Bank of England Vault Floor Layout (updated)

The Bank of England Virtual Tour is pretty neat - specifically the 360 degree rotatable picture of the main gold vault. 'Crazy to do from a security perspective', so interesting to consider the need for transparency was greater than the need for secrecy. The website/app is great fun for anyone liking shiny things.

I wanted to explore a few additional details, create a historical record for posterity and completely debunk the 1,300 tonnes of leased gold idea before it gains too much traction in the metals space. Primarily though, the main purpose of this article is to highlight extra detail - insofar as it helps reduce the social distance between us and that big stash of gold.

Worth the visit - an interactive gold vault complete with one-tonne shelves.
This main vault section has been sighted before - Queen Elizabeth II did a tour through this section in 2012, we've seen some photographs in newspapers and some documentaries have been filmed there (Professor Martyn Poliakoff and David Dimbleby), but it's the detail provided by the Virtual Tour which is exciting - the height of the camera allows counting the stacks. The room has a name! (my emphasis):
"The Royal Visit took place in our display vault. This is the vault used in the Bank’s official photographs and is the image the general public are familiar with from archive footage. It is distinctive..." -- Louise Lee, Manager of Gold and Foreign Exchange Settlement Operations, The Bank of England (link)
On each shelf in the display vault we see in the picture is approximately one tonne, typically 80 bars in 4 layers of 20. The gold is stacked 4 shelves high, i.e. 4 tonnes = 320 bars in each vertical space. My count for the display vault from the virtual tour photo is 172 stacks, i.e. approximately 55,040 bars [~688 tonnes]. The amount here is difficult to conceptualize by volume, but by way of comparison consider that GLD at its peak once held 109,318 bars (but now less than 75,000).

In the professor's documentary, the stacks are 6 shelves high and based on the contents, layout, ceiling and floor markings, the professor's room is different to the main display vault. For the section visible to the camera (and inferred from rows continuing), I count 68 stacks, approximate total of 32,720 bars [~409 tonnes]. I've done my best to stitch together a floor layout of the sections which are known. Due to a sloping wall section which seems to be common to both, I've surmised that the professor's room adjoins the display vault (this may or may not be correct, it just seems to fit). Click on the image to see all my notes in detail. Feel free to comment with observations of your own.



So we know The Queen's visit took place in the display vault, and we can confirm this from matching the arrangement of columns supporting the roof and other clues*, but the most notable observation is that during the royal visit there are fewer gold stacks present compared with the virtual tour picture. There are of course a multitude of reasons to explain the discrepancy, some which are blindingly obvious - it would have been useful to fill the room completely with gold specifically for the photo-shoot to maximize the visual impact, or perhaps gold was moved out during the royal visit simply to make room for all the people in the room. Either way, we have no way of telling what the amount is 'normal', except to point out that it it generally 'full' during documentaries like David Dimbleby's brief visit and other photo shoots. The Alchemist extract claims the room holds 63,000 gold bars, so that is currently the most authoritative figure for the room contents.

My theory is that the 360-degree picture was taken prior to December 2012, because in the virtual tour picture, you can spin the camera around to view the ceiling you'll notice a few wires sticking out - I'm guessing this is the initial installation of additional security cameras which are visible on the roof during the Queens visit, but it may also be possible the cameras we see during the Queen's visit might have been taken out (or replaced) later with only wires remaining.

Snapshot of my roof inspection comparison. Note it's still possible the supporting
columns are hiding some of the detail, but generally the Virtual Tour photo
has a roof is devoid of cameras, where as many can be seen in the royal visit.

Why is the timing relevant? Over the last few days there's been some discussion about exactly how much gold is actually being held there, with some speculating that the differences between the estimates may be indicative of leasing arrangements (link). I find this incredibly unlikely because of the inherent 'limit of reading error' on all the figures available, and in particular the ones being used by Macleod/Keiser. They need to know that although the virtual tour was released in June/July of 2013, the production and construction of the website would have taken longer than that. Software projects invariably take many months to build and sometimes even longer to review and sign off before going 'to production' - the audience for the content is also vastly different to the official report! As such, the figure of 'over 400,000' gold bars should be taken for what it is - a round figure supplied for mass public consumption carefully weighed by legalese with enough ambiguity to be approximately correct at all times, rather than being an official statement about inventories. As such, Max Keiser, Alisdair Macleod as well as Jesse and anyone else caught perpetuating the story ought to have known better but perhaps they can be forgiven for not knowing the inane complexities of modern software development.


