Swiss Security Problem: Storing Gold

Seems like the Swiss may be running out of secure gold storage. If this is true, it’s a real security issue. You can’t just store the stuff behind normal locks. Building secure gold storage takes time and money.

I am reminded of a related problem the EU had during the transition to the euro: where to store all the bills and coins before the switchover date. There wasn’t enough vault space in banks, because the vast majority of currency is in circulation. It’s a similar problem, although the EU banks could solve theirs with lots of guards, because it was only a temporary problem.

Tags: , , ,

Posted on July 28, 2009 at 7:13 AM • 61 Comments

Comments

John Moore • July 28, 2009 7:26 AM

Bruce,

The Swiss likely have some military bunkers under a mountain that could be easily converted in to gold storage. Likely they have some extra space just for the occasion. There’s only likely to be one way in and out of an underground mountain fortification. Didn’t they return some of that Nazi gold and other valuables (artworks) that the Nazis stole from Jews and other wealthy people in WWII about ten years ago? That should have freed up some storage space.

John

Sean • July 28, 2009 7:34 AM

Just last weekend my wife and I visited the village of Kremnica, Slovakia, a former gold-mining town that has the world’s oldest mint still in operation — striking coins since the 14th century, up to and including Slovak Euros which were introduced this year. The local mine owners built a castle there to house the gold, and it still stands. Probably not the case, but your post makes me imagine them storying all those Euros prior to our changeover January 1st.

joe • July 28, 2009 7:42 AM

Why don’t they just melt the stuff down into a larger ingot that packs more compactly. If you have a ton of gold, and its all one lump, its gonna be hard to move.

sooth sayer • July 28, 2009 7:47 AM

Its foretells a rather ominous thing – the crooks are looting their countries and buying gold.

I personally think the Swiss banking system is a bigger criminal empire than all others put together – they should be put out of their misery. Recent tiff with US government regarding tax-cheats showed one angle of the problem — but I would venture to guess that at least 90% of that gold is gotten by criminal means by asian/african/south american politicians and bureaucrats.

Someone really needs to raise a passe and get it back!

Dan Hill • July 28, 2009 7:59 AM

This one is easy to fix. Send over some members of the US Congress. They’ll spend that stuff faster than you can say “enormous budget deficit”.

kangaroo • July 28, 2009 8:24 AM

soothsayer: asian/african/south american politicians and bureaucrats

What would make one believe that the folks “looting” their country are in the global south? There’s a lot less stuff to loot there — I’d look to where the stuff is, particularly where the stuff was and seems to have disappeared in the last few decades…

kashmarek • July 28, 2009 8:41 AM

We should check Fort Knox. Maybe that’s our gold being held as security for those loans from China.

Sam Van Ryder • July 28, 2009 8:45 AM

It’s a general problem in Switzerland – there just isn’t much space there. And yes, there are a LOT of bunkers dug into the mountains, but they are either still in military use or are being used for other purposes (I know of one that is now a data center).

gvainfo • July 28, 2009 8:45 AM

If there’s one country in the world with abundant bunker space, it’s probably switzerland. While you might need to add equipment to store gold, at least the passive infrastructure is already available, plenty of. Reaction time will be a few months, but not years.

Carlo Graziani • July 28, 2009 8:48 AM

They risk literal “Bank-Ruptcy” from the cost of storing gold? The world really is a stupid place.

Reminds me of an episode of “Cheers”, where Woody proves he owns a found $20 bill by reciting the serial number. Turns out he memorises the serial numbers of all his currency, “for just such an occasion.” The punch line: “I pray every day I don’t get rich!”

Clive Robinson • July 28, 2009 8:53 AM

I’m reminded of the old “Two Ronnies” news item joke,

“Later we will ask a rich man what it is like to have piles of gold”.

I guess the sensible answer is not to use the old style “thousand fine” stamped 400 troy once ingot.

If perhaps the ingot was made more like Lego or house bricks with three holes in then, they could be made into large interlocking stacks around a post or frame of bolted down difficult to cut metal with an appropriate strength lock on top. as “joe” noted stealing a single big brick would be difficult at best, especialy if it’s also bolted down in a way you cannot get at.

Then you surround with appropriate alarms and have a rapid deployment force of appropriatly equiped troups/gaurds/police.

If the design of the frames is correct then you don’t even realy require a building, just a suitable fence to ensure a clear zone for the alarms and CCTV etc.

This type of technique has been proved to work in London with the fashion industry.

After multiple thefts of top designer ranges where stolen from shows and stores a policeman worked out the weak point of the way the theives operated “crash, grab, dash”.

