Swiss Institutions Ask: Where's the Gold?
9/18/2010 - Ron Holland
Ron Holland"He who owns the gold makes the rules."
– An old adage
Have you ever wondered what would happen if most of the claimed US gold reserves do not really exist? Can Washington continue to operate under its own questionable and often non-existent accounting rules if it doesn't have the gold reserves as promised? Should we worry about the old idiom, "When the chickens come home to roost" when a person, entity or a government pays dearly for a mistake or something bad they have done in the distant past?
Well, the gold has to be somewhere but what if it is in France, Germany and Switzerland rather than in Fort Knox? The price of gold probably wouldn't change much except in dollars which would likely dramatically fall in value as would US Treasury obligations. While the monetary elites and their central banks might prefer to keep the question under wraps, American citizens and foreign holders of dollars and US debt deserve the same full disclosure and transparency as required in the private sector.Congressman Ron Paul Questions Whether There's Gold at Fort Knox and the NY Fed
Quoting from The Hill website, "Rep. Ron Paul (R-Texas) said he plans to introduce legislation next year to force an audit of U.S. holdings of gold. Paul, a longtime critic of the Federal Reserve and U.S. monetary policy, said he believes it's "a possibility" that there might not actually be any gold in the vaults of Fort Knox or the New York Federal Reserve bank."Is Washington Still # 1 In Gold Reserves?
Most of the 8,965 tons of gold is supposed to be at Fort Knox and valued at over $350 billion dollars but is this still true today? First the gold hasn't really been audited since the Eisenhower Administration. Although a spokesman for the US Treasury recently stated US gold holdings are audited every year by the Treasury's Office of Inspector General, I fear this is more like the internal audits of Fannie Mae or the supposed audits of Madoff, AIG and Enron.
The Swiss well remember the calls for an audit of Fort Knox made after the 1974 Nixon impeachment following the 1971 Nixon Shock. This action unilaterally closed the gold window and ripped off the nation of Switzerland but the "fake audit" was little more than a photo opportunity designed for home consumption in the United States.Will the Nixon Shock of August 15, 1971 Be Followed By An Obama Event?
Why should Switzerland and other nations or investors trust the US Treasury? There are ominous parallels between 1971 and today and this is why I support Ron Paul's call to audit the gold at Fort Knox in 2011. In 1971 the costs, deficits and debts of the Vietnam War were worrying foreign nations just like the deficits and overhanging national debt today threaten the dollar and Treasury obligations. Therefore many nations including Switzerland and France began demanding that Washington redeem their dollars for gold as required by the Bretton Woods agreement. Switzerland had redeemed $50 million in paper dollars for gold in July but was stuck with the rest when Nixon arbitrarily and without warning "closed the gold window," ending convertibility between US dollars and gold on August 15, 1971.
I fear that much of Washington's gold reserves were lost back in 1971 prior to the Nixon emergency closure of the gold window and was the reason for the sudden, secret announcement sprung on investors and nations without even consulting other members of the international monetary system. In addition, the world's central banks have kept very quiet when questions arise about whether the Federal Reserve has used the remnants of the US gold reserves through international swap agreements to keep gold prices artificially low and to hold up the dollar earlier in this decade.Why Trust Washington?
The US Treasury claims to have the gold bullion reserves but why should we believe them? Since the government stretches the truth about almost everything else today, I seriously wonder if they are giving us the true condition about Washington's gold ownership.
A recent poll has shown that 80% of the American people don't trust their government and when you add the 22 million government employees and their families, one could say zero percent of productive Americans in the private sector trust the government. So why should global investors have any more confidence or faith in Washington than the American people?
Just think back over the last few years. From the wars in Iraq and Afghanistan, to the real estate bubble and collapse, the Wall Street meltdown, the Gulf oil spill, the recession that wasn't expected, the recovery that never happened, promised change with Obama, the bailouts from both political parties etc. Can you think of one political promise kept or one true statement out of Washington, the Federal Reserve or Treasury? Therefore why should American citizens, foreign nations or international investors believe for a moment the US has the gold reserves claimed?
Here in Switzerland at Appenzeller Business Press AG publisher of "The Daily Bell" and "Freedom Matters" we believe American citizens certainly deserve a full and complete outside audit of "claimed" United States gold reserves during these trying economic times.
The same can be said in even stronger terms for international investors, central bankers and sovereign funds that have purchased trillions in US treasury obligations. Those who still use the dollar as their currency of choice in business transactions and as a safe haven in times of crisis on the world financial stage need to do their due diligence concerning the US gold holdings out of responsibility to their investors and citizens.