Where does that leave us? Our full tally for rooms on camera (with the assumption the inventory shown in each is unique) is at least 87,760 bars (~1097 tonnes). If we use 400,000 as the benchmark, this implies we've seen less than 21% of the inventory the bank holds, so therefore there must be more sections of the vault. Is there any detail on this? Yes. The virtual tour claims the bars are spread over 'two floors', but conducting a basic internet search reveals other snippets about the vault levels (my emphasis):
".. this vast building now rises seven storeys above ground level and has a further three basement levels, which contain the cavernous bullion vaults" link

"The vaults are huge and include three disused wells. In fact, the floorspace is actually larger than that of the City's tallest building, Tower 42. Keys three-feet long are needed to open the gigantic vault doors." link

"The basement levels contain the secure vaults, divided into strong rooms typically 6.10m by 4.57m, and separated by 610mm thick reinforced concrete walls and floors with additional armour plating. All the vaults are also watertight." link
I've also seen other references to the Display Vault being a former 'canteen', I think its fair to suggest if we were shown the rest of the vault space we would see the 4½m x 6m rooms mentioned above, and the big rooms we see on camera were re-purposed for gold storage at some point in history. The claim about abundant vault floorspace is also interesting, but not surprising if you consider that some additional £489 billion worth of 'assets' are also being stored¹.


For anyone doing their own research out there, here's my summary collation of the different figures quoted in relation to the BoE gold holdings². The numbers varied so much that I decided to add my own commentary on each. The figures used for my conversions are in this spreadsheet.

News events around the Queen's visit didn't quote the total value of the hoard, however the Alchemist special feature from Louise Lee claims the Display Vault holds approximately 63,000 bars (784 tonnes), just 12% over my estimate of a full room. As such, this must represent the peak capacity, and not the actual contents when monarchs visit.

Presenter David Dimbleby, in an excerpt from a BBC documentary series "The Great Offices of State". The Display Vault is shown, with "90 billion pounds worth" quoted @ 1:02 (link). This series was broadcast in 2010, using average prices for the period gives a rough estimate of 3,500 tonnes of gold.

Brady Haran / Professor Martyn Poliakoff, in a series from 'Periodic Table of Videos' at 2:28 (link), explains the total hoard is worth £197 billion. For the gold price at estimated Nov/Dec 2012, that would make the total weighing in at 5,836 tonnes. The professor does explain the figure is from the banks annual report but doesn't say which one so the result is blurry.

The Bank of England report published June 2013, is the one used by Alisadair and Max to come up with their leasing conclusion, but the figure is only in pounds, not ounces. They translate '£210 billion in gold as at 28th February 2013' as being 505,000 bars -> my own calculation is approximately 6,266 tonnes (503,637 bars).

Newspapers showed us some of the very first pictures of the BoE Display Vault, The Daily Mail in October 2008 quotes a figure of 4,600 tonnes (link), however it's not clear where they got that value from.


Virtual Tour App - says over 400,000 bars. That is a lower bound of approximately 4,977 tonnes, but appears to be just a round figure supplied for mass public consumption, subsequently confirmed as being "deliberately non-specific" by a Bank of England spokesperson (see email below).³


Because of the ambiguity in the figures it is possible to select any number or situation and use it to support a narrative. For example, I could use David Dimbleby's figures to argue that the bank has added thousands of tonnes to its holdings over the last few years - or even take the view that the display vault being full of gold in the Virtual Tour application in July 2013 indicates more gold had been added to the room since December 2012. Both views would be difficult to prove or disprove and neither have a specific bearing on gold prices past and future.

Finally it is worth noting the Macleod/Keiser theory absolutely rests on the idea that the app took LESS than 5 months to develop and launch to production, i.e. if the app was designed and copy provided BEFORE their end-of-February amount, then the same argument method means the bank ADDED more gold — the opposite thesis of what they are setting out to prove. So when I read "The app has been under development for about a year, a Bank spokeswoman said" (link), this is a SERIOUS BLOW to their leasing theory (however of course, the text may have been changed through a change request)**.

The moral of the story is be careful with your initial data points because it cuts both ways if you're reaching conclusions using disparate information.

Regards,
Warren James
Screwtape Files

Notes:


* Other visual clues include the yellow painted section at one end as well as the shape of the covers on the cabling near doors (yes, I did quite a lot of study on the videos and pictures).

1. According to the same 2013 report. £489 billion is a lot of assets, and I've wondered what that is exactly. In internal discussion, the closest candidate is 'vault cash', but that still seems excessive even for a money center like London - perhaps someone with expertise in M0, MB, M1, M2, etc. can shed some light on that.