He sugested as a simple measure that when putting on the racks the coat hanger hooks where alternated on the rail and the rail be bolted to the floor. This way the theives had to take each garment off the rack as oposed to grabbing armfulls.

This stoped the “grab and dash” and the crash as before tripped the alarms and the police arived to catch the theives still in progress and rounded them up.

The moral is true of all security “detect, delay, respond” is going to be cheaper and better than a fortress mentality (remember the Diamond Safe Story Bruce blogged about).

Roxanne • July 28, 2009 8:56 AM

I find this hard to believe. Particular banks may be having issues in their basements, but Switzerland as a whole has a lot of potential for secure storage. As John Moore says, they have seriously secure military installations which could be converted, and vaults that can only be tunneled to via advanced – and detectable – mining techniques.

Haven’t they said that all of the gold bullion in the world could be stored in one basketball arena? I know that Fort Knox is remarkably small.

Clive Robinson • July 28, 2009 9:04 AM

One thought,

What’s the US Gov doing with Fort Nox these days?

Now the US does not have a gold standard they might have a bit of secure storage for rent?

Likewise Switzerland has a lot of Mountin Tunnels and other inside a Mountin infrestructure they built for a nuclear war, what are they doing with these “Hobbit Holes” these days?

Impossibly Stupid • July 28, 2009 9:10 AM

I think joe has the right idea. You turn the problem into an opportunity. Instead of trying to hide away little pieces of gold, you melt the bulk of it all together into one huge bar. Make it worth a billion (or trillion) Swiss francs or Euros or whatever is appropriate.

And then you put it on open display to the public as a tourist attraction. It’s not like anyone is going to have a crane in their pocket to walk off with it. Just cover it with some bullet-proof plexiglass to deter anyone from trying to scrape a bit off. Put 4 armed guards on it and you’re essentially done.

Corollax • July 28, 2009 9:19 AM

And I don’t suppose the expense of melting down this gold is a factor? Nor the expense of acquiring (or building) the equipment necessary to perform the task?

Remember, our goal is for effective and AFFORDABLE security. Not Hollywood schemes.

ZoneWombat • July 28, 2009 10:06 AM

OK, here’s what you do: you find some caves in the Alps. You tunnel between them to create a series of twisting passages. Some of the tunnels should be quite finished, like corporate building corridors. You should have changes in elevation.

Then you get your SFX and bio-engineer friends to build a whole range of monsters. Dire rats go on the top level, then some orcs, a bugbear or two. Some ogres, a handful of stirges, etc.

If you’re lucky, you can tunnel into the Underdark (which is totally under Switzerland) and the drow will start moving into your dungeon.

Scatter the gold randomly – put some in the monsters’ pockets, put some in treasure chests, put some behind traps that can’t be opened.

Works every time.

Lazlo • July 28, 2009 10:07 AM

Here’s a novel solution: get a boat, take the gold out to sea, dump it in the Mariana Trench. You won’t be able to get it, but neither will anyone else, thus making the gold you have left more valuable because of its increased scarcity.

(for the humor-impaired: yes, this is a joke)

MDB • July 28, 2009 10:12 AM

According to this article, all the gold in the world would fit in a cube 25 meters squared (http://money.howstuffworks.com/question213.htm). There has to be that much storage in Switzerland. My guess is that there are lots of other things stored in secure storage other than gold. Simple solution would be to raise the price – it will free up the space.

bf skinner • July 28, 2009 10:18 AM

They can keep it back of my house. I’ll watch it for them.

“has a lot of Mountin Tunnels and other inside a Mountin infrestructure ”

US cold war fall out shelters (what they did build) are being turned in to datacenters. Info must be the new gold.

sooth sayer • July 28, 2009 10:33 AM

@Kangaroo —
Pakistan’s current president is a variously accused of stashing about $3Billion (10 years ago) in swiss banks

Indian media has claimed (I believe naively) that about $10T has been systematically stolen and stashed abroad by bureaucrats over the past 60 years .. I would say that figure is off by a factor of 10 but probably not less.

How many examples of looting of Africa do you need — there isn’t enough room on this website.

It was variously reported that Yeltsin’s resignation was end results of wholesale transfer of Russian gold to switzerland
.. etc. etc.

In the developed countries wholesale looting is harder to do – there are too many system/checks and balances etc. I have never heard of $1B bribes in the west — but these are routine in 3rd world, it’s another matter that bribes are paid by europeans mostly – it’s illegal in US law but not in most europe.

