Where’s the gold?

fort knox

Interesting question and only alternative sites are commenting on it:

Note how gold flows into New York, but has difficulty flowing out of US private banking hands as is the case with the ‘confiscation’ of Germany’s gold. Numerous attempts by Bundesbank to repatriate its gold reserves have been met with a brick wall, and to date, Germany has only recovered a miniscule 5 tonnes directly from the NY Fed – out of the total 674 tonnes (an additional 32 tonnes were recovered via French central bank).

It’s worth pointing out here that when NATO sacked Libya in 2011, one of the first items that came into question was the gold in Libya’s state-run central bank. Prior to the NATO takeover of that country, Libya had one of the highest per capita gold reserves in the world, alongside Lebanon, giving Libya a distinct advantage should it carry out former Libyan leader Muammar Muhammad al-Gaddafi’s long-term financial transition to a gold-backed Libyan Dinar. As you can imagine, this is no longer the case in Tripoli.

Additionally, like Libya, both Syria and Iran are two of the world’s last remaining nation states who both have state-run central banks and gold reserves which fall outside of the world’s private central banking syndicate.

And so we get to the current biggy – the Ukraine’s gold:

[I]f gold really is considered to be irrelevant, then how come Central Banks – especially the Fed – are so secretive about their gold storage and trading activities?  What’s even more amazing is that no one other than Ron Paul and GATA asks them about this.

Think about it. GATA spent a lot of money on legal fees attempting to get the Fed to publicly disclose its records related to the Fed’s gold activities. The Fed spent even more money denying GATA’s quest. And how come the Fed won’t submit to a public, independent audit of its gold vaults?

This brings me to the issue of the Ukraine’s gold. According to public records, the Government of Ukraine owns 33 tonnes of gold that was being safekept in Ukraine. Last week a Ukrainian newspaper reported that acting PM Arseny Yatsenyuk ordered the transfer of that gold to the United States. The actual report is here:  LINK. Jesse’s Cafe Americain provided a translated version here: LINK.

On the assumption that the report is true, and so far I have not seen any commentary or articles suggesting it is not true, the biggest question is, how come the U.S. has absolutely no problem loading up and transporting 33 tonnes of gold from Ukraine to the U.S. but seems to have difficulty loading up and transporting any of Germany’s gold from New York to Berlin?

However, this from March 2014:

German gold held by the U.S. Federal Reserve in New York and in Paris is slowly but surely returning home, said a German central bank official in a Tuesday update in New York.

Germany’s gold repatriation program, whereby the nation’s central bank is recalling 674 metric tons from vaults in New York and Paris, is progressing slowly. About 69 tons have returned to Frankfurt so far.

Which brings up the next question – is the US’s gold really all gold?  This is from 2012:

In 1981, when Paul served on the Gold Commission – a panel formed by Congress to look into expanding gold’s role in the US financial system – he argued for full gold audits to be carried out on an annual basis. 

He has proposed legislation for an exhaustive review of all the gold kept on US soil, which includes bullion owned by various foreign governments in addition to America’s.

“If the gold is there and everything is in order, they should welcome an audit,” Paul said, as quoted by The Los Angeles Times.

Now, things seem to be moving in Paul’s direction, at least at the New York Fed – which is by leaps and bounds the largest by assets, and most influential of America’s 12 reserve banks. 

The US government has been quietly carrying out an audit of all the American-owned gold at the New York Fed. The process involves drilling small holes in about ten per cent, or roughly 350, of the bars to make sure they’re pure. 

About a half dozen Mint, Treasury Inspector General’s Office and New York Fed employees took part in the audit. It’s being monitored by the Government Accountability Office, the branch of Congress that wields investigative powers.

Though the gold kept at Fort Knox, West Point and the US Mint in Denver, Colorado, have all been audited and tested in the past, the remaining 5 per cent – or about $21 billion – of America’s gold, held at the New York Fed, has never been exhaustively checked out.

Taking into consideration the gold owned by other nations, the New York Fed’s vaults hold about 23% of the world’s official gold reserves.

And even if the audit shows that the gold’s all there, it’s not likely to satisfy many, including Paul.

He claims he’s not concerned with whether the gold is real or fake, but with the paperwork that would outline what it’s been used for. Many suspect deals that were never made public, like loans to foreign governments. 

The US stopped backing dollars with gold in 1971, bringing an end to the Gold Standard. Today, the gold in vaults across the country carries little weight, so to speak. 

And this:

Between July-September 2014 central banks added 92.8 tonnes of gold to their reserves – and 59% of net purchases in this period were made by Russia.

So gold doesn’t matter then does it, Messrs Bernanke and Greenspan?

Enter, stage right, Jeff Christian, who assures investors that the paper market is on the up-and-up. The debate between GATA and Jeff Christian kept some investors out of the line to take delivery of real metal, forestalling a bit longer the inevitable and coming stampede into the gold market.

Was GATA an organization spewing ‘conspiracy theories about a gold cartel?

Christian, a suspected shill for the gold cartel, argued that GATA was seeing things, imagining dark-hat bankers ripping off the public with un-backed gold ETFs and bogus short sales of the metal in the futures market.

The case of Andrew Maguire and the CFTC investigation into JP Morgan proves beyond a reasonable doubt that Christian is either a liar, an incompetent or a shill for the Fed.

