Monday, April 13, 2009
How much gold is in Fort Knox?
The Fort Knox Bullion Depository is in Kentucky, and was opened in 1937. In 1933 the US government expropriated privately held gold, and the increased gold reserves were stored in Fort Knox.
What is kept in Fort Knox?
The U.S. Department of Treasury claims that the Fort Knox gold vault contains 147.3 million troy ounces of gold.
It is also holds some important US historical treasures such as the Declaration of Independence and Abraham Lincoln's Gettysburg Address.
In the 1970s, because of conspiracy rumors that Fot Knox actually contained no gold reserves, an official of the US Mint led reporters and congressmen through part of the facility, showing the 8 foot tall stacks of gold, 36,236 bars in all. One Fort Knox bar of gold weighs 400 troy ounces. The problem is that this was not a real inspection, just a "glimpse" at the gold, and participants claim that they were only allowed to view one storage room, and that they viewed it only through small peepholes. This Fort Knox visit is largely thought to have been little more than a photo op.
Suspicion over the amount of gold kept at the facility persists. The last full audit of Fort Knox's gold took place in the 1950s during President Eisenhower's administration. Since then, partial visual inspections have been done, such as the above mentioned walk-through with journalists.
During the 1970s a wealthy businessman named Edward Durell alleged that most of the gold in Fort Knox had been secretly moved out of Fort Knox by President Johnson in the late 1960s in an attempt to keep the gold price suppressed at $35 per troy ounce (the price at which it was fixed under the gold standard). His evidence was mostly circumstantial and anecdotal, so it's far from definite, but it goes without saying that his claims were suppressed and that reporters covering his allegations were soon out of a job.
In 1982 President Reagan set up a gold commission to investigate the possibility of returning to a gold-backed currency. His commission's investigation concluded that the US Treasury now owns no gold, that it is now owned by the Federal Reserve - a private bank and non-government entity.
Theories similar to Durell's have been held by many, that the Federal Reserve has leased out its physical holdings of gold to suppress the gold price and keep the US dollar high. Chris Powell, chairman of GATA, the Gold Antitrust Action Committee points out that since 1995 the US Federal Reserve has been swapping gold with other countries' central banks to rig currency markets and keep the gold price low. The Federal Reserve is a private bank and not controlled by the US government, but as we mentioned before, the Fort Knox gold is now owned by the Federal Reserve. Perhaps this is because of the US's massive amount of debt to the Federal Reserve.
How could the Fed's gold swapping be affecting the gold market today? Chris Powell claims that in a free market environment for gold, prices per ounces would be thousands of dollars higher than they are now. The good news for precious metals investors is that price fixing and market manipulation never works in the longterm, and natural market forces always force a correction to the true level of value.
How Much Gold is in Fort Knox?