Common thread is that swiss are the keepers of gold – if you die they keep it – ask some jewish people in your neighborhood (if you have any).

erica • July 28, 2009 11:03 AM

expend a huge amount of effort digging gold out of holes in the ground

then expend another huge amount of effort digging holes in the ground to safely store the gold

why are we so anal about au?

Anon • July 28, 2009 11:08 AM

Fascinating. I can see how you’d want special custom-built safes and locks for gold, but I’d think you’d need somewhat less in a pinch, even if it’s a lot of gold. We’d be talking guards, cameras, etc., not thick steel walls.

The objective would be to make it reasonably likely that police would break up the party — deterring theft attempts — not to make the vault impenetrable.

Clive Robinson • July 28, 2009 11:10 AM

@ Corollax,

“Remember, our goal is for effective and AFFORDABLE security. Not Hollywood schemes.”

Actually no the main need is for relativly easy divisability and transportability. Affordable security comes quite a bit further down the list.

A 400 Troy Ounce ingot (192000 grains or aproximatly 12.44Kg) is a nice physical size and can be moved fairly easily (but not to easily) by a single person (about 27lb if you still work in Imperial).

And that’s the real problem you could if you where fit pick up and run off with about 1/3million USD.

So even 1 ingot is worth having if you know how to realise it’s value (which is not as easy as people think these days).

Therfore if you can find a simple and effective way to keep an ingot small(ish) but only when required and a ten ton lump otherwise it will look after it’s self for a considerable period of time due to just physical inertia.

Therfore if the ingots locked together in big enough piles or stacks most of your security problems get shifted into detection and response.

The cost of actually melting gold down and reforming the ingots into shapes that do interlock securly would not be that high, after all we routinly melt down and cast iron and steel.

You could easily make a quite small stack of 800 or so ingots (around 10 ton) around a central column very securly fixed to the floor with a slide down top that locks securely to the column.

Because the ingots interlock you cannot just pull one out the side nor quickly forklift a number off the top. You have to take them off one by one by hand.

Provided the column was made of suitable metals a theif would have a tough time getting more than a few grams of gold befor they where arrested.

If you found yourself an old quary or other suitable rock cavity putting in a suitable floor and columns would not be that costly a suitable roof over the top and it would likley cost less than a high tech security and CCTV system you would need for a rapid response force.

And probably a lot less than making a significntly secure building for paper assets such as high value bank/treasury notes and bonds.

Yes you could consider a “hollywood epic” type heist but how would you do it?

You are not exactly going to get much away in a helicopter are you?

I would actually be more worried about the theft of paper currency, a nuke or the country being invaded by hostile forces.

The major scare would most likley be a denial of access attack whereby somebody who had significant quantities of gold elsewhere attacked the facillity to scare the price of their gold holding up (or other precious metal).

The main downside of such a system is actualy it’s strength which is the time required to move more than a few ingots around.

However do you actually need to?

By and large it is a “traded commodity” not a consumable resource. For years countries backed their paper currency by gold (so called Gold Standard). and the gold basicaly sat collecting dust in a vault.

Beta • July 28, 2009 11:22 AM

@Lazlo

I had a similar idea, but you don’t officially abandon the gold; it’s still yours, but at the bottom of the sea. Honestly, what’s the difference between a ton of gold that will sit in a vault for centuries (maybe “changing hands” now and then) and no gold at all? I can think of only two differences: if your gold actually exists, 1) you have to guard it, and 2) you can take dates to visit the vault.

This whole thing reminds me of two of my favorite stories, the ancient greek one about the miser who gets robbed and goes to the oracle, and the one when Scrooge McDuck buys a 1916 quarter and tries to make it valuable by artificial scarcity.

Philippe • July 28, 2009 11:23 AM

Just give it to Canada’s mint they have ample space now. They just recently lost over 10M $ worth of gold.

The C • July 28, 2009 11:29 AM

@sooth

If these people aquired their money legally within their jurisdiction, then there is no problem. It is not up to the banks of Switzerland to judge the morality of the actions of those people.

If those people acquired their money illegally, they have to be brought before a court within their country. Should that happen, the respective law enforcement agencies can request information about a person’s bank accounts withing Switzerland. Switzerland does not offer protection to criminals. The only difference to other countries is that in Switzerland, the authorities are not allowed to simply check your bank accounts even if there is no case against you. Swiss people simply value their privacy – and rightly so. But if you did something illegal, stashing away your money in Switzerland will not help you. And it happened repeatedly in the past that the Swiss authorities voluntarily decided to freeze the bank accounts of dictators or warlords, even though they were not required to do so.

