American's Rush To Bitcoin As Evidence Reveals That There Is No Gold In Fort Knox
What If There’s Actually No Gold At Fort Knox?
Let’s Dig A Little Deeper…
Send The Auditors To Fort Knox!
In Light Of The Revelations From NSA Whistle-Blower, Edward Snowden, It’s Even Harder Now To Trust Washington Politicians.
The government has been doing a lot of things that it said it wasn’t for years (i.e. – spying on citizens). And that naturally makes me wonder what else it might be up to.
I’m not alone, either.
Three-time presidential candidate, Ron Paul, has long questioned the amount of gold at Fort Knox. He even went as far as introducing legislation in 2011, which proposed an audit.
One thing we can all agree on is this: Lack of transparency always leads to corruption. So Paul’s audit demand seems reasonable. Especially considering that the world’s publicly traded companies must undergo annual audits. Why should the Federal government be immune?
Amazingly, though, the last audit of Fort Knox occurred in 1953, right after President Eisenhower’s inauguration. Except no outside experts were permitted, and only about 5% of the gold was tested. So there’s been no full audit in over 60 years!
Over that time, however, the government has sold its gold – reducing its holdings from about 20,000 metric tons in the 1950s, to the current level of 8,133 metric tons.
So are we just supposed to trust that the government stopped selling? In this day and age, that’s a pretty tall order!
In late 2012, Germany’s federal court ordered its central bank to conduct annual audits and physically inspect gold deposits worldwide – including in the United States. For decades, the Bundesbank had relied on written confirmation.
Why the sudden change of heart? It makes me wonder…
A More Fundamental Question
Let’s give the government the benefit of the doubt for a (brief) moment and ask: Why do we even have gold reserves?
The gold bars, packed tightly into a secure vault, were supposed to give us confidence in our country’s currency. But we cast off the gold standard in 1971 and stopped redeeming currency for gold. So nowadays, gold reserves are nothing more than an asset on the Fed’s balance sheet, not an integral part of our monetary system.
So What Gives With Clinging Tightly To It?
Fed Chairman Ben Bernanke says that it’s the result of “long-term tradition.”
Mark Zandi, Chief Economist at Moody’s Analytics says, “It may lend some confidence to investors that we have large gold reserves. But it’s more symbolic than substantive.”
Meanwhile, former Fed Chairman Alan Greenspan reportedly said, we hold onto the huge reserves “just in case we need it.” (That’s comforting.)
In the end, if there’s no real purpose for the gold reserves, then why worry about an audit at all?
A Crisis of Confidence
One reason the government might not want an audit is because it would lend importance to an asset that it swears is unimportant.
Or as hedge fund manager James Rickards puts it, “An audit would give gold too much credit and start to erode the official propaganda that gold is not a monetary asset. After all, no one audits the number of acorns in the national parks… They are too unimportant.”
Makes sense. Yet, I don’t think that’s substantive enough to justify the refusal.
What’s more likely is that an audit would raise more questions than it answers. Like, if the gold is really there, does it really all belong to the government?
I say that because central banks routinely lease or lend out gold. But current reporting guidelines don’t require them to distinguish between gold owned outright and gold swapped with another party.
Again, such a lack of transparency opens the door to abuse. Not only could all the gold be on loan (perhaps on unfavorable terms), but banks could also be “re-loaning” that very same gold, thereby creating a “paper pyramid of gold.”
The process is known as “rehypothecation,” and it’s exactly what happened during the mortgage crisis with collateralized debt obligations. And we all know how that ended.
An audit might also reveal that the government dumped some gold on the world markets to manipulate prices. (Yes, governments have done that before.) And if the U.S. government even sold a little without telling us, trust would be irreversibly broken.
More spectacularly, an audit might reveal that Fort Knox is littered with gold-painted tungsten. Here, too, a precedent exists, as counterfeit bars turn up from time to time. Although I doubt a government would confess to being so incredibly duped.
Fort Knox: A New Stimulus Project
It would reportedly take 400 people, working full-time for six months, to test all the gold at Fort Knox for purity. It would cost at least $15 million, too. For me, that’s not a deterrent, though.
Sounds more like an economic “stimulus” project. Lord knows we’ve squandered way more tax dollars on projects with no tangible benefits. Besides, we could use some new jobs.
And while I don’t believe Fort Knox is completely devoid of gold, it’s certainly possible that our gold reserves are lower than reported and/or not wholly owned by the U.S. government.
Protected by a 109,000-acre U.S. Army post in Kentucky sits one of the Federal Reserve's most secure assets and its only gold depository: the 73-year-old Fort Knox vault. Its glittering gold bricks, totaling 147.3 million ounces (that's about $168 billion at current prices), are stacked inside massive granite walls topped with a bombproof roof. Or are they?
