Ron Paul’s obsession valid or just Ron Paul?
Ron Paul’s obsession
Valid or just Ron Paul?
First, I asked the US Mint, what’s up with the gold?
“The United States Bullion Depository Fort Knox, Kentucky
Amount of present gold holdings: 147.3 million ounces.
The only gold removed has been very small quantities used to test the purity of gold during regularly scheduled audits. Except for these samples, no gold has been transferred to or from the Depository for many years.
The gold is held as an asset of the United States at book value of $42.22 per ounce.
The Depository opened in 1937; the first gold was moved to the depository in January that year.
Highest gold holdings this century: 649.6 million ounces (December 31, 1941).
Size of a standard gold bar: 7 inches x 3 and 5/8 inches x 1 and 3/4 inches.
Weight of a standard gold bar: approximately 400 ounces or 27.5 pounds.
Construction of the depository:
Building materials used included 16,000 cubic feet of granite, 4,200 cubic yards of concrete, 750 tons of reinforcing steel, and 670 tons of structural steel.
The cost of construction was $560,000 and the building was completed in December 1936.
In the past, the Depository has stored the Declaration of Independence, the U.S. Constitution, the Articles of Confederation, Lincoln's Gettysburg address, three volumes of the Gutenberg Bible, and Lincoln's second inaugural address.
In addition to gold bullion, the Mint has stored valuable items for other government agencies. The Magna Carta was once stored there. The crown, sword, scepter, orb, and cape of St. Stephen, King of Hungary also were stored at the Depository, before being returned to the government of Hungary in 1978.
The Depository is a classified facility. No visitors are permitted, and no exceptions are made.”
Stop lurking around here, Ron Paul. You are creepy.
“The Great American Disaster: How Much Gold Remains In Fort Knox?
by Chris Weber
A Huge Mystery Remains To Be Solved
Yesterday marked the 39th anniversary of the day when the US Government declared bankruptcy. Oh, they didn't call it that at the time. But what happened on August 15, 1971 was that the US defaulted on its promise to pay gold for dollars.
Before that day, gold was the legal linchpin of the world monetary system. Although every currency was defined in terms of the US dollar, the dollar itself was legally defined as 1/35th of a troy ounce of gold.
Since then, there really has been no center to the international monetary system. The "reserve currency" continues to be the US dollar. But there is no official definition of what a dollar is. Like every other currency, its value changes every ten seconds as it is traded on the global currency markets. It is a promise to pay nothing. Its value has been devalued for years. On top of that, enormous effort has since been put into the global currency markets: buying, selling, manipulating...none of which has caused anything productive to the world economy. Oh, sure, currency investing has made some of us rich, but is it really the same kind of wealth that, say, Steve Jobs has created with Apple?
After cutting that last tie to gold, there was no longer any discipline left to keep the value of the dollar steady. The US dollar of August, 1971 is as of 2009 worth just over 18 cents, according to the Inflation Calculator. Thus, in purchasing power, the dollar has lost over 80% in the past 39 years.
Only foreigners were legally able to turn in their US dollars and get gold from the US Government from 1934 to 1971. August 15 of that year closed off that last power of convertibility.
In 1934, gold was confiscated from US citizens, melted from coins into bars, and gathered over the next few years into a new storage facility at Ft Knox, Kentucky. After that, the official price of gold was raised from $20.67 to $35, a devaluation of the currency that was an attempt to inflate the economy out of depression. It didn't work, but what it did do was to attract more gold in one place than had ever been seen.
At a time when deflation was depressing prices for all assets, the drastic rise in the official gold price made people all over the world want to sell their gold to the US Treasury. For many years, $35 an ounce was higher than the market price, so foreign sellers got a bargain.
The peak amount of gold held in Fort Knox reached 701 million ounces of gold. This was in 1949. This amount equaled 69.9% of all the gold in the world; never before had so much gold been gathered in one place.
