Gold's silence: US says Fort Knox vaults should be inspected
According to Western media reports, Ilon Musk is preparing to conduct an audit of the US gold reserve. He was approached with a corresponding initiative by Rand Paul, a well-known Republican congressman. The last audit of American gold was performed half a century ago, in 1974. And this fact has given rise to many theories about what and how much is stored in the underground vaults of Fort Knox, and whether it is stored at all. Experts speculate on the scenarios of events in case the real state of the U.S. gold reserve will be worse than it is believed. "Izvestia" found out the details of this story.
Who is over the gold
The idea to check the contents of Fort Knox belongs to Kentucky Senator Rand Paul, who, like his father, ex-Congressman Ron Paul, is known for his critical stance towards the Federal Reserve System (FRS) and American monetary policy.
As is often the case in the US, it all started with a correspondence on social media. The well-known alternative media Zerohedge, which has repeatedly expressed doubts about the safety of U.S. gold, appealed to Musk with a proposal to conduct an audit: "It would be great if Ilon Musk could look into Fort Knox, just to make sure that 4580 tons of U.S. gold is there. The last time someone looked in there was 50 years ago, in 1974." Musk replied, "Surely it gets checked at least once a year?" That's where Senator Paul came into the dialog with a short answer of "no" and suggested that Musk "do it," i.e., instruct DOGE (Department of Government Efficiency Enhancement, which Musk runs) staff to do an inspection.
This discussion could have remained just an exchange of opinions. However, the topic of Fort Knox and the state of U.S. gold reserves is another mystery in modern American history. Over the past few decades, skeptics (the bulk of whom today are Trump supporters) have advanced several theories. The most common one is that the real amount of reserves is much smaller than reported, as a solid portion of it has either been used by the Fed or simply stolen. With the rise of digital media, the number of proponents of this theory has, of course, grown considerably. Among them is Paul Craig Roberts, an economic adviser in the Reagan administration. He, for example, argued that the scandalous resignation of former International Monetary Fund chief Dominique Strauss-Kahn in 2011 could have been due to the fact that he learned about the actual absence of the U.S. gold reserve. In 2009, Strauss-Kahn demanded that the Fed return the 191 tons of metal belonging to the IMF, but was refused - without explanation.
Attempts of foreign countries to get their gold reserves, stored in the U.S. since World War II, were not without problems. Germany, the Netherlands and Turkey tried to repatriate their gold, but none of them managed to return everything. Berlin, for example, received only 674 tons out of 3300.
According to official information, at the moment the U.S. gold reserve is 261.5 million troy ounces (8.1 thousand tons), of which 147.3 million (or, if very approximately, 368,250 bars) are stored in Fort Knox.
Not all that glitters
However, the quantity of gold is only half the story. There are just as many questions about its quality. In 2009, the Chinese government purchased 70 tons of the precious metal on the London Stock Exchange. Upon further inspection, it turned out that the ingots with the US Federal Reserve's branding were not gold. This is gold-plated tungsten. It is not known how that scandal ended, but it happened again in 2012. The Chinese company Kingold Jewelry was accused of fraud. The gold it pledged as collateral for the loans it took out was also found to be counterfeit.
A prominent conservative speaker, journalist Glenn Beck, reported that a certain buyer was actively buying gold on the London exchange and transporting it to the U.S., as if preparing for an upcoming large-scale audit of reserves.
Drill, Ilon, drill
The problem with the likely audit is that it will involve a very large number of technical difficulties, emphasizes Vladimir Vasiliev, chief researcher at the Institute of the United States and Canada.
- Back in the early 2000s, rumors spread across America that a significant part of the stockpile was missing, and instead of gold bars, it contained tungsten bars with gold plating. No one did much checking. The Fort Knox vault is vast halls that hold vast quantities of these gold bricks. The Federal Bank of New York has repeatedly stated that a full inspection is impossible, only partial. Admission, security measures, installation of equipment - all together can take several years, - states the expert.
However, despite the difficulties, the solution to this issue is in the interests of the Trump administration. And of course, it is not just about revealing another secret of American history. It's about a very specific economic benefit, says American political scientist Malek Dudakov.
- Since 1974, no real audits have been conducted, in fact, only the presence and safety of seals on the doors were checked. No one really knows what's really going on there. But what's more important is Trump's plans to "unlock" the U.S. gold reserve. All this time it has been sort of off the market. Even its value was determined at 1974 prices, $42 per ounce (the current price is $2929.7 per ounce. - Ed.). That is, if the volume of gold remains the same, the U.S. government gets $800 billion. The hole in the budget is $2 trillion. Of course, selling gold is considered the last option when there is nothing else. On the other hand, it will cause a downward trend in the US credit rating (which has happened before) and the dollar exchange rate. The second consequence, a mild devaluation, is quite in line with Trump's plans," the Izvestia interlocutor points out.
Golden era
The idea of checking the gold reserve appeared at a very opportune time for its initiators. Thanks to DOGE audits, the American society discovers incredible amounts of embezzlement and fraud, which means that it is interested in continuing the "superaudit". As Vladimir Vasiliev notes, Musk and his agents have, in fact, revealed to the public the fact that the United States has double-entry bookkeeping at the state level.
- Previously, no one in the U.S. had ever thought that funds appropriated by Congress could be spent for completely different purposes. Now it turns out that payment orders for huge sums do exist, but no one controls their execution. Thus, in fact, there are two budgets: real and virtual. This means that many analytical indicators are absolutely ephemeral. What the late USSR was accused of is now happening in the United States. In a sense, this circumstance predetermines the huge state budget deficit and the growing national debt. Americans see how the U.S. is truly turning into a third-world country," the expert states.
If the audit of the U.S. gold stock shows a significant shortfall or even more falsification, there will be economic consequences in addition to the obvious political ones. The growth of gold price will continue, and its market value is likely to set new records. In addition, as experts note, this will entail an increase in prices for strategic resources.
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