But then they bought it again. They had 129 tons of gold, and now they still have 129 tons of gold. Where does the realised gains come from?

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emanueleo 2 hours ago | parent | next [-]

They "realized" it just for a short time.

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AnimalMuppet 12 minutes ago | parent | prev | next [-]

Let's say I bought a 100-ounce gold bar in 1965, when gold was $35/oz, for a total price of $3500. Let's say I sold it today at $4700/oz, for a total price of $470,000. That gives me a gain of $466,500.

And let's say that I regret it. I decide that I really want to hold some gold, so I take the $470,000 and buy another 100-ounce gold bar.

The situation was that I had a gold bar worth $470,000 with a taxable basis of $3500. Now the situation is that I have a gold bar worth $470,000 with a taxable basis of $470,000, and I owe the IRS taxes on $466,500 of capital gains.

TL;DR: Selling and re-buying the same asset gives you the accumulated gains, and resets the price basis.

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fakedang 2 hours ago | parent | prev | next [-]

The variation in gold prices in the time they carried out this exchange process.

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littlestymaar an hour ago | parent [-]

So they had 129 tons of gold, and now they have 129 tons of gold and 11 billions of euros? Sounds like a good deal.

	▲	sixhobbits an hour ago \| parent \| next [-]
		They had gold worth X to the market but X minus 11 billion on paper. So when France accounted for its gold in euro terms they would say they have X minus 11 billion Euros worth of gold. Now they still have the same amount of gold but they "realized" a gain of 11 billion. They don't have that much cash left after the repurchase but now they say they have X Euros worth of gold which is 11 billion more than before. So no they didn't make a profit from this as gold is higher on both sides of the Atlantic than last time they did their accounting updates.
	▲	6031769 an hour ago \| parent \| prev [-]
		Welcome to the wonderful world of commodities trading.

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direwolf20 an hour ago | parent | prev [-]

From paper shenanigans. Don't expect accounting spreadsheets to perfectly mirror real life. Most of the financial economy is kayfabe.