And lastly, Swiss banks do absolutely not keep your gold/money if you decease. They are required by law to track down your legal heirs, whatever it takes. Most banks in Switzerland require that you give them information about who they should contact in case you die. If those people you are refering to can prove that they are the legal heirs, they WILL get their money/gold back. To say that Swiss banks simply ‘keep your gold’ after you die is a flat out lie. Swiss banks spend huge amounts of money on tracking down the heirs of Jewish people after the WWII, and where they possible always gave the money back.

Clive Robinso • July 28, 2009 11:43 AM

@ MDB

“a cube 25 meters squared”

Which “dimension” are you calculating in?

Do you mean 25 x 25 x 25 meters (15625 m^3)?

With the density of gold being aproximatly 19300 kg/m^3 you’ld be talking around 300,000 ton of gold that’s a little over 6,000,000,000,000 USD (if my brains working correctly) which sounds a little low.

TS • July 28, 2009 11:59 AM

The cost of melting down gold and reforming ingots isn’t negligible. Remember, we’re talking ingots of pure gold. The process would need quite a bit of precision to ensure there are no impurities added to the gold. They need a precision that’s several orders of magnitude higher than the average steel mill. You’d probably need a new, highly secure facility to convert all the gold into the new sized bricks. If you want a facility that isn’t going to be obsolete after you’ve done the conversion, then it’s only going to handle a limited number of ingots at a time, and so you’re paying a lot for transport to and from the facility, as well as for security of the facility.

After that, you need some authority to go through and verify that all the bricks are still of the same quality.

Maybe it’s worthwhile in the end. But not a negligible cost.

Impossibly Stupid • July 28, 2009 12:50 PM

It’s rather amazing that so many people here think that gold is difficult to reshape. It doesn’t take any elaborate process to add some interlocking male/female connectors to existing ingots, nor do you have to melt down all the gold in order to join it into one big lump:

http://en.wikipedia.org/wiki/Cold_welding

The reality is that having a large amount of gold is its own security, and it is movie plot madness to think that any big heist is going to go down at a monitored cache. The biggest concern would be small-time shaving by inside workers that adds up over time.

Savik • July 28, 2009 12:50 PM

@TS

This is a simple problem to solve. Stack all the pure gold ingots on top of one another. they will, in short time fuse together…all except the top most layer.

Erik • July 28, 2009 1:24 PM

They’ve got plenty of space, just give it to CERN! Accelerating the gold to near light speed they have practically infinite room due to the relativistic contraction, and it’s pretty damn difficult to steal something going that fast.

pj • July 28, 2009 2:06 PM

Clive – your posts are always excellent. The things you know both fascinate and scare me!

Auric Goldfinger • July 28, 2009 2:11 PM

Why don’t they just melt the stuff down into a larger ingot that packs more compactly.
If you have a ton of gold, and its all one lump, its gonna be hard to move.

The one lump of gold would be vulnerable to a single dirty-bomb attack.

Martin • July 28, 2009 2:13 PM

@Clive Robinso: according to the World Gold Council webpage FAQ, the total amount of gold mined by the end of 2006 was 158000 tonnes (~174000 tons), much less than your estimate. Why do you think that’s low?

Snarki, child of Loki • July 28, 2009 2:50 PM

I like the “make one big block” strategy. Sure, it would only be vulnerable to “movie plot” threats, but oh, the movie plots! Why just sell the filming rights to Oceans N, and you’ve paid for the security!

How about this for a possible line:

“Okay, we got it. Now what do we do with it?”

Dr. Grok • July 28, 2009 3:02 PM

The classic approach in the old westerns where they had to send the gold by stagecoach thru Badman’s Gulch was to melt it into one big block. They would use a hoist to set it in place. Way too heavy to carry away on horseback.

Snuh • July 28, 2009 3:47 PM

“Okay, we got it. Now what do we do with it?”

“Way too heavy to carry away on horseback.”

Hack off a chunk.

Filias Cupio • July 28, 2009 5:19 PM

A thief with power tools could hack 100kg off of the ‘big lump’ in a few minutes or tens of minutes. Even if they have to leave 5 tonnes behind, 100kg of gold is still a big heist.
The big lump may have its uses, but you need more than just a big lump plus surveillance.

Kai Howells • July 28, 2009 5:24 PM

I too find this a bit strange – there is only a relatively limited amount of gold coming out of the ground, and it is very dense, so it’s quite compact.

The gold bricks you see in the movies is the 400 ounce London Good Delivery bar, weighing in at over 12kg each, so they’re not that easy to move around in bulk.

Now, the packing fraction of gold isn’t 1.0, as the bars are wedge-shaped, but even these 12kg bars don’t take up a lot of space around 650cm^3^, less than 1 litre of water.

