Due to rising gold prices, the move helped the bank to generate a capital gain of €13 billion ($15 billion), bringing it to a net profit of €8.1 billion for the 2025 financial year after a net loss of €7.7 billion in 2024.
If they sold gold in New York to buy gold in Europe, how did they turn a profit? Is this some accounting magic I’m too poor to understand?
Well, in Accounting terms, once you sell your investment you have realized the gains on it (and if you’re a person or a company, are now liable to pay tax on those gains), even if you use the money from the sale to buy the same thing again.
Gains on an investment which hasn’t been sold yet are unrealized gains (in common parlance “paper gains”) and don’t really count in accounting terms until you sell that investment so you don’t have to pay tax on it.
Amongst other things billionaires use this to pay no tax when the share value of the companies they own goes up: if they need money rather than sell their share holdings they take loans using the shares as collateral, and because the shares aren’t sold any gains aren’t realized, hence no tax is due.
If they sold gold in New York to buy gold in Europe, how did they turn a profit? Is this some accounting magic I’m too poor to understand?
They just effectively moved it. It wasn’t a profit generating activity, just a kind of organizing/maintenance activity.
Enron?
“they simply sold the older, less pure gold bars in New York for what they were worth in U.S. dollars as gold prices were reaching all-time highs, then pocketed the cash and bought bars that met their updated weight and purity standards in Europe, as prices conveniently pulled back.”
-https://www.kitco.com/news/article/2026-04-06/bank-france-sells-its-129-tonne-us-gold-reserve-then-buys-it-back-europe
Sounds more like they dumped a bunch into circulation when prices were high. Then bought the dip.
Hah, nice. Thank you for the link.
Well, in Accounting terms, once you sell your investment you have realized the gains on it (and if you’re a person or a company, are now liable to pay tax on those gains), even if you use the money from the sale to buy the same thing again.
Gains on an investment which hasn’t been sold yet are unrealized gains (in common parlance “paper gains”) and don’t really count in accounting terms until you sell that investment so you don’t have to pay tax on it.
Amongst other things billionaires use this to pay no tax when the share value of the companies they own goes up: if they need money rather than sell their share holdings they take loans using the shares as collateral, and because the shares aren’t sold any gains aren’t realized, hence no tax is due.
Dunno and didn’t read article, but buy in Europe first, prices go up, sell in USA last.