2. As far as I know, some of this Bank of England gold belongs to GLD shareholders, although to date we have never identified a GLD bar in any pictures (using the database). This actually makes perfect sense (no identified matches) in the light of the very large amounts (sample size) they have in their vaults.
[Addendum: 01-August-2013, the use of BoE as a sub-custodian is stated here, the text suggests that any GLD gold allocated from BoE vault will be transferred to HSBC's main vault, i.e. not residing in the BoE vault on a permanent basis. ]

3. This article was written over the last week, but the breaking news is that Bron Suchecki has received what appears to be the final word on the matter regarding the app gold bars count, which appears to be a standard response sent to other enquirers on the matter.
Dear Ms Suchecki,

You are correct. The number of bars mentioned in the app cannot be used to infer a change in the amount of custodial gold held by the Bank of England as the figure is deliberately non-specific. The Bank will not be offering any further comment on this matter.

Regards,

Chris Shadforth

Head of Division, Public and Internal Communications Division
Bank of England | Threadneedle Street | London EC2R 8AH

** The app itself apparently allows content update and addition too, so (admittedly) it appears that the text can be whatever the bank wants to set it to, but my main point is that the COPY for the app would have been written in 2012, when the business requirement documents were submitted and signed off. At some point in the development cycle, requirements get locked although subsequent change requests can occur. It was developed as a cross-platform application by agency Clay Interactive in London.




[ Update - 2nd August 2013 ]

On Gene Arensburg's 'gotgoldreport', I saw a good counter argument by 'Simon S' who points out the text (in virtual tour gold vault section 3) states a specific date. He is correct, and I am embarrassed to have overlooked this detail when doing my review (although I did cover the editing possibility). Here is the text:




... but if I may counter the counter; the new information does not have the effect of clarification. Here's my thoughts:

  1. The text DOES prove that at least some of the app copy was updated in June 2013.
    We could assume that the other text was also reviewed for consistency in the same edit but we can't prove that. There is still a 12-month range during which the primary copy could have been produced. Because only that paragraph is date specific there is no way of knowing (or proving) which parts of the text were (or weren't) updated during the June edit; this underscores my point regarding limit-of-reading error.
  2. The fact they have a specific date reference on the gold bar value but not on the 400,000 bars figure indicates it was conscious decision to not make the 400,000 date specific - i.e. if they did mean it to be accurate then they would have also appended “in June 2013” to the 400,000 figure. This is consistent with the BoE statement on the matter (regarding the usage of the figure).



Congratulations to Simon S for having eyes sharper than mine. I did use the opportunity to check any other month/year specific references in the rest of the application (couldn't find any). Also, recommend having a look at the 'cash vaults' section, you'll see other vault space which looks similar to the display vaults (but more modern).

27 comments:

S Roche said...

Thanks Warren,

This is a very timely article with great detail to assist anyone trying to judge the value of the sensational claims now being made by Goldmoney's Alasdair MacLeod.

I hope Alasdair will comment publicly here on the Bank of England's rejection of his App analysis, beyond the inevitably shallow defence made famous by Mandy Rice-Davies, (paraphrased): "Well, they would say that, wouldn't they".

Beer Holiday said...

This is such and awesome analysis. What an amazing vault.

Any idea what the red line on the floor is for?

Bron Suchecki said...

"it may also be possible the cameras we see during the Queen's visit might have been taken out (or replaced) later with only wires remaining"

Highly unlikely IMO and so I think the app visuals were before the Queen's visit.

Bron Suchecki said...

I think the most reasonable interpretation of the app’s reference to “400,000” was that the BoE could not include a figure that would contradict whatever was in their annual report but also from a practical point of view one would not want to have to constantly update the figure in the app to ensure it was consistent. The simple solution to those two requirements is to pick a number sufficiently below the current and expected future amount of custodial gold.

That is the reason they picked 400,000 not because the actual number of bars was near 400,000 when the app was written (which as Warren points out, we do not know when that was).

IMO it reflects poorly on the quality of GoldMoney's research that the standards they allow include relying on data in an app which is clearly a piece of PR/marketing puffery and furthermore does not require any validation from the source, which as I, GATA and Lars have shown, is not too difficult to obtain.

I am dissapointed in GoldMoney and thought they had a bit more class.

Bron Suchecki said...

