international standards for weight, purity, and certification
The overall size of France’s gold reserves still remained unchanged at roughly 2,437 tonnes, which are now entirely held at the BdF’s underground vault in La Souterraine.
According to Reuters, the Bank of France’s Governor Francois Villeroy de Galhau clarified the decision was not politically motivated, but was merely pursuant to that very goal of updating the bullion’s compliance, a process it has been slowly undertaking since 2005, Newsweek wrote. The French central bank still has 134 tonnes of gold to bring up to standard, which it aims to do by 2028.
Fed watchers will understand how it’s normal procedure for any central banker to stress that their actions are A-political, and even though it’s been a process underway for two decades, the timing of the event fits in with the overall trend towards gold replacing the dollar as the world’s reserve asset. US President Donald Trump employed personal mockery against his French counterpart and his wife while he was struggling to contain the fallout over Iran’s closure of the Strait of Hormuz. President Macron said he had decided not to respond, since it was “not up to standard”.
It’s not the first time the two had traded barbs either. When Macron announced he would not be joining Trump’s Board of Peace to oversee post-ceasefire Gaza, Trump said he would get him to join by threatening a 200% tariff on French wines.
Doing its job
Even though the amount of total ounces in French vaults remains unchanged, it would have been difficult to monetize in its previous form, and so by updating the bars, the BdF has made them more liquid—a critically important function. The world just saw Turkiye sell 60 tonnes of gold to backstop the lira as the national currency took a nosedive during the last 40 days of Middle East conflict.
The Central Bank of Turkiye, which had added to its gold reserves for 23 straight months through the end of October 2025, understood there was no international market for lira-denominated bonds, and so it fell back on the only thing it owned that did have a market, which was gold.
Bloomberg noted that it only sold a small amount of gold outright and used the rest to secure foreign exchange via swap agreements where it would buy the gold back later.
Given that rising oil prices means a demand for dollars rises, as most oil contracts use dollars for exchange, this inevitably means a falling demand for lira. For readers curious how selling gold might prevent this, Mike Maharrey at FX Street explained in a recent story related to the Turkish sale.
“The Turkish bank sells gold for dollars or euros. It then uses those currencies to buy lira. This increases demand for the lira and supports its value. Turkey’s fire sale reveals just why central banks hold gold. It serves as a long-term reserve free from counterparty risk”.
The war on Iran took the air out of the sails of gold which had recovered from a late January correction to test its stratospheric highs made earlier that month of $5,500 per ounce. Many have perceived this as an example of gold failing in its safe haven status, but other investment media personalities disagreed, saying that the sell off in gold was the metal doing precisely what it should, which is to remain liquid and relatively valuable when many other monies or assets, such as the lira, might not be.
While reporting on the French gold transfer, SCMP quoted Michael Jaeger, head of the Association of German Taxpayers and the European Taxpayers Association, who also called on the government to withdraw its gold holdings from the US.
“Trump is unpredictable and he does everything to generate revenue,” Jaeger previously told local media. “That’s why our gold is no longer safe in the Fed’s vaults”.
There may be some corresponding fear with the seizure of Russian foreign assets held in the US which the Biden Administration was strongly in favor of.
Meanwhile in Hong Kong, a new central clearing system for gold is on track for preliminary trials this year, as the city state aims to become a globally-trusted gold vault with capacity for 2,000 tonnes of storage. Aimed for full operations to be underway in the next three years, Cambodia has already expressed interest in storing its gold there.
The Chinese central bank extended its gold-buying streak for a 17th consecutive month, adding 160,000 ounces to reach a record 74.38 million ounces in March, according to the latest official data. WaL
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