UPDATE (Aug. 16, 2024, 1:06 p.m. ET): Sen. Robert Menendez was found guilty on all 16 counts against him in his criminal corruption trial.
Last week, in Sen. Bob Menendez’s trial, newly released photos provided a peek at the gold bars the FBI seized from his residence as evidence of alleged bribes. The senator and his wife, Nadine, along with three co-defendants, each face multiple federal felony charges. Menendez and his wife are also charged with acting as foreign agents of Egypt. They’re alleged to have received cash, diamond jewelry and other valuable items in exchange for the senator performing certain official acts as chairman of the Senate Foreign Relations Committee. The New Jersey Democrat has pleaded not guilty to the charges.
If you think gold is having its moment these days, you’re right; and this is bigger than the Menendez trial. Costco sells up to $200 million in gold bars every month.
During the trial, federal prosecutors permitted jurors to handle some of the 13 gold bars, reportedly weighing over two kilos and valued at over $150,000. If you think gold is having its moment these days, you’re right; and this is bigger than the Menendez trial. Costco sells up to $200 million in gold bars every month. In fact, one of the lawyers for co-defendant Fred Diabes raised the Costco phenomenon in his opening statement, attempting to downplay the significance of gold bars that he claimed were simply “generous” “gifts” by his client to a friend like Mrs. Menendez. This was pretty much an “everybody does it” type argument.
The price of gold has risen 15% in the last three months, partly driven by inflation concerns, but perhaps even more by fears about ongoing military conflicts and terrorism. Typically, you can buy gold bars from specialist dealers, in person or online. Investment grade gold bars come in varying sizes and weights but must be at least 99.5% pure gold. The bars are made by governments or private refineries and are considered safe-haven, low-risk investments that operate outside of any monetary system. No central bank controls the supply and demand of gold, and the price is set by the open market. That makes gold a commodity without borders.
In my FBI career, I’ve seen gold bars and diamonds turn up in criminal cases the same way we’ve seen in the Menendez case. That’s because it can be difficult to trace gold. While legitimate bars are marked and serialized by law, those markings tell us the maker and the bar’s purity, not who bought and sold it after it left the original dealer. The U.S. has reporting requirements for large cash transactions of any kind, but they’re sometimes ignored. It’s possible when you physically possess gold bars, versus an electronic investment account where you aren’t in possession of your gold, to anonymously buy and sell gold bars from a private, local seller with cash. This increases at least the perception that gold isn’t easy to track and is an easily liquidated asset. Nadine Menendez certainly seemed to think her gold bars could be easily converted to cash. Federal prosecutors say she sold two of the “gifted” gold bars to a jeweler and falsely told the shop owner the bars were given to her by her mother. The senator says his wife never mentioned the gold bars to him. The old song says, “Diamonds are a girl’s best friend,” but for the senator and his wife, gold could be their worst enemy.
