Somebody or something out there has been buying a lot of gold — 400 tons of it in the third quarter, more than $20 billion worth at today’s price.  

That’s double the amount that changed hands in the second quarter, and more than quadruple that of the first quarter, all according to the World Gold Council. 

Central banks bought a quarter of it, but the rest? Nobody knows. Maybe some country or countries. But who? And why? 

When Ken Kuttner worked at the New York Federal Reserve Bank back in the ’90s, he sometimes went into the basement. 

“Buried deep in the Manhattan granite was a gold vault, and there were, if I remember correctly, there was 800,000 bars of gold in our basement,” he said.

One time, he got to pick one up. It was superheavy. 

“Behind the main set of bars were a whole set of cages, and each cage belonged to different countries. So if country X wanted to transfer gold to country Y, one of the guys down in the gold vault would open up the cage, take out some bars of gold, wheel it around in a dolly and take it over to the cage for country Y,” he said.

Now Kuttner is an economics professor at Williams College, but by the time he left the Fed in 2003, a quarter of those gold bars were gone. There wasn’t some heist, central banks had just sold a lot of it off. 

“Gold, well it really doesn’t earn any interest, for one thing,” he said.

Banks preferred Treasury debt. They earn interest and they’re easier to sell. This move away from gold was the trend for many years.

“There are maybe two dozen or fewer central banks that are buying gold, and then there are other central banks that are not buying gold — maybe 160 of them,” said Jeffrey Christian, managing partner of CPM Group. 

At this point, most countries’ gold reserves, he said, are just residue from an age decades ago when the world was on the gold standard. 

“Most of these central banks still only have 15% or 10% of their reserves in gold,” Christian said.

But since 2008, he said, while most central banks have been selling gold or not bothering with it, a few have been buying it up and then some. There are reasons gold could be useful. Central banks can use it to control their currencies’ value or pay for imports during a crisis. 

“Another reason is if you have trouble paying off foreign debts, having some reserves could come in handy,” said Joe Gagnon, a senior fellow at the Peterson Institute.

But reason No. 1 right now, Gagnon said, is avoiding economic sanctions.

If a country holds U.S. Treasuries, the U.S. can seize them. See: Russia. Gold in a vault at home is safe. So whoever is buying all that gold — Gagnon thinks it’s Russia, others suspect China — may be doing it to evade the long arm of the U.S.