The streets of London are not paved with as the old saying goes, but dig down deep enough in the right place and you might hit one of the city’s secret bullion vaults.
Investors have always taken a shine to gold, but where is the precious metal kept?
The question was provoked by China’s Standard Bank buying one of the world’s largest private vaults somewhere in London.
Barclays Bank has sold the operation to the Chinese for an undisclosed sum.
All that is known about the vault is that it lies within the M25 motorway that surrounds London like a collar.
The vault is large enough to take 2,000 tonnes of gold, silver, platinum and palladium.
At the current price for an ounce of gold, that’s more than £62 billion of precious metals.
Other facts aimed at discouraging robbers are the underground bunkers have front doors which can withstand a direct blast from rocket propelled grenades, the roof is electrified and under the foundations are plinths to deter tunnels.
Even the fingerprint entry system is sophisticated enough to determine whether the person trying to access the vault is dead or alive. This is aimed at stopping robbers cutting the fingers off workers to gain entry.
The Standard Bank move is understandable. London is the world’s largest market for trading gold, while China is the world’s largest gold consumer.
The bank was also reported as interested in buying another vault in London belonging to Deutsche Bank. This vault can take 1,500 tonnes of precious metals worth around £45 billion.
Under the venerable City building are eight vaults over two floors holding 5,135 tonnes of mainly gold.
The vaults are split to spread the weight of the precious metals over the soft London Clay to stop them sinking.
The British Treasury’s gold reserves make 394 tonnes. The rest is held by the Bank for other governments and financial institutions.
The Bank’s vault is the second largest in the world. The biggest is the New York Federal Reserve which holds 6,300 tonnes of precious metals.
Each of the 500,000 gold bar in the London and New York vaults weighs 438.9 ounces and is valued at £350,000. The exact value depends on the day’s spot price and the amount of gold and other precious metals stored, but the contents of each vault is valued at around £200 billion.
Besides the Barclays and Deutsche Bank vaults, London also has four more smaller, private bullion votes. Three are near Heathrow Airport.