Need Gold? Check Your Fed Holdings

By Brad Zigler

Record numbers of gold and silver ETF shares have been created in the past couple of trading days as worried investors sought footholds in the roiling financial markets. As of Tuesday, Sept. 23, the bullion inventory of the SPDR Gold Shares (GLD) grantor trust rose to a record high 724.9 tonnes, making it the world's seventh-largest gold stash, right behind the 765.2 tonne reserve held by the Bank of Japan.

Bullion Inventory - SPDR Gold Shares (GLD)

The United States, with a hoard of 8,133.5 tonnes, is the world's largest holder of gold bullion. Gold accounts for more than 77% of U.S. central bank reserves, the remainder of which is held in currencies of other countries. On a per-capita basis, that makes each present-day U.S. citizen the "owner" of 9/10ths of a troy ounce of gold. In contrast, each share of the GLD trust nominally represents the value of a tenth of an ounce.

That should make us feel nine times happier about the way the Federal Reserve is managing our money, shouldn't it?

Top Ten Holders of Gold Bullion

	Gold Bullion Holdings	Percentage of Total Reserves
United States	8,133.5	77.3
Germany	3,413.1	64.4
International Monetary Fund	3,217.3	n/a
France	2,540.9	57.8
Italy	2,451.8	67.0
Switzerland	1,084.1	38.1
Japan	765.2	2.1%
SPDR Gold Shares Trust	724.9	n/a
Netherlands	621.4	59.9
China	600.0	0.9

 Source: IMF, World Gold Council, SSgA

 The currency market, however, indicates a singular lack of confidence in the U.S. central bank's ability to restore the greenback. Real-time monetary inflation (explained in "Computing Inflation In Real Time") has shot up to a 12.7% annual rate after bottoming at 11.4% on Sept. 12.

Real-Time Monetary Inflation

On Tuesday, bullion holdings of the iShares Silver Trust (SLV) also reached a new high, at 6,758.5 tonnes.

Bullion Inventory - iShares Silver Trust (SLV)

Comments

[short gold:]

The US can easily sell 10% of it's reserve for $258,185,376,000.00, down goes the dollar and Wall street is saved.....but Gold goes down, supply and demand...

2008 Sep 25 02:43 PM

[short gold:]

"each share of the GLD trust nominally represents the value of a tenth of an ounce." that means they are leveraged 10 times? Sounds very risky...

2008 Sep 25 02:46 PM

[gbd:]

not leveraged 10x. GLD price / share mid to high $80s. Gold price per oz mid to high $800s. 10/1 ratio. No leverage at all.

2008 Sep 25 03:01 PM

[dieuwer:]

"The United States, with a hoard of 8,133.5 tonnes, is the world's largest holder of gold bullion. "
Any proof the gold is actually there? No? How inconvenient...

2008 Sep 25 03:10 PM

[User 267182:]

Without an independent audit, no one knows how much gold is in the hands of the US gov't.

2008 Sep 25 03:28 PM

[lance sjogren:]

Short gold:

I don't see how anyone would take your views seriously when you flaunt your ignorance in such a stunning way.

2008 Sep 25 03:44 PM

[lance sjogren:]

By the way:

Short gold, maybe it would help if I explained a little first grade math to you.

If you slice up a pie in 10 equal size pieces, each piece is 1/10 of a pie.

2008 Sep 25 03:46 PM

[Smarty_Pants:]

@ shortgold Huh? Check your math.

1 metric ton = 32,150.746 troy oz.

813 Metric tons (tonnes) = 26,170,707.54 troy oz.

At $875/oz that's $22,899,369,095.75 ($22.9 Billion) for 10% of US gold reserves.

Meanwhile, 10% of National Debt is $1 Trillion.


Price of gold needed to pay off national debt with "official" gold reserves is about

$38,210/oz.

That's a long way from $20/oz (back in 1912).

The price of gold needs to increase by a factor of 43 to get our reserves anywhere near the amount of debt we have issued. That number will only grow with the coming bailouts.

Assuming constant growth, the US debt has grown over 8% faster than our gold reserves every year for the past 95 years (compounded).

It's a wonder that any foreigner would lend us money with a track record like that.

2008 Sep 25 03:58 PM

[GMiki1:]

Back to we don't know what's in Fort Knox since we haven't had an audit in decades--since the 1950s or 1960s, and the government refuses to do an independent audit. Why? Has the U.S. sold its gold or loaned it out and it was never returned? How would we know? We don't. Is "trust me on this" good enough for you? Not for me.

2008 Sep 25 04:24 PM

[Chicodoodoo:]

Each U.S. citizen is NOT the "owner" of 9/10ths ounces of gold. "United States gold" is most likely better named "Federal Reserve gold." The international banking heavyweights that own the Federal Reserve are the real owners of that gold. Why do you think they've run the paper money scam for the last 95 years? Their purpose was to get all the gold! When the U.S. government required everyone to turn in their gold in 1933, it was the Federal Reserve that took possession of the gold, paying $20.67 / oz. And nine months later, when the Fed had most of the gold, the bankers had the U.S. government raise the official price of gold 75%, to $35 / oz! That's what these bankers do best - they profit from the gullible citizens.

2008 Sep 25 05:01 PM

[ozzy43:]

Why does anyone bother responding to poster 'short gold' anymore? Except to chuckle at the boneheaded mistakes in math and logic he always makes, of course.

Regarding the gold constituting "77% of U.S. central bank reserves" - hilarious. That gold was leased out to bullion banks and sold on the private market to keep gold prices depressed. This is the story per Gary North anyway:

www.lewrockwell.com/no...

