AIG Bailout Exceeds Value of Fort Knox Gold

At the end of this Fox Business News video with Chris Powell, Secretary/Treasurer of the Gold Anti-Trust Action Committee (GATA), it is learned that, if indeed all the gold in Fort Knox is still there, it is worth less than all the bailout money already paid to AIG.

That, in itself, is a weighty argument for the yellow metal being undervalued at today's prices, perhaps by a quite considerable margin. The current GATA media blitz is related to their recent Freedom of Information Act request to see if they can get someone to audit the contents of Fort Knox, besides the Treasury Department, that is.

This report in the TimesOnline provides many of the details:

Is there any gold inside Fort Knox, the world's most secure vault?

It is said to be the most impregnable vault on Earth: built out of granite, sealed behind a 22-tonne door, located on a US military base and watched over day and night by army units with tanks, heavy artillery and Apache helicopter gunships at their disposal.

Since its construction in 1937 the treasures locked inside Fort Knox have included the US Declaration of Independence, the Gettysburg Address, three volumes of the Gutenberg Bible and Magna Carta.

For several prominent investors and at least one senior US congressman it is not the security of the facility in Kentucky that is a cause of concern: it is the matter of how much gold remains stored there - and who owns it.

They are worried that no independent auditors appear to have had access to the reported $137 billion (£96 billion) stockpile of brick-shaped gold bars in Fort Knox since the era of President Eisenhower. After the risky trading activities at supposedly safe institutions such as AIG they want to be reassured that the gold reserves are still the exclusive property of the US and have not been used to fund risky transactions.

In other words, they want to be certain that the bullion has not been rendered as valueless as if a real-life Goldfinger had stolen it.

“It has been several decades since the gold in Fort Knox was independently audited or properly accounted for,” said Ron Paul, the Texas Congressman and former Republican presidential candidate, in an e-mail interview with The Times. “The American people deserve to know the truth.”

Mr Paul has so far attracted 21 co-sponsors for a Bill to conduct an independent audit of the Federal Reserve System - including its claims to Fort Knox gold - but an organisation named the Gold Anti-Trust Action Committee (GATA) is taking a different approach.

It has hired the Virginia law firm William J.Olson, PC, to test President Obama's promise to bring “an unprecedented level of openness” to the Government and next month it will file several Freedom of Information requests for a full disclosure of US gold ownership and trading activities.

“We're taking the President at his word,” said Chris Powell, of GATA. “If you go online you can find out how to build a nuclear weapon but you won't find any detailed records on central gold reserves.”

A month after President Nixon resigned over the Watergate affair Congress demanded to inspect the contents of Fort Knox but the trip to Kentucky was dismissed by critics as a photo opportunity. Three years earlier Mr Nixon brought an end to the gold standard when France and Switzerland demanded to redeem their dollar holdings for gold amid the soaring cost of the Vietnam War.

Many gold investors suspect that the US has periodically attempted to flood the market with Fort Knox gold to keep prices low and the dollar high - perhaps through international swap agreements with other central banks - but facts remain scarce and the US Treasury denies that any such meddling has gone on for at least the past decade.

Interestingly, in what may have been a fascinating editorial discussion, the Times saw fit to include a number of other conspiracy theories at the end of the report.

They seemingly come out of nowhere at the end, right after they mention that the Treasury Department says the gold holdings are audited every year, but that no independent auditors are allowed access.

Comments

[Steven Hansen:]

i just don't get why we keep having this question raised without the government responding. simply let a bunch of people see the gold. this issue is seemingly very easy to dismiss.

it is obvious they have something to hid.

Apr 02 04:44 AM

[abetterplace:]

I would be surprised if there is $37 billion in there, much less $137 billion.

Apr 02 07:25 AM

[debtacid:]

Remember that Goldfinger didn’t want to steal the gold, he wanted to nuke it to increase the value of his existing gold holdings. He simply wanted to create a massive asset bubble. Maybe we should bring him back to solve the housing "crisis"

Apr 02 07:35 AM

[Vuke:]

Gold is the banker's reserve in the great game of Monopoly we all play. As such, it will be only trotted out only when the players begin to doubt the honesty, stability or soundness of the Banker.

Once opened you can be sure the vault will contain plenty of gold, and at a sufficient price to persuade all doubters the currency is "sound". Only the cynic will ask: "is this borrowed"?

Kindleberger's "Manias, Panics and Crashes" outlines the history of Central Banker's thinking. Their fundamental task is to keep us all believing the paper we hold is actually worth something. Which it is, as long as someone else will take it from you.

Apr 02 09:21 AM

[traderstraffic:]

Audit the gold, why have a audit when there is nothing to audit, we were taken off the gold standard, so what makes you think there is any thing in there, we were taken off the gold standard for a reason. Reason being, we have no gold, why else would we be taken off the gold standard.

Apr 02 10:38 AM

[henarl:]

The only real pupose of the gold in Ft Knox is to enhance the credibility of the U.S. government to the rest of the world and to it's own citizens. Gold or no gold, that credibility has been in a downward spiral ever since the end of WWII. Refusal to allow independent verification just tends to accelerate that loss of credibility.

Apr 02 12:20 PM

[henarl:]

As to AIG, nullify all naked CDS contracts, return the premiums to the buyers, and liquidate AIG.

Apr 02 12:24 PM

[User 432551:]

What happened to our gold?

Jun 17 06:56 AM