BTW, does not the 400,000 figure represent the BoE's minimum expected future amount of gold, which is above the David Dimbleby 2010 figure? A sign of BoE confidence that investment interest in gold will be sustained - 400,000 strong hands? :)

Koos Jansen said...

I think jumping conclusion on a Tour App for kids isn't very well funded. #BoE

Bron Suchecki said...

Hi Koos. The response Koos got to his enquiry to the BoE provides more detail http://koosjansen.blogspot.com.au/2013/07/the-boe-on-its-current-gold-holdings.html

"The App is a relatively informal means of communicating, and I believe the phrase "over 400,000" is deliberately vague, in part to ensure that the phrase is likely to remain accurate for a considerable length of time."

Bron Suchecki said...

He is not backing down http://www.goldmoney.com/en-gb/news-and-analysis/news-and-analysis-archive/untangling-gold-at-the-bank-of-england.aspx#

"The Bank appears to have thought that if it said in the virtual tour, “over 400,000 bars in custody” it would be sufficiently vague to be without meaning; but it is so much less than the figure in the Annual Report dated only four months earlier that it is unlikely to be a mistake. We must therefore conclude that they meant what they said, and that some 1,300 tonnes has left the vault since 1 March."

Further, he makes this statement "The BoE sold about 1,300 tonnes into the London market, which given the explosion in demand for physical at lower prices looks about right" as if there is no other possible explanation, like the BoE didn't sell it (because it is custodial gold), or that it was just shipped to other locations by its owners and no sale was involved.

Bron Suchecki said...

Sorry, back down wrong wording, the GM article was posted Tue 30th, written before the Max interview.

S Roche said...

Bron,

Yeah...they meant what they said in an app for tourists but they didn't mean what they said in a statement addressing this specific issue?

"The number of bars mentioned in the app cannot be used to infer a change in the amount of custodial gold"

Analyse That!? I think it is called jumping the shark in terms of analysis.

Bron Suchecki said...

This quote seems appropriate http://www.zerohedge.com/news/2013-07-31/dylan-grice-intrinsic-value-gold-and-how-not-be-turkey

“the advantage of having found out how difficult it is to really know something, how careful you have to be about checking…” and that experts hadn’t “done the work necessary, they haven’t done the checks necessary, they haven’t taken the care necessary.”

costata said...

Hard to fault your analysis Warren. Great work, thank you.

Does anyone know if the BOE stores other valuables aside from gold for clients? e.g. fine art, jewellery and so on.

I would love to hear Max Keiser explain why the BOE doesn't have an 'and silver' display vault.

Cheers

Bron Suchecki said...

For the trainspotters, tonnes of gold held in custody from past BoE annual reports (end of Feb balance date) using GBP PM London Fix:

2005 - 3,433
2006 - 3,422
2007 - 3,946
2008 - 4,581
2009 - 4,737
2010 - 5,211
2011 - 5,586
2012 - 5,518
2013 - 6,240

Heathcliff said...

No natural light in the vault.

Pause the 360 video camera, shift the gold, resume recording.

Easy.

Beer Holiday said...

@Heathcliff Maybe they got this guy to move the gold, he's pretty fast.

http://www.youtube.com/watch?v=GoLhLn9hVkE

You might as well say they are all fake bars - what's the difference.

victorthecleaner said...


Very nice analysis, thank you!

The BoE vault inventory listed by Bron should rather be the topic of the goldbug characters such as Macleod. Gold seems to have become very popular recently.

Victor

Warren James said...

On another website I found a useful counter-argument to the date issue. I have appending it (and some additional discussion) to the article, in the interest of transparency & debate.

This exercise has been fun and if anyone has footage of the Perth Mint vault, please let me know ;p

Regards,
Warren

Warren James said...

@Heathcliffe, using a stop-camera method wouldn't explain how they did it for the TV footage (Queen and Dimbleby). If you view the app using the IPad the resolution is better you can get a whole lot more detail - including different markings on the bars. Additionally, the shelving seems to be distinct, with numbers on each of the metal stands (which are bolted to the floor). Big job to spoof the photo, even assuming it possible with the special 360-degree camera format. For me the big question is what the other 'half a trillion' of assets are.

@Beer Holiday, the red line seems to be a marking indicating the center of the vault, one pallet wide, but your guess is as good as mine as to the purpose of it (could mean anything and be from almost any time era). Rgds,

S Roche said...

@Victor

I agree with you 100% on this issue of the whole "Evil Gold Cartel" ranters egging each other on.

