Several key figures in the Trump administration have declared that the “gold at fort Knox” ought to be audited. I’m all in favor of this, but the gold at Fort Knox is less than sixty percent of the federal government’s gold holdings. The rest of the gold reserves needs to be audited as well.
How Much Gold Is There?
The US government has not performed a proper audit of its gold reserves since 1953. A partial audit occurred in the 1980s. The “audits” that have occurred since then have generally been little more than brief, hardly comprehensive, visual inspections. For example, Treasury Secretary Steve Mnuchin briefly visited the US Bullion Depository at Fort Knox in 2017.
US bureaucrats are fond of needlessly keeping secrets from the Americans who pay all the bills—and who pay the bureaucrats’ inflated salaries—so we have very little reliable information on the gold reserves. Nevertheless, we know what the US Treasury Department claims, and it claims that the US gold reserves consist of 8,133.46 metric tons. That’s about 261 million troy ounces of gold.
If this is true, the US gold reserves are the largest in the world, coming in at more than double that of Germany, and nearly ten times that of Japan:
Where Is the Gold?
The treasury department reports that most of this gold—147.3 million troy ounces—is stored at Fort Knox. In addition to this, the Treasury Department owns 54 million troy ounces stored at the West Point Mint, plus 43.8 million at the Denver Mint. Less than five percent of the total—13.3 million troy ounces—is stored in the vaults of the Federal Reserve Bank of New York. Although the New York Fed’s vault is among the largest in the world, most of the gold there is owned by foreign central banks and other owners who are not the US government. Another one to three percent of the total US gold reserves are held as display pieces and “working stock” used to make gold coins.
What Is the Value of the US Gold Reserve?
Ridiculously, the gold held by the US government is still valued according to the “value” assigned to gold ($42.2222 per ounce) in 1973. In recent days, the actual market value of gold is closer to $2,900, or 68 times the “book value.”
The book value is thus a measly $11 billion, based on the 1973 statutory dollar value.
If valued according to the current market price of $2,900, however, the US gold reserves are worth $757 billion.
For anyone who imagines that the US gold hoard might be used to pay off some significant portion of the national debt, this is going to be a big disappointment. The US gold reserves wouldn’t fund the US Department of Defense for a single fiscal year.
This, of course, all assumes that the numbers provided by the US Treasury Department are accurate and that the gold is all where it is supposed to be. If an audit takes place, and we find that the gold is all there, that’s great. But if it’s not all there, the missing gold will simply be yet another illustration of the dishonesty and lack of transparency that permeates the federal government. In any case, the state of the gold reserves won’t fundamentally change anything about dire fiscal situation the US finds itself with as it heads toward a national debt of 40 trillion dollars. Nor does the size of the gold reserve impact the value of the US dollar. The value of the dollar has nothing at all to do with the size of the gold reserves, and the gold reserves don’t fund any government program. It’s just stolen loot that the US government locked up years ago.