Christian leaves the stage and CFTC’s Bart Chilton enters. Chilton, the corn-fed, boy-next-door kind of guy, who grows up to become a heroic fighter of corruption in the financial markets, is the perfect character for the next act to Christian’s ‘Gaslight’ performance.

And the tangible results of the so-called Eliot Ness of Wall Street? Nothing. Nearly three years after the CFTC hearings and investigation into JP Morgan, Chilton comes up with zip, furthering the con of the U.S. dollar. Chilton is now quiet. He’s done his job for the Fed. He may leave now.

You’ll notice that most of this material is 2012 but then it seems to die away.  There’s no 2013/14 material saying definitively that all is OK, that the gold is fine, that there has been no fraud.

There is simply nothing substantial on Google at least post-2012.  Zilch.  What does that say?  Tim Worstall at Forbes tried to play it down:

Where the story goes off into fantasy though is here (and Felix is correct in the questions he asks to try and work out prevalence):

If there are 1.3 million salted 400 oz bars in existence, and each one is 75% tungsten, then that makes 390 million ounces of gold which in truth isn’t there. At $1,660 per ounce, that’s over $600 billion which people think they own but don’t. To put that number in context, it’s roughly half the total quantity of subprime mortgages which had been issued at the height of the housing bubble.

The answer to this comes from a commenter there:

The amount of turnover in the market is much higher than you think. In the case of the professional market which deals in 400oz bars, yes many of these sit in central bank vaults but many others are held by private investors and these are traded. There has been no occurrences in my 18 years in the industry, and I haven’t heard of others, of fake 400oz gold bars.

Wonder if you can see the logical flaws in that?  He’s saying that there was no way to put doctored bars in storage and other bars out to play.  I say that’s bollox – bars marked one way go to storage, bars marked the other are the ones traded.  What’s the issue?  Bars to go back to Germany come from the ‘out to play’ lot – hence only 5 tonnes so far and slowly does it as they’re gathered in.  The rest in storage at the Fed are not being spoken of by the media.

We can even assume in this that the Fort Knox bars are fine, hence Ron Paul only concerned with the gold under the Fed.

3 comments for “Where’s the gold?

  1. Ironies Too
    November 25, 2014 at 3:48 pm

    Fiat currency paper chase is soming to an end so in my view, gold is one alternative! Physical possession would help form part of a stronger negotiating position, especially if genuine bars are secreted elsewhere than former known locations. Commodity indices may be a negotiating alternative!

    • MadNumismatist
      November 25, 2014 at 9:49 pm

      Currencies have always being Fiat in one way or another, even when backed by gold. The bank of Amsterdam was 1st central bank with 100% reserves. It went bankrupt. When William of Orange married Mary, the BoE was set up having learned from those mistakes.

      A Lot of the debate today about fiat imagine fiat with a gold backing, a few call for 100% backing and others call for Free Gold.

      However, there is already a one world currency in place ready to go; the IMF SDR. It has a gold component, and is issued, is in circulation and being used as we write. In fact, the IMF recently increased the supply of SDR. http://news.bbc.co.uk/1/hi/business/7979484.stm

      This is another thing that annoys me about the gold promoters. They never seem to take into account that TPTB may be one step ahead. They assume they are smarter and TPTB have overlooked the role of gold in their machinations.

      Quirks of gold, like gold being Non VATable and Silver being Vatable, make me think that TPTB have considered gold in their schemes and it will not end as many expect.

  2. MadNumismatist
    November 25, 2014 at 5:39 pm

    There are certainly dark forces at play on both sides of the gold market. There are the miners that want the highest prices possible; Russia & China being the largest producers. There are the bullion banks and their low priced gold carry trade, and there are the promoters that get rich by ramping their holdings on to the gullible.

    There is no systemic manipulation of gold; there is manipulation as a business model, both up and down, it is how banks make money. It is the only advantage banks have; try and think of a market that is not manipulated.

    Central bank sales and leased gold, the golden rule applies; “He that makes the rules owns the gold”. If a CB leases gold to a bullion bank and the BB sells it for cash, who owns the gold? I contest that the CB remains the legal owner and the above golden rule applies. “He that makes the rules owns the gold”

    As for convertibility of dollars into gold, Antal Fekete shows how that convertibility still exists, in a fashion. It is through the COMEX exchange. It is not a coincidence that the first COMEX gold contract traded a few months after “suspension” by NIXON.

    Gold bugs also point to the derivatives in gold, 100 ounces to 1 or something. The fact is aside from a few unhedged positions, those derivatives, put and calls, would net out to zero. So the nominal amount is in the trillions, but the net amount would be a tiny fraction of unhedged exposure.

    Also recall, that the USA and the IMF both value their gold holdings at $45 per ounce. Why? Perhaps because when the CB’s want their leased gold back a fair market price needs to be worked out. Using $45 as the base, and accounting for the few week at highs, I would guess a level of about $500 would be fair, maybe even less.

    In regards the Tungsten bars, I find it fascinating that several bars bearing numbers allocated to the Brinks Mat robbery were found in Austria; they were Tungsten filled. A good way for a bank to rid itself of unwanted Tungsten would be to have it conveniently stolen to break the chain of custody.

    My advice is Occam’s razor; the simplest explanation is probably the best. Do not fall for the manipulations and conspiracies. Gold is an amazing metal, everybody should own it. But don’t own it because of some great criminal conspiracy that when discovered will make everybody rich. Own it because it amazing, nobodies liability and amongst the best financial insurance one can find

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