Foreign investors are rightly concerned about accountability and openness about supposed assets when there has been no real audit for decades. Certainly, an audit is required following the regulatory breakdown and oversight of the American financial system and the misplaced trust in institutions like Fannie Mae and Freddie Mac and the Fed which led the world to the brink of another 1930's style collapse. A gold audit is only prudent due diligence and this should be welcomed in order to help restore confidence in the US. It is time to bring down the wall of secrecy and restore confidence and accountability to the US balance sheet. Therefore I endorse Congressman Ron Paul's initiative to audit the American gold reserves.Do You Know Where Your Gold Is?
Of course, if you have some emergency gold stored in your local safe deposit box or hidden around the house or yard, your gold is somewhat secure but we are talking about large private gold holdings. Maybe the United States should protect and guarantee the existence of much of the American gold reserves formerly held by private American citizens but stolen in Roosevelt's 1933 gold confiscation by looking at the private sector.How Gold Is Privately Stored in Switzerland?
Gold bullion can be stored in secure, non-bank vaults (we don't trust bank holidays even in Switzerland). They can be insured for full value and stored in a tax-free zone to avoid VAT costs used by large financial institutions and Swiss banks.
Your gold should be fully and safely allocated and stored in-kind in high security vaults and never leased, pledged or used for international swap agreements.
The vaults and gold inventories should be regularly audited by independent third parties including Swiss Customs inspectors as well as audited by one of the private Big Four accounting firms.
Your gold should be a specific amount or number of coins or bars not fractions or digital units promised in some prospectus but not tangibly existent. For example, your holdings should be described as 100 Canadian Maple Leafs or bars of a specific weight. All of this with reasonable and transparent pricing, commissions and storage fees
Liquidity is king with gold ownership and you should be able to take physical delivery or sell promptly and conveniently. You should not be required to show up to take delivery or initiate your transactions. You can effectuate all matters by fax, e-mail, letter, or phone. You are not dependent on the internet as all of this is particularly critical in a severe crisis situation.
Gold delivery should be universal in Switzerland or internationally on a cost basis utilizing respected international high-security logistics firms. You might not be able to travel when banks and stocks markets are closed, or crisis exchange controls and travel restrictions are in place.
Finally concerned gold investors should never trust their wealth to bankrupt governments, corrupt politicians or questionable legal systems and this is why large gold investments above emergency gold holdings should be stored in Switzerland or other secure jurisdictions. Knowledgeable investors should remember Roosevelt's gold confiscation and Nixon's gold shock and defend their wealth accordingly.What Does the Future Hold For Gold In the United States?
I certainly don't have a crystal ball but if the gold reserves aren't there or in the amounts promised, there is a real risk during a future crisis of another Washington gold confiscation event. Second, rather than trusting vague statements out of Washington, I would give real credibility to how the private sector views Washington gold reserves.
Watch the dollar, watch the price of gold and soon you just may be able check the gambling odds on whether the government will allow a real audit of Fort Knox and also if the amount of gold claimed is really there. Christopher Costigan, publisher of Gambling911 the leading gambling website in the United States indicates that "soon odds and betting may be possible on the questions above thanks to the coming Ron Paul Fort Knox Audit Legislation."A Call To Washington: Restore Confidence in US Gold Reserves
First a full private audit would do much to assure the world that American gold reserves were not lost during the Nixon Administration and that the gold holdings haven't been accounted away like the Social Security Trust Fund or become little more than a Madoff-style Ponzi scheme of vague paper promises and unaudited assets that do not exist.
We urge Congress to follow the leadership of Ron Paul and to take the initial step to begin the restoration of world confidence in the integrity and openness of the Treasury gold reserves. It is time to put the sorry record of American accountability with non-existent or over-valued assets in Madoff, AIG, Enron and Fannie Mae-style scandals behind us and we can start in 2011 with a full audit of the US gold reserves.
The United States constantly preaches and demands full disclosure, accountability and open transparency to governments, investment industries and financial systems in the rest of the world while failing to keep its own house in order back home. I grew up on a chicken farm in North Carolina and trust me, if and when the chickens come home to roost on the gold reserves, the situation can quickly get very messy. It is time for Washington, the Treasury and the Federal Reserve to come clean and open the US gold reserves to a full and complete private audit.
Otherwise, I don't want to be around when the chickens come home to roost and the sh*t starts flying. Until then, I'm betting against the gold being at Fort Knox and looking forward to the day when I can really bet on this question and put my money on the line but for now just storing gold outside the United States is an easy step to take in the right direction.
An audit will answer the gold reserve questions, secure the US economy and end the worry of American citizens and foreign investors about US gold reserves. It is past time to answer the question, "Where's the gold" and move forward.
Only an audit will tell if the Treasury is holding a Full House or busted and bluffing but I choose not to play a game with my wealth when the stakes are this high. I'm walking away and urge you to do the same."You got to know when to hold 'em, know when to fold 'em, / Know when to walk away and know when to run."
~~Kenny Rogers, The Gambler