Packing a cubic metre of these on a palette, as the movies show, would have a lump of gold that’s nearly 20 tonnes of gold there – quite difficult to take unnoticed and quite difficult to transport, you’re not going to chuck it in the back of a hatchback and drive away…

Winter • July 29, 2009 12:36 AM

It is probably worthwhile to invest $100M to steal $1B in gold.

How many professional people (military) can you hire for $100M? What weapons can they buy? What tools?

If you install a security system, any system, $100M buys you the people who build it plus the people who can subvert it.

For a lot of money, people will do a lot of work.

Winter

LKM • July 29, 2009 2:28 AM

@sooth sayer: In the recent decades, international pressure has forced Switzerland to give up many of its privacy laws. Nowadays, few criminals and dictators would put their money into Swiss banks. Criminals only use Swiss banks in Bond movies nowadays.

Clive Robinson • July 29, 2009 3:19 AM

@ Martin,

“mined by the end of 2006 was 158000 tonnes (~174000 tons), much less than your estimate. Why do you think that’s low?”

First of my estimate was based on the 25 x 25 x 25 meter fiqure and a conversion by the standard density figure of gold of 19.3 giving you 3.01562E8 Kg of gold.

Which I then did a quick rounded downwards estimate for the held bullion value.

Now if you have a look at estimates of gold in saltwater etc you can work things back to say that of the expected available gold that is within mans current mining reach (top 2K of earths land surface) we have hardly scratched the surface at 300 million Kg.

Also if you have a look at other figures for official gold reserves in the past and monetary value and revalue to todays paper money value there is one heck of a difference.

Plus we know that a big chunk of gold is “hidden” from official figures in that it is hanging off of people and in their homes.

Some estimates put it conservativly at double the offical gold reserves used for the various gold standards. Further some have estimated that as much as 90% of held gold is in this hidden form for some cultural areas such as west/middle asia.

Likewise the estimates for the various precious metals markets in paper currancy don’t come out right either.

So my gut feeling is there is a lot more gold out there than a 25^3 cubic meter figure. Which I would tend to belive is the world wide “official public” holding of gold bullion and coinage.

Now back to the 25^3 cubic meter 3E8 figure and the “official public” mined figure of 1.74E8.

Although in physical terms it is aproximatly 2:1 it was untill recently an almost mind blowing monitary figure (however Gov bail outs of recent times have started making Joe Average wake up to just how little their own personal wealth is).

So why the difference between 300K and 174K. There could be two reasons for the difference the 25^3 cubic meter figure is wrong or the 174K figure is wrong.

Suposadly the two figures have come from the same place (I’ve not checked either by the way).

They could of course both be right as calculations (that is if you used monetary figures to do your historic calculations you would easily expect a 2:1 variation in outcome)

There are however a couple of fairly obvious reasons why I think even the 3E8Kg figure is low to do with the precious metal markets.

First off unlike many other mined metals the supply is very deliberatly restricted to maintain the price of held reserves (there is reasonable evidence to suggest for instance that 80% of mined diamonds are locked up in safes of the likes of DeBeers and have not and may never come to market).

To further support the price the “official” mined figures are likley to be under reported.

This is easily done by quoting production figures in Kgs of ore or gross mined Kgs (which includes non ore rock etc cleared to get at the ore) not the current recovered gold. Then give the “historic” value for the ore or mined tonnage yield. If you think about it in most cases the “historic” yield is going to be a lot less than current yield by quite a margin of difference.

Whilst “official reserves” are likwise going to be under reported (for sound Gov finance reasons) to keep tax revenue figures up.

Also there is the question of “taxation -v- investment” a company that wishes to attract investors tends to pay more atractive dividends and a lot more tax. Whilst a company that is not looking for “open market” investment will want to keep it’s tax liability as low as possible.

Most established “precious metal” mining companies unlike oil and industrial use metal and mineral mining companies are not looking for share investment, therfore can pay low dividends and low tax.

The reason for the difference is the amount of finished product that is consumed by industrial production and stored for market control/stabalisation (yes iron is stored for this but as a percentage of the anual market it is small).

Now before people jump down my throat about corperate governance and Goverment oversite I would ask them to consider why SabOx came into existance and the fact that although it was an “auditors dream legislation” it has made not a jot of real difference to the way the financial industry works or (dosen’t) pay tax.

There are other factors involved but my gut feeling is there is one heck of a lot more bullion out there than you can get “public figures” for.

Clive Robinson • July 29, 2009 3:46 AM

@ TS

“The cost of melting down gold and reforming ingots isn’t negligible. Remember, we’re talking ingots of pure gold.”

