Is There Gold in Fort Knox?
2010 06 23
By Constance Gustke | moneywatch.bnet.com
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 reason Fort Knox will remain a mighty fortress, however, may come down to something Alan Greenspan once told Paul. When Paul asked the former Fed Chairman why the Fed hangs onto its hefty gold reserves, “Greenspan said ‘just in case we need it,’” says Paul. “You hold onto it because it’s the ultimate in money.”
United States Bullion Depository
Is there any gold inside Fort Knox, the world's most secure vault?
All That Glitters
Fake gold bars
The IMF sold Gold plated tungsten bars to India?
Latest News from our Front Page
Magaluf bar where British girl was filmed performing sex acts on 24 men is shut down after police investigation into video
2014 07 26
Is this what the youth in Britain and Europe is spending their their energy, money, efforts and innocence on?
The young girl, pictured, was lured into performing multiple sex acts after organisers offered a free drink although she thought a holiday was on offer* Council officials launched an official investigation after the video went viral
Playhouse bar in Magaluf and entertainment ...
Prejudice is a Form of Common Sense - Hard-Wired Into the Human Brain, Says ASU Study
2014 07 26
Contrary to what most people believe, the tendency to be prejudiced is a form of common sense, hard-wired into the human brain through evolution as an adaptive response to protect our prehistoric ancestors from danger.
So suggests a new study published by Arizona State University researchers in the May issue of the "Journal of Personality and Social Psychology," which contends that, ...
The State is a Bully
2014 07 24
In the history of Western philosophy and social theory, no really silly idea has been more successful than the theory of the social contract.
It is in fact not a theory of the social contract. It is a theory of the political contract. It is the idea, promoted by Thomas Hobbes, John Locke, and Jean-Jacques Rousseau, that, at some point in ...
NATO Exercise in Ukraine Coincided with MH-17 Shoot-down
2014 07 24
Rapid Trident was omitted from the flurry of coverage on the shoot-down MH-17.
From the U.S. Army in Europe website:
Rapid Trident supports interoperability among Ukraine, the United States, NATO and Partnership for Peace member nations. The exercise helps prepare participants to operate successfully in a joint, multinational, integrated environment with host-nation support from civil and governmental agencies. ...
Warning of ’imminent’ terror attack in Norway
2014 07 24
Norwegians were warned Thursday of the concrete possibility of a terror attack occurring in that country at the hands of people with connections to an extremist group in Syria.
A press conference was called in Oslo, Norway on Thursday where an announcement was made of a "possible concrete threat" to national security in that country from terrorists related to an extremist ...
|More News » |