Lecture on the Bank of England's Gold Vaults

Introduction

• Location: A stone throw from where the speaker grew up, London’s Financial District.
• Popular Saying: Streets are paved with gold – a nod to the wealth within the area.

Bank of England

• Visit: Speaker has an appointment with Sarah John, the Bank’s Chief Cashier.
• Entrance: Security and heavy steel doors en route to the vault.

The Gold Vault

• Description: One of nine vaults, containing around 400,000 gold bars.
• Valuation: Collectively worth about £250 billion.

Historical Context

• Origins: Gold’s use as a form of money dates back many years.
• Transition From Coins: Heavy coins led to the use of IOUs from Goldsmiths, evolving into banknotes.
• Modern Banknotes: Today's banknotes are still essentially IOUs.

Global Gold Holdings

• Reserves: Countries store gold as reserves (savings) for financial stability and crisis response.
• Example: 2004 Indian Ocean tsunami – communities used gold as collateral for recovery.
• Value of Gold: Holds value well, especially during crises, making it a safe store of value.

Conclusion

• Physicality and Security: Gold’s tangible nature and secure storage solidify its role as a reliable asset.
• Practicality: Gold’s ease of trade in significant financial centers like London.