Err no such thing as “pure gold” except in the lab.

An ingot is usually 400 Troy ounces and has a serial No stamped in. A certificate with the serial number is kept to say how “fine” it is (fine is a normalisation to 1000).

Nazi Germany for various reasons used to deliberatly add significant quantities of lead and other metals to their “treasury ingots” (as have quite a few nations).

Also as has been noted by others gold is a very soft metal (see Savik’s slightly tounge in cheek comment to you above).

By adding very small quantaties of other metals gold can be significantly hardend for structural integraty purposes (one of which is it significantly lowers wear/skim loss).

If you want to have an aproximate idea of what can be achived have a look at the “redwood” value of various steels compared to iron and the % of total mass difference of comparitivly very low density additives like carbon.

Q aka Clive Robinson • July 29, 2009 4:12 AM

@ Auric Goldfinger,

“The one lump of gold would be vulnerable to a single dirty-bomb attack.”

Auric, my dear chap,

You are perhaps refering to the myth of C60/iodine radioactive contamination of gold as spread by the “ornothologist chap” books.

Gold is a very stable dense metal.

When stacked in large lumps less than 50% of the surface is going to be affected by radiation from a point source at a distance. Likewise fallout is probably going to settle on less than 20% of the surface.

Cleaning it up though expensive would be very very minor compared to it’s loss value.

However if you where to let of a small nuke in the middle or very close by, you might have to spend a long long time finding even small chunks of it.

Most would “gold plate a small fraction of a micron thick” the surounding country side for a very very large area (possibly most of the earths surface).

It’s the very short term “run on the market” effect that will do the real damage in the first case. Oh and the “gone up in smoke” in the second case.

But importantly the “not all the eggs in the same basket” aproach will significantly mitigate the fiscal value “gone up in smoke” problem with as little as four repositories. And the resulting “anuallised inflation” the rest within fairly short order.

Clive Robinson • July 29, 2009 5:47 AM

@ Filias Cupio,

“A thief with power tools could hack 100kg off of the ‘big lump’ in a few minutes or tens of minutes.”

Err what sort of power tools had you in mind?

Oh and where are they going to get the power from?

And how are they going to carry the lump away?

A 100Kg lump is 0.1 ton or 220lb which is 15st10 (or fit 6ft6″ bloke) is going to be a little over 1/200th of a cubic meter (5000cm^3).

So if you cut down on a corner of a big square lump of gold, you’ld have to cut 45degree outwards cut starting about 23cm in from the corner for an initial cut length of just over 32cm (13inches) the same depth and a CSA of 512cm^2.

You’ld end up with an awkward to carry pyramid the weight of a big bloke, which does not sound very easy to shift around quickly.

The CSA is very aproximatly the equivalent of cutting through a 1ft by 7″ bar of metal.

Back many years ago as a ‘prentice I had to cut mild steel bars in a small industrial workshop and that sort of size would be cut on a large 3phase 10KVA saw about the size of a small motor bike and would have taken a good while to do.

Although gold is quite maliable it’s not easy to cut with power tools and needs a much slower cutting speed than mild steel (see problems with cutting aluminium or brass compared to mild steel in a workshop manual for why).

Most portable power tools for cutting steel are actually more grinders than cutters which would be usless for soft metals.

So you would need a circular saw blade about a yard in diameter for a 13″ cut depth (I don’t think I’ve ever seen anything like it).

So you’ld have to cut at an odd angle and quite slowly to prevent swarf clogging the very course cutting edge on a circular blade. Which does not sound very practical or safe to me.

Anybody know of ship/fab yard tools that might do the same sort of job and how long etc?

Clive Robinson • July 29, 2009 6:02 AM

@ Winter,

“It is probably worthwhile to invest $100M to steal $1B in gold.”

Not at all that would be about “break even” for ordinary crime.

As a rough figure stolen goods get 10cents on the dollar value to the person commiting the crime.

Now gold bullion is not going to be a “Hey Gov, this fell of the back of a lorry” type sale even in coins.

It would require a specialised fence who in all probability could not handle more than 200K$/month.

Have a look at the Brinks Mat robbery in the UK, and the history of Kenneth Noye.

http://www.crimeandinvestigation.co.uk/famous_crime/19/home/1/Brinks_Mat_Bullion_Heist.htm

Winter • July 29, 2009 6:39 AM

@Clive Robinson:
“As a rough figure stolen goods get 10cents on the dollar value to the person committing the crime.”

Obviously. 10% of official values sounds plausible. Which makes the $100M indeed a maximum. But this still leaves this amount as what to plan your security on.

