Menendez Indictment: Why Gold Is an Eye-Popping Part of the Charges

Of all the details in the federal indictment of Senator Robert Menendez, one of the most eye-popping may be the assertion that a sizable chunk of the graft he is charged with collecting came in the form of gold bars.

The indictment does not say why Mr. Menendez, Democrat of New Jersey, and his wife would accept such bribes along with the roughly $550,000 in cash and luxury car that prosecutors say were found in searches of the couple’s home and a safe deposit box.

Although gold is widely considered a dubious investment because it yields no revenue, can be costly to store and protect, and carries short-term risk, Mr. Menendez may have viewed it the way some people do: as an asset that maintains long-term value and acts as a hedge against inflation and stock volatility.

William Bernstein, the author of “The Four Pillars of Investing,” said in an interview that the appeal of gold resonated with those who seek security in case of an economic meltdown or who question the U.S. financial system’s underpinnings. Ads pitching investments in gold are a staple of some cable television and internet outlets geared to the conspiracy minded.

Gold is also attractive, he added, to those who want to stash wealth overseas easily or who need assets that can travel abroad if a hasty getaway is needed. Others, he said, like it because it provides a bit of “glitter and glamour.”

“It’s bling, pure and simple,” he said.

Some of the same qualities align with those identified in an International Monetary Fund report published in 2014 as making gold and other precious minerals “attractive to criminals.”

For instance, the report notes, such minerals are “high value, portable and odorless” as well as “compact and therefore easy to smuggle.” Gold specifically, the report says, “is easy to melt and cast in any shape.”

Drug dealers in the United States, the report says, have bought gold with their profits, disguised it as common items and shipped it back to suppliers in South America.

Precious metals like gold, the report adds, are “negotiable worldwide and may be used as a form of currency”; can be “held anonymously without a need for records to be kept”; and can be used “to store wealth generated by illegal activity and avoid seizure and confiscation.”

The illicit use of gold has significant global implications. Venezuela, under strict international sanctions and in economic crisis after years of government mismanagement and corruption, profits from illegal and dangerous mining in a region called the Arco Minero. The Venezuelan government has been reported to have sold hundreds of millions’ worth abroad to finance its programs and pay creditors.

If the charges against Mr. Menendez are true, he may have obtained the gold simply because it was favored by two of the businessmen charged alongside him. However it wound up in his possession, he took a keen interest in its value in October 2021, searching online for the worth of a kilogram, the indictment says.

During the period detailed by the indictment, the spot price of an ounce of gold was about $1,800, prosecutors say. On Friday, according to the World Gold Council, it was up to about $1,925.

Sheelagh McNeill contributed research.