They do more harm to the gold investment thesis than they can possibly realise. Almost without exception they miss the positive aspects for gold of just about every story they emotionally arc up about.

They attract a certain type of self-reliant, distrustful folk for whom I have a lot of time, but moreso, they repel a huge percentage of potential gold owners while they froth away.

They seem to enjoy themselves in their Echo Chamber of Impotent Doom, explaining their Selfless Important Work to each other.

Onanists!

Beer Holiday said...

I found this old black and white picture of the gold vault at the BoE in 1968. I wonder if it's the same as the display room, only because it seems like a big vault room.

I find all of these vids and photos exiting because it seems these past few years we are seeing something new: detailed pictures and video inside one of the worlds great gold stockpiles.

Interesting that all the bars I can see are the Swiss bars that the Prof. declared the pretty bars. In older photos a mixture of bars are seen . Guess they might have shifted some bars for appearances.

I agree that the red line could mean almost anything. I just find it interesting because I imagine the room operating like a warehouse, so maybe gold in the yellow wall painted section has some designation, as does the red line section.

The red line can be seen in other pictures like the Queen visit which IMHO shows it extending across to the the two center pallets to the corridor on the other side of the room. That is the corridor that the queen walked down as opposed to the one the 360 camera sat in.

The red line also only extends down along the first ~10 1/2 pallets.

If you count the gold in the areas where Warrens diagram indicates the queen was filmed - the yellow wall end + red lined centre section (by my estimates), you get ~290 tonnes . So she did inspect an amount similar equal to the 310 tonnes the UK has.

Warren James said...

@Beer Holiday, that's a great find! As far as I can tell, your black & white stills are from a different vault section. There's no direct match for the column layout and the distance between the columns and the wall is different (however many of the columns we see in the modern footage seem to be 'new' ).

The yellow walled section in the Display Vault is an interesting one - it actually appears to have once been a different room and if you look closely you can see the scar where the wall partition has been removed (to make a bigger room) that would explain the different paint and I presume they would have kept it that way to preserve some of the history (the line is indicated as a grey line in my floor layout, but I didn't explain it at the time because there was already so much detail.

rupertmja said...

I looked at the BoE website when it first came out a short while ago. I have been looking into who owns it - nowhere does it openly state such and I have looked high and low: Is it private or givernment? What I mean is, is it like the FED. So I sent an email and asked BoE directly. They replied promptly but they did not say either this way or that in a way I could decipher their message.

Slow Loris Larry said...

LBMA: Beyond the Smoke and Mirrors

Nick sent me this link just as I was reading the article:

https://www.goldcore.com/goldcore_blog/london-bullion-market-association-june-clearing-turnover-statistics

S Roche said...

WGC Gold Investor Volume 3 via Sharps Pixley if anyone missed it:

http://www.sharpspixley.com/uploads/WOR7257GoldInvestorVolume3RGBSECURE.PDF

victorthecleaner said...


rupert,

both the Fed and the BoE are part of the public administration, and both follow orders of their respective governments' treasury departments or Congress/Parliament. In both cases, the governments have stated that they would grant their central banks "independence" in implementing their interest rate policy and in pursuing their inflation and employment targets. In both cases, the Treasury Departments have explicitly retained sovereignty about exchange rate and reserve (read: foreign currency and gold) policy.

The Federal Reserve System used to be part of the private banking system before the 1933 Gold Reserve Act - in fact, it used to play the role of a kind of "deposit insurance" as a reaction to the 1907 banking crisis. With the 1933 Gold Reserve act

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

the Fed was basically deprived of all their powers, and the government took over the gold reserve. The Fed no longer owns any single ounce of gold.

If the US ever intervenes in the foreign exchange (or gold) markets, this is done by their Treasury Department, especially by the

<a href="http://en.wikipedia.org/wiki/Exchange_Stabilization_Fund>http://en.wikipedia.org/wiki/Exchange_Stabilization_Fund</a>

The New York Fed provides their trading desk for this purpose and follows the instructions from the ESF/Treasury.

The Fed also derives some (small) profit from lending to commercial banks and issuing base money against government debt. These profits all go to the government budget as well.

Victor

S Roche said...

A MacLeod on the imminent failure in the Comex silver market - From Dec 2012

http://goldswitzerland.com/a-failure-on-comex-silver-alasdair-macleod/

Bron Suchecki said...

Everything lives for ever on the internet. So there was no way the BB could cover their shorts without market failure?

I dont have a problem with people getting it wrong, if they then ask themselves why and change their theory to account for it? But we just see the same narrative over and over again.