However, whomever plans to steal $1B of some goods must plan a distribution or retail chain. Most likely, such a heist would be set up by someone who has a market for the goods. That is, a robbery on demand.

There is a very big market for personal gold (jewelery) in Asia and other places with rising incomes and disfunctional retail banking systems.

Winter

Eric in PDX • July 29, 2009 10:12 AM

Speaking of the gold depository at Fort Knox, wasn’t it last opened for public inspection in the mid to late 70’s?

Isn’t it about time we have another inspection and accounting, if nothing more then to prove the gold is or isn’t there?

paul • July 29, 2009 10:16 AM

When you’re talking about longterm storage, you also need to think about longterm theft plots. Someone stealing even 10 grams a day has a nice little nest egg in a single year.

Arubi Senseko • July 29, 2009 6:51 PM

Dear Reader,
I am a highly connected official in Nigeria with a solution to this problem.
My government has agreed to accept gold for safe-keeping
through our custodial bank and secretly distribute it
throughout the world through a secure network of security speciialists.
All you have to do is email me your name and identifying particulars, (SSN, Routing & Account number, etc.)
and I will forward to you your own electronic certificates of deposition to holding gold in the vault
in return for a 1% holding fee to process your 10% of the gold deposition as your fee.
Only honest candidates need apply. All correspondance will remain secret.
Contact Dept 419 Nigerian Ministry of Sharia Banking, Upper Volta

bob • July 31, 2009 8:36 AM

NORAD has left Cheyenne mountain; seems like that would be available as a reasonably secure facility for storing a couple thousand tons of gold. I mean you’d need to add some alarms, guards and take out the WOPR; but other than that, perfect.

Ed • August 1, 2009 8:03 PM

@Clive
“Err what sort of power tools had you in mind?
Oh and where are they going to get the power from?”

Contractor-grade cordless tools. I think a big drill and sawz-all would work fine (after the obligatory trial run in an abandoned warehouse, with a complete mockup of the facility).

Or bring a small generator in on the hand truck used to cart off 100 kg of gold, and run the tools off line voltage. Leave the generator behind, of course.

Or use a cutting torch and just cut out a big chunk that way. Again, leave the torch and tanks behind.

Clive Robinson • August 2, 2009 4:45 AM

@ Ed,

“Again, leave the…”

I’m sort of playing devils advocate here so there’s no “malice of intent”.

The problem with leaving things behind is forensic evidence…

The bigger or more news worthy the crime the more imperative there will be to find the “perps”.

And even if it’s not the Police investigating, how much money do you think the insurance company will invest to get the value back?

The days of Movie Plot crime are currently over except in movies.

The simple fact is there is an economic threshold below which crime is not worth investigating, and another political threshold above which no expense will be spared to catch the criminals (kill a politician for political reasons to discover that fact).

Therefor to be a success at crime you have to stay under the radar or be very very clever.

Forensics due to science and engineering technology have now reached the point where what can be measured of physical evidence cannot be distinquished from the background noise (think cocaine in US bank notes etc).

And unfortunatly some people have been wrongly accused etc because of this. Partly because people do not understand the limits of technology and partly because there is always political or social benifit in seeing crime punished (irrespective of actual guilt).

We are starting to see “publicity cases” (Jill Dando etc) where people have been found guilty on forensic evidence that was “noise” and false positives talked up by prosecuters.

These cases had “political imperative” behind them they had to be solved and quickly. Unfortunatly they have subsiquently come crashing down when the forensic evidence was found to be false, and the attendent publicity has stopped the appeals process from hiding the truth.

These tip of the ice burge cases hide the sad truth that in jails there are a lot of people serving time for crimes they did not actualy commit. Amnisty International has figures that are again tip of the ice burge but are very very sobering to read.

Why is all this of interest to me well…,

When I was quite young I was a bit of a “perp” by today’s standards (I would have been a “Significan Terrorist Risk” today due to having an almost harmless interest in making things go bang).

Likewise I could pick locks and fake finger prints and all sorts of other activities that would be of use to a criminal.

My father took me aside one day and said that life was about choices, and that I could use what I had learnt for good or bad, but I needed to remember one important thing, if you have the brains to commit a crime and get away with it then you have the brains to earn more money honestly.

As I was not actualy interested in stealing things just curious about the “how to do it” and subisquently the battle between the criminal and the authorities I maintaind my “lock picking” and other activities as a hobby and “party peice” etc.

But as I got more interested in the “science” side of crime I realised that it was aproaching the limits and was getting expensive to the Authorities.

Therefore the Authorities had pragmaticaly moved to the human failings which is why 90% of police success is based not on forensics but unreliable human intel.