I have no way of knowing the truth, but it certainly fits with all of the other fraudulent activities of the criminal gang that is the Fed.

How would one go about verifying that 8k tons of gold is actually in the physical possession of the Fed? My guess is this was looted a long time ago, one reason they need to resort to the crass bailout scam being rammed through Congress as we speak.

2008 Sep 25 05:05 PM

[CTMike:]

If I'm following this advanced math correctly, ignoring short gold's decimal point error, the next calculation rounds off to the USA needs to acquire an additional 340,000 tons of gold to have enough gold reserves to cover the national debt. Somehow I don't think there is that much gold even if miraculously we started balancing the budget and began investing all surpluses into a gold reserve. Sooner or later countries with a positive balance sheet are going to wise up and ask for payment in something other than dollars that are backed up by 2 cents of gold each.

2008 Sep 25 05:22 PM

[MellowGuy:]

Where is it documented that each share represents a tenth of ounce of gold?

I thought that it was the case, but sometimes Google doesn't tell me everything.

2008 Sep 25 06:35 PM

[Kelly Liebe...:]

FYI...Check out bankrate.com to see if your bank is at risk of failing. We were very surprised to find out that one of the banks we do business with is at serious risk. It is not enough to scatter your deposits around and make sure they are under the FDIC limit. You must check the stability of your bank.

2008 Sep 25 06:35 PM

[carbonates:]

MellowGuy: thanks for asking - you forced me to look it up and read the prospectus- something I should have done before I bought it!

From the website:
www.spdrgoldshares.com.../


SPDR® Gold Shares
Objective Designed to track the price of gold (net of Trust expenses)
Structure Continuously offered investment trust
Symbol GLD
Exchange New York Stock Exchange Arca
Initial Pricing Based on the price of 1/10th of an ounce of gold
Minimum order 1 share
Short Sale Eligible Yes
Margin Eligible Yes
Estimated Expenses 0.40%*

Obviously, there is no guarantee that each share matches 1/10 ounce of gold. I have already noticed that it does not exactly match that based on spot. It seems to vary by a significant amount from gold spot at times during the day. This is a problem I have noticed with other ETF's based on various commodities (like oil for example).

2008 Sep 25 07:38 PM

[marxbites:]

The Fed has already inflated 96% of the dollar's purchasing power away for starters.

Add in the $2.20 principle and interest each dollar borrowed into existence from thin air has cost total over 75 years.

Wouldn't all agree the Fed's made enough off the people for doing nothing but rolling the presses?

I say stiff the Fed the entire national debt and confiscate all the gold they stole for collateral, then coin and distrubute that to all Americans in recompense for three generations of robbery, the opportunity cost of which is that we aren't all the millionaires we would have otherwise been with the accumulation of compounding intergenerational wealth !!!

2008 Sep 25 09:11 PM

[marxbites:]

Were there any metals reserves in the WTC's?

How much, any lost? How much recovered?

Just asking. I vaguely remeber hearing something about metals.

2008 Sep 25 09:15 PM

[drooyrich:]

there is no gold left that is actually owned by the US government..that the reason they call it "deep deposit" - the run on gold will be breathtaking..30.000 USD / ounce ?? I would be glad for half ..

2008 Sep 26 01:57 AM

[goldis4ever:]

>>>>"Were there any metals reserves in the WTC's?"<<<<...

This was actually the first task undertaken just after the event. There was an armored truck crammed with gold bullion buried underneath the rubble. A battalion of NYPD cops cordoned off the area where it was located so workmen could dig it out and transport the contents to somewhere. else. At that time, gold was valued under 300 dollars an ounce.

2008 Sep 26 09:48 AM

[NOWHEREMAN:]

Shortgold is running for the hills about now, looking for gold to cover his short. 9:12 AM CDT 09-26-2008.

2008 Sep 26 10:12 AM

[User 30121:]

I can't help wondering that with the manipulation of gold (and silver) if there REALLY would be any gold in Ft. Knox. Certainly, one could surmise if Ft. Knox were LOADED with gold, the price of gold would be MUCH higher than now, and the manipulation would be to the UP side, not surpressing its price. Besides, who the hell are you going to trust to tell you what is or isn't there????

2008 Sep 26 02:18 PM

[User 82364:]

bankrate.com to check for bank safety is OK, but a much better site is: thestreet.com; more acccurate and up to date..

2008 Sep 26 11:02 PM

[directcommu...:]

short at 970 and buy long at 700

2008 Sep 27 01:16 AM

[The Rookie:]

bankrate.com to check for bank safety is OK. Wow, you guys are full of info. I'll check out the new web site
Dave

2008 Sep 27 11:55 PM

[short gold:]

I admit my calc's were in correct on the GLD trust of not being 1/10 leveraged, however how abot all those risky investors who margin their GLD's in a marginable account?

Audit's, audit GLD ETF's prospectus, you have no idea who has leveraged their positions?

2008 Sep 29 09:41 AM

[Disaster Pr...:]

How does this work, who owns this gold, where is it? What individual or agency authorizes the sale of it?

I heard that most of the gold was taen frae fort knox in roosevelt's day, and sent to nyny, much of it bein sent again to europa.

2008 Oct 26 03:13 AM

[Disaster Pr...:]

A swindler does not become a legal owner, he becomes an ornament in a rope necklace.

2008 Oct 26 03:18 AM

[Disaster Pr...:]

oK I'm new. I see how this works now. I was replyin to the bloke who said the federal reserve owners "own" the gold. They haven't even legitimate title to the air that they breathe, much less to any other property.

2008 Oct 26 03:20 AM