Recently by Chris Weber: The Great American Disaster: How Much Gold Remains In FortKnox?
What Do They Have to Hide?
In a few months we’ll “celebrate” the 40th anniversary of the day when the US Government declared bankruptcy. Oh, they didn’t call it that at the time. But what happened on August 15, 1971 was that the US defaulted on its promise to pay gold for dollars. It is now clear that they didn’t have very much gold left to pay.
My new book, Good As Gold? is now available. I’ve tried to make it a clear and readable history of what happened to the gold confiscated from Americans and put into Fort Knox in the 1930s. I’ve used the government’s own words and statements to paint a picture I think is shocking. There has never been an accounting of this gold. There has never been a real audit of it. (I know people say there was one in 1953, but after reading my book, I wonder if anyone really can believe this.)
At every turn when the government was asked to provide proof of either the amount of gold they have left, or the quality of it, they have answered with lies and evasions. They have been acting like they have something to hide.
What we do know is that until August 15, 1971 any foreign central bank could go to the US Treasury and buy official US gold at $35 per ounce. It was the last link to the international gold standard. Before then, all currencies were defined in terms of the US dollar, and the US dollar was defined in terms of gold. A dollar equaled 1/35th of an ounce of gold; $35 equaled one troy ounce of gold.
But on that day the gold window closed. Since then, no more US government gold has been exchanged for US paper money. In my book, I uncover a 1975 letter from the Washington DC director of the General Accounting Office. Quoting US Treasury sources, the GAO director pretty much comes out and says that there was almost no more “good delivery” gold left. This means that the gold that would be acceptable on international markets and have a purity of .995 or better was almost gone by the time Nixon closed the gold window. They knew that there was almost nothing left that was of a purity acceptable to foreign central banks.
We can only guess at what remains, and the purity of it. In fact, we could do more than guess, if the government only let sunlight in. The technology now exists to scan each bar of gold and see how much gold it really contains. There could be independent accountants and a generally public procedure to show how much the US government has.
To be sure, the US government puts out a report each year detailing the official numbers of what they have. Here is the latest one from a few weeks ago:
Department of the Treasury — Financial Management Service STATUS REPORT OF U.S. TREASURY-OWNED GOLD January 31, 2011
Fine Troy Ounces
Gold Coins, Blanks, Miscellaneous
Mint-Held Gold — Deep Storage
Fort Knox, KY
West Point, NY
Subtotal — Deep Storage Gold
Mint-Held Treasury Gold — Working Stock
All locations — Coins, blanks, miscellaneous
Subtotal — Working Stock Gold
Grand Total — Mint-Held Gold
Federal Reserve Bank-Held Gold
Federal Reserve Banks — NY Vault
Federal Reserve Banks — display
Subtotal — Gold Bullion
Federal Reserve Banks — NY Vault
Federal Reserve Banks — display
Subtotal — Gold Coins
Total — Federal Reserve Bank-Held Gold
Total — Treasury-Owned Gold
Deep Storage: Deep-Storage gold is the portion of the U.S. government-owned Gold Bullion Reserve that the U.S. Mint secures in sealed vaults, which are examined annually by the Department of Treasury’s Office of the Inspector General. Deep-Storage gold comprises the vast majority of the Reserve and consists primarily of gold bars. This portion was formerly called “Bullion Reserve” or “Custodial Gold Bullion Reserve.”
Working Stock: Working-Stock gold is the portion of the U.S. government-owned Gold Bullion Reserve that the U.S. Mint uses as the raw material for minting congressionally authorized coins. Working-Stock gold comprises only about 1 percent of the Reserve and consists of bars, blanks, unsold coins, and condemned coins. This portion was formerly listed as individual coins and blanks or called “PEF Gold.”
So this is what the US government says they have, and where they have it. In fact, by their own words, nearly all of it is in what they call “Deep Storage”. The gold here is not examined annually. Instead, the “sealed vaults” are examined annually. But what this means is that they just do a cursory check to see if the seal has been broken.
By the way, the “book value” of this gold is absurd. It is officially valued at $42.22 per ounce. This is because that was the last “official” value of the US dollar. A few months after the August 15, 1971 closing of the gold window, Nixon devalued the US dollar. This was on December 17, 1971. The official gold price was raised from $35 to $42.22.
But this new price meant nothing. They still weren’t going to sell gold at this new, slightly higher rate. It was really a sham. Other countries had long been after the US to raise the official gold price, so Nixon finally did it. But what good did that do when this was the price at which the US would not — repeat, not — redeem its paper dollars into gold?
As I hope my book shows, there has been the atmosphere of a sham — even a fraud — about the US policy toward gold for generations. The Nixon fraud was only one in a series of sham acts.
I don’t understand why today’s government would be afraid to open the vaults and publicly count and assay the gold. After all, if a lie was revealed they could say that it wasn’t their fault: they weren’t even born when these policies were put into place.
Officially, the US has by far the largest government reserves of gold in the world. Here are the top eight nations and the amount they have in millions of troy ounces:
So, officially, the US has much more than twice its nearest rival, Germany. It has nearly eight times as much as China — again, officially.
But China has quietly become the world’s largest producer of gold, and the Chinese central bank buys 100% of all production at the market price. I’m sure they make certain this gold is of the utmost purity. I’m suspicious of the "official" Chinese total, which I really believe is a state secret, and may be much higher than they state here.
In any event, it is the US gold this article is all about. We need to finally see what is left of the gold that was confiscated from the American people in 1933. We need to know how much is left from the 702 million ounces the US had in 1949, when this was by far the most gold held by one owner in history.
There are elected members of Congress, in both parties, who are ready to try to open the vaults. One of them, Ron Paul, wrote the forward to my book.
Even if a person doesn’t understand the importance of gold as an investment, this is a sort of mystery story: What Happened to the Gold? Why have they been acting as if they had something to hide?