And the realisation that what my father had told me nearly forty years ago had changed.

Over simplisitcly the authorities where now becoming the criminals in the “name of society” the science had started to be used by the supposed “good” against the “good” for “bad” reasons and for the basest of reasons money.

Importantly what underpinned the crime/punishment battle like society was money or the lack of it. And therefore subsiquently I started looking at the “economic” side of crime.

Because of this I can see not only why “movie plot” crime will almost invariably fail because of the politics or human issues involved.

But also why one person cannot be a major criminal on their own except in “internet crime” or fraud (that is thousands of small victims not one major victim crimes).

The authorities are starting to get a grip on whte collar crime (fraud) by using human failings via plea bargening.

Which might account for why wide spread “Internet crime” is going to be the “new big job” crime.

Which is one of the reasons I think we should spend more time and resources on actualy doing something about internet crime instead of saying it’s below the economic threshold and it’s cheaper and easier to blaim the victim for not being smart enough.

Cuts can kill you in many ways a “slit blood vessel” is quick, but a “thousand paper cuts” will kill you as well but more slowly and more painfully. With crime individuals are the blood cells and society the body. Internet crime will kill society by the “death of a thousand cuts”.

Any way I have used up far to much “blog” space on this post.

Bruce as always if you or anyone else find usefull thoughts for op eds or research, please feel free to use them.

Jeroen Hellingman • August 3, 2009 1:06 AM

@sooth sayer: USD 1 billion bribes do happen in the west, and all in the open as well. Just look at the list of senators who approved the 1995 CTEA (Copyright term extension act), then verify who contributed to their re-electionfunds, and you’ll notice how corruption pays of in the west.

A country like the Congo, rich in all kinds of minerals, have been literally plundered. Mobutu, its former dictator is said to have siphoned of 20 billion, most of it now in Swiss banks, waiting for their 30 years to end, and become the property of the bank in question. Imagine what the country would have been, had it been invested wisely.

The Philippines, with a lot of trouble got back about USD 1 billion from Marcos’ loot, the remainder will officially be the Swiss banks property by 2016.

Gold, stolen by the Nazis from the Netherlands and handed over in the 40’s is still in Swiss hands.

Clive Robinson • August 3, 2009 9:23 AM

@ Jeroen Hellingman,

“Gold, stolen by the Nazis from the Netherlands and handed over in the 40’s is still in Swiss hands.”

It is a very murky subject and very much depends on which gold you are talking about.

For instance a lot of the gold lodged via lawyers and similar was not actually stolen but handed over to the lawyers etc for safe keeping, they in turn put it in Swiss Banks which the original owners good not do (see Nazi German laws to do with “export taxation”).

Due to the fortunes of war many of those intermediaries and there records where lost one way or another. Which means in theory that now, that gold belongs to the government of the country from whence it came due to company and inheritance law etc.

The problem to work out is who the original owners where/are and that is a very significant forensic records job, and I believe one that is still a work in progress by German US and Swiss authorities with assistance from a number of other nations and various NGO’s with interests in the area.

Somewhat ironically if it had all just been stolen by the Nazi’s the task would have been a lot simpler as they kept very good records as a lot of the theft was done as either “100% taxation” on individuals and companies or as direct seizure of finance and other money related reserves (treasury gold).

Then there is other gold that was “collected” from individuals in various very unsavory ways by the Nazi authorities from various minority ethnic and foreign nationals (teeth, wedding rings etc). It is very unlikely that any of the original owners can be traced and as it was derived from many people of different nationalities it is a subject that few in authority wish to talk about let alone deal with as from their perspective it is an issue that is virtually unsolvable.

However by far the easiest to resolve is “treasury gold” that is gold that was seized/stolen from the treasuries of various banks and governments of countries that the Nazi’s invaded. Often this gold was in the form of bullion or coins and was sent via various party officials unchanged so there are reasonably accurate records of what and from where it came.

Unfortunately by far the largest amount of “treasury gold” seized went through the German treasury where it was adulterated by various metals and cast into new ingots and coins. Although the debased gold is relatively easy to identify, the origin before seizure is not as easy to identify.

Irrespective of the rights or the wrongs of what happened it is a subject that will not go away and it is one where fairness to the victims will come a long way second to political considerations.

Leave a comment

Login

Allowed HTML <a href="URL"> • <em> <cite> <i> • <strong> <b> • <sub> <sup> • <ul> <ol> <li> • <blockquote> <pre> Markdown Extra syntax via https://michelf.ca/projects/php-markdown/extra/

Sidebar photo of Bruce Schneier by Joe MacInnis.