Tweet

What If There Is No Gold at Fort Knox?

Guest post by: Michael Farrell

Article Overview: Gold is real money and will become more valuable, suggests Mike Farrell with aspenIbiz. Read this short post as it will reveal that American dollars in circulation are just a bunch of IOUs with a value that was determined by the gold reserves sitting in Fort Knox but what if Fort Know has no gold?

What If There Is No Gold at Fort Knox?

Gold is a commodity and its value is subject to the law of supply and demand.

In every sense, gold is real money because it has value and there is only so much of it, unlike the currency of the US which is paper money and with what appears to be an unlimited supply due to excessive money printing.

As long as the Federal Reserve has access to printing presses and is able to print more and more money, gold with its limited supply, will become more valuable.

The more supply you have of something, its' value goes down. The less supply you have of something, its' value goes up.

Therefore, with a limited supply of gold and an unlimited supply of dollars, it will take more and more money to buy an ounce of gold ... this is what drives market value; dollars fall and gold rises. It is unavoidable.

Today, the American dollars in circulation are just a bunch of IOUs and this would be fine if the gold reserves were sitting in Fort Knox to back up the IOUs but what if Fort Knox has no gold?

This question dates back to the days of the Great Depression.

In November 1932, the American people voted for "change" and elected New York governor Franklin Roosevelt as President. Immediately after taking office in March 1933, Roosevelt issued Executive Order 6102, restricting the ownership of gold coins, bullion and certificates by private citizens.

Roosevelt explained at the time that he wanted the American people to "loan" their gold to the federal government during the Great Depression. Within months of Roosevelt's edict, Americans by the millions - back in a more innocent age - handed over their gold to the U.S. Treasury.

The federal government, in turn, needed a place to store the people's gold. Thus, in 1936, the Treasury Department constructed a massive granite-lined "depository" adjacent to the Army base at Fort Knox, Kentucky. Treasury employees melted down millions of gold coins, cast the gold into bars, and placed the bars inside the new depository.

There was, to be sure, a lot of gold in Fort Knox. According to the Treasury Department, the Fort Knox Depository held 649.6 million ounces of gold as of Dec. 31, 1941. That's well over 20,000 tons of gold, or the equivalent weight of a Navy heavy cruiser built of gold from bow to stern.

Then came World War II, the Cold War and its related arms race, the Korean War, the Vietnam War and a long string of other U.S. military engagements and commitments up to the present.

Add in the nonmilitary expenditures of the federal government over many decades, such as the Great Society, the War on Poverty and the seemingly ceaseless growth of an entitlement-based federal welfare state. Pile onto the ledger the ongoing expense of running a massive network of federal regulation of pretty much everything.

Big wars and big government cost a lot of money. The bottom line is that today, the Treasury Department states that there are 147.3 million ounces of gold in Fort Knox. That's less than 23% of the original quantity "loaned" by the people to their government in the 1930s and on deposit back in 1941.

Not to worry, however. The official Treasury Department statement on the matter of gold in Fort Knox is that "The only gold removed (from Fort Knox) 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 Treasury Department adds, helpfully, that "The Depository is a classified facility. No visitors are permitted, and no exceptions are made."

We would never want any "visitors" to look inside the Fort Knox Depository, would we?

But wait a minute; aside from taking the word of a few anonymous federal managers, nobody really knows what's inside Fort Knox. You probably have seen the James Bond movie Goldfinger but that's not real, it is only a movie.

We can understand the desire to keep Fort Knox secure but it's NOT out of line to want to know with certainty what's inside the national gold depository. Nor is there anything wrong with wanting to get the information from an independent source, and not merely a declaratory statement from the U.S. Treasury Department.

"Trust, but verify," as President Ronald Reagan used to say.

That is, auditing the U.S. gold supply is prudent management of an important part of the U.S. monetary base. Following the Reagan analogy, assuring the amount and quality of the gold supply is as important, in its own way, as keeping tight control over the nation's most powerful weapons.

The gold in Fort Knox came, quite literally, from the pockets, purses and bank vaults of the American people. Thus, the American people are entitled to know what's in Fort Knox - both the amount and the quality. The Treasury Department should open the doors of Fort Knox to an independent third-party audit by competent metallurgical and forensic specialists.

What would the impact of a gold audit be? Here are two possibilities.

Suppose we learned that everything was there, all 147.3 million ounces of gold, based on the "gold melt" of coins from the 1930s. It would remove the basis for well-known concerns that the gold has been somehow "leased" away or transferred out. A good, clean audit would likely calm the world's gold markets. We could actually see the price of gold pull back a bit while the dollar strengthens.

However, if an independent audit found that there's not as much gold as we thought or if there were problems or if some of the gold was missing, there would be a new series of issues for the gold markets and the federal monetary authorities.

The point is that the Fort Knox gold had better be there, because that's what the federal government has been telling the world for many decades. That's the story. Let's confirm that it's true.

It's not that difficult to audit the gold reserve; just do it! Provide an honest assessment to the American people about what is inside Fort Know and then let's move on.

In the meantime, what to do? Obtain more financial education and learn how to protect yourself during these trying times and purchase precious metals including gold to hedge or protect your net worth against the decreasing value of the US Dollar, which is just paper money.

I favor a quote from Steve Forbes ... Forbes says that pursuing additional financial education and the resulting increase in our financial literacy will open our eyes to being savvy with our money and using alternative wealth creating strategies; this will be they key to resolving our financial crisis.

To gain the necessary financial education, it is best to pursue association with, access to, and membership in, a wealth creation community. As a result, you will learn about alternative wealth creating strategies and consider investments in non-dollar denominated assets ... perhaps emerging markets ... perhaps energy assets that are inherently useful like oil rigs, hydropower, or methanol plants ... perhaps precious metals, rare earths, water rights, oil, natural gas, potash mines, or gold mines ... things hard to build, difficult to replace, and costly to substitute ... definitely not financial stocks, definitely not retail stocks, definitely not commercial property.

For those wanting protection of their purchasing power in gold, there are several ways that may be appropriate to obtain this protection. These include direct ownership in minted coins, use of gold exchange traded funds, gold mutual funds, and junior gold stocks. Many are investigating having part of their IRAs in gold, silver, precious metals, and non-dollar denominated currencies.

In addition, for those that truly believe sovereign risk is the greatest risk we all face, it is wise to learn how to implement a multiple flag strategy to diversify this risk or provide protection against higher taxes, capital controls, hyperinflation, civil unrest, erosion of personal liberty, and the rise of a police state. With a multiple flag system, you consider taking preparations like, but not limited to, establishing a foreign bank account, purchasing some real estate overseas, seeking alternate sources of income, dual citizenship, and carrying multiple passports.

I will continue to provide examples of things we need to learn, the secrets of the insiders, as part of being savvy with our money, and introduce alternative wealth creating strategies, in future articles and updates at my blog over the next few weeks.

In addition, a good book to read would be "Bad Money" by Kevin Phillips; it describes Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism.

Finally, I want to thank Byron King editor of Agora Financial as he was the source of some of the materials about gold and Fort Knox mentioned in this post.

Related Articles
  POS Security for Productivity
  This is a Sales Emergency & You Can Win
  Get Leads Coming to You and Get Them to Act Now
  Five Ways to Show Honest Appreciation
  How To Boost Your Bottom Line With Just Two Little Words
  Golden Income Opportunities in Retirement
  Three Feet From Gold...A lesson in the consequences of quitting before reaching your goal
  My 2012 Gold Forecast
  Investing in Gold
  The Coming Economic Basket Case
  The Fortune 1000 Entrepreneur: Wayne Huizenga Gets his Start
  Gold