But soon after that, gold began to leave Ft Knox and was shipped to the foreign persons and institutions who ponied up their $35 in Federal Reserve Notes for each troy ounce of gold they wanted. At some point in the 1950s, $35 became too cheap a price for gold.
From then until 1972, at least 75% of official US gold left the nation in exchange for paper dollars which can be printed at will. However, I think the total amount of real gold which remains is even less. The exact amount that remains is now officially listed at 147.3 million ounces. From the peak, that is a decline of 79%.
In 1988, 22 years ago, I wrote a book about Fort Knox, the gold there, and the documented history of official lies, evasions and incompetence of those who were entrusted with the gold.
I say "documented history" because when writing the book, I was very careful to only include official documents and private correspondence from the US government, stretching from 1934 to 1987. Using their own responses to the questions of just how much gold is left, and what that gold's quality is, for the first time this book put all these governmental attempts to answer the questions about their own gold policies in one place. What their responses revealed was shocking to me.
Nothing since 1988 has happened to change my views.
The Story Of A Great Man
How I came to write this book is an interesting story. I was in the right place at the right time. A man named Edward Durell had been corresponding with the highest US governmental officials for years when he asked me to come to his Virginia farm and write a book based on all his work. He was nearly 90 years old, and had been a wealthy industrialist who had bankrolled the campaigns of many politicians for decades. He was dying (he would die weeks after the book came out) and wanted to see all his concerns made public before he did. It was his life's work to restore transparency and honesty to the monetary system. (He had learned about me from Congressman Ron Paul. Five years before, in 1982, I had ghostwritten half of Paul's book, The Case For Gold.)
When President Nixon closed the gold window exactly 39 years ago, Durell began hearing rumors that made him concerned about the amount and quality of the gold that remained in Fort Knox. While Durell was a lifelong Republican, he never trusted Nixon, and considered him a world-class liar.
However, within days of Nixon's resignation in August of 1974, Durell contacted his old friend (and longtime recipient of Durell's money for his various past elected offices) William Saxbe. Saxbe wasn't just anybody: he was then the United States Attorney General, the highest legal official of the executive branch of the government. With a new President, Gerald Ford, who Durell considered more honest, he asked Saxbe to mount a complete audit of the gold at Ft Knox.
Saxbe moved quickly to try to placate Durell, and barely six weeks later, on September 23, 1974 Mary Brooks, the Director of the US Mint, led six Congressmen and one Senator on a tour of Ft Knox. It was the first time since Franklin Roosevelt visited on April 28, 1943 that anyone except Mint and Treasury officials had been allowed inside of Ft Knox. Too my knowledge, no outsider has been inside ever since.
It was not an audit or inventory of the gold supply; but simply a tour. But there was more of a carnival atmosphere than anything else. While it seemed to placate the few elected representatives at the time, upon reflection several of them publicly pronounced themselves unsatisfied.
I tell the story of this, and more, in the book. I don't want to repeat it here. I'm trying to get the book put online, and by the time we go to print with this issue, I may be able to do this. Until then, there are copies of the book available at Amazon.com. It is called '...Good As Gold?': How We Lost Our Gold Reserves and Destroyed The Dollar. (I wrote it as Christopher Weber.)
The book was not a success. In fact, no other book I ever wrote made so little an impact. It came out to a world which didn't care about the subject. It was not a "sensationalist" book, in the sense that we were not screaming that there was no gold left in Ft Knox. That approach would have gotten more press. Instead, the tack we took was to let the official government responses speak for themselves, while pointing out their poor quality and very unsatisfactory nature. We didn't want to put out any allegation that would not stand up in a court of law: that's how carefully the book was written. I've sometimes thought that the massive indifference which greeted the book hastened Mr. Durell's death, and I've felt bad about that ever since. Durell was a great man who deserved better.
Part of the failure was my own fault. I did very little to promote the book. This is because I am not a good promoter of anything; I don't like to be the center of attention and have always tried to avoid fame and the spotlight. While I'm happy to say that I've been successful in the avoidance of fame, in this case, I was the wrong person. With Durell dying, the burden of any promotion of the book fell to me, and I let him down.