It’s hard to know for sure. Few people have been inside Fort Knox, a highly classified bunker ringed by fences and multiple alarms and guarded by Apache helicopter gunships. When the U.S. finished building Fort Knox in 1937, the gold was shipped in on a special nine-car train manned by machine gunners and loaded onto Army trucks protected by a U.S. Cavalry brigade. And the fort has been pretty much off limits since then. A U.S. Mint spokesman said in an email statement to MoneyWatch that the accounting firm KPMG, which audits the Mint, “has been present in the vault at Fort Knox.” The Mint won’t comment on exactly how much gold is in there, though.
That’s why Ron Paul (R-Texas), a 2008 presidential candidate known for his libertarian streak, wants to have a look around. Paul introduced a bill to audit the Federal Reserve, which includes Fort Knox’s gold. “My attitude is, let’s just find out what’s there,” he says.
Despite conspiracy theories to the contrary, no serious Fed watcher thinks Fort Knox is wholly goldless — not even Paul. The push by Paul and a conspiracy-theorist group known as Gold Anti-Trust Action Committee (GATA) to open Fort Knox’s 22-ton door is more about their loathing of the Federal Reserve and its purported growing powers. “The gold market is being manipulated by the Fed,” says GATA spokesman Chris Powell. “It’s involved in gold swap agreements with foreign banks. Gold is a major determinant of interest rates.”
How Important Is Fort Knox?
The bad news for Goldfinger buffs, say gold analysts, is that Fort Knox doesn’t really matter much anymore.
Fort Knox began losing its luster when the United States went off the gold standard in 1971. Before that, gold bars packed into a secure vault gave people faith in the country’s currency. Today, however, Fort Knox’s gold is now an asset on the Federal Reserve’s balance sheet, not a key part of our monetary system.
Though Fort Knox’s security overkill may seem a quaint relic of bygone days — like the Beefeaters guarding the Tower of London — the gold there and at U.S. Mint facilities adds up to one of the world’s largest bullion holdings. Still, it’s a tiny part of the nation’s total assets. In a $13.8 trillion GDP economy, 147.3 million troy ounces of gold barely registers.
“It may lend some confidence to investors that we have large gold reserves,” says Mark Zandi, chief economist at Moody’s Economy.com. “But it’s more symbolic than substantive.”
The Fed’s gold is valued at a tremendously low figure — just $42.22 an ounce. The rock-bottom figure was set in 1973, two years after we left the gold standard, primarily to avoid wild accounting swings. “What would happen if the price of gold drops dramatically?” asks Dimitri Papadimitriou, president of the Levy Economics Institute at Bard College. “The Fed balance sheet would be dramatically lower.”
Time For Fort Knox To Sell?
The Fed won’t be unloading large stashes from Fort Knox anytime soon. Doing so would flood the market and send the price of gold spiraling downward. “A small, vocal group of gold bugs would be against it,” says John Irons, research and policy director at the Economic Policy Institute, a liberal think tank. “The Fed wouldn’t want to stir things up.”
But Irons and some other economists would like to see the U.S.’s gold reserves thinned out. “The Fed could sell a lot of the gold,” says Irons. “It’s better used in jewelry or in electronics. It can be useful to the private economy rather than buried in a vault.” The sale could make a small dent in the $12.1 trillion national debt and, with the price of gold near its all-time high, this is a particularly good time to sell.
The Gold Anti-Trust Action Committee was organized in the fall of 1998 to expose, oppose, and litigate against collusion to control the price and supply of gold and related financial instruments.
Using the U.S. Freedom of Information Act, throughout 2008 and 2009 GATA sought access to the Federal Reserve's gold-related records, eliciting an admission from the Fed that it has gold swap arrangements with foreign banks and insists on keeping them secret. To obtain the records at issue, in December 2009 GATA sued the Fed in U.S. District Court for the District of Columbia.
In February 2011 the court ruled that most of the Fed's gold records could remain secret but that one had to be disclosed: minutes of the April 1997 meeting of the G-10 Committee on Gold and Foreign Exchange.
The minutes, released by the Fed two weeks after the court's ruling, showed G-10 member treasury and central bank officials secretly discussing the coordination of their policies toward the gold market. The court ordered the Fed to pay court costs to GATA.
There seems to be a lot more to this story than meets the eye. When the “Federal Reserve Bank,” a conglomerate of private bankers (and this bank has nothing to do with the Federal government) took over the issuance of the American currency, they also took control of Fort Knox.
This had been the goal of these bankers since the beginning of the Republic. Now, under their control and devaluing the Dollar, the Federal Government needed to borrow money and raise the debt ceiling. The bankers were only too happy to comply, but asked to have the National Parks as collateral. They already had the gold. Of course, this was not publicized, and who was fleeced along the way: the American people.
Congressman Ron Paul tried to wake the people up and introduced a bill to have the FED audited,but he did not get the support of the rest of our so called representatives and the bankers continue to debase the Dollar and with it the savings of every American.
Once the Dollar loses the status of being the world’s Reserve Currency, inflation will kick in, the likes we have never seen here. The Media will not warn us. They are bought and controlled by the money. People need to open their eyes and ears and put that grey matter between their ears into overdrive. Many will be shocked what they can learn.
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