Maybe a great promoter could have gotten the public interested in the story of how America lost its gold, but by 1988, the bull market in gold had become a distant memory, so maybe nothing would have worked.
Of course, the book didn't have the best title; I've forgotten who came up with it (probably me). The "Good As Gold?" part was based on a speech given by President Kennedy days after he took office in January, 1961. As he put it, "the growth in foreign dollar holdings has placed upon the United States a special responsibility – that of maintaining the dollar as the principal reserve currency of the free world. This required that the dollar be considered by many countries to be as good as gold. It is our responsibility to sustain this confidence."
Sadly, the policies of JFK were just like those of every president from FDR to Obama. They all have treated the value of the dollar as something to be sacrificed in favor of other goals. The only reason why the US dollar is still the reserve currency of the world is that no other nation is in a position to have a currency to challenge the dollar.
What has happened instead is that the dollar is no longer "as good as gold," and that every currency has fallen in value in terms of gold.
The One "Audit" Of Fort Knox
The only audit that has ever been done of the gold inside Ft Knox was done days after Dwight Eisenhower became President in January of 1953. After 20 years of Democratic presidents, the American public wanted to be sure that the gold confiscated from them was still there. Thus, the new President ordered an audit within hours after taking office.
The central problem was that it wasn't much of an audit. To sum it up:
Representatives of the audited group were allowed to make the rules governing the audit. No outside private experts were allowed.
Those government bureaucrats involved were inexperienced in their tasks, by their own admission.
The entire audit of the largest gold hoard ever concentrated in history lasted only seven days.
Only a fraction of the gold was actually tested. Later, the officials put this fraction at just 5%.
Based on that fraction, the official committee reported that, in their opinion, all the holdings would have matched their records if they'd all been tested.
If the audit was accurate, the fact remains that almost 80% of it went overseas in the coming years. If the audit was not accurate, the amount of gold lost could have been even more.
This one and only audit reassured the America of 1953. But that America was still used to accepting official government statements at face value. In later years, after all the lies connected with Vietnam, Watergate, and so many things ever since, Americans today have lost much of their respect and belief in the words of their government. (In fact, few today even view it as "their" government.) An audit such as the one of 1953 would today satisfy almost nobody.
The years after 1953 saw hundreds of millions of ounces of gold fly out of the US. It is absolutely certain that wealthy Americans, operating behind foreign institutions, were able to accumulate gold at what are clearly now bargain prices. But more important, America's enemies were able to do the same: exchanging the paper dollars for gold at $35 an ounce.
In the book, I tell the sad story of how Washington tried to suppress the price of gold during the 1960s with the London Gold Pool. Both the official and private responses regarding this are included.
It is clear to me that the last bull market for gold lasted 20 years, from 1960 to 1980. However, the price of gold only rose during the 1970s. This is because the price was manipulated – suppressed – all during the 1960s. When the manipulation stopped, the price soared far and fast to make up for the time it had been held down artificially. From $35 in 1971 to $850 at the January 1980 peak, that's a rise of 2,329% at a time when every other asset class was either doing nothing or plunging.
After a period of moderation in inflation which began in 1980, gold went into a bear market. However, it reached a low of $256, much higher than the old low of $35. When the price began to rise in 2001, it hasn't stopped. However, this has been a stealth rise, a bull market that has been ignored by most people.
Even after 10 consecutive years of annual rise, very few people own it or are excited about it.
I think there is still much, much more room for gold to rise. This bull market will take the price to a level much higher than most anyone today believes possible.
There are people who today think gold's price is being manipulated and held down. If they studied the history of the London Gold Pool, they'd have to realize that any supposed suppression going on today is child's play compared to what went on as official policy in the 1960s. If gold's price action since 2000 has been suppressed, I say bring on more of it! It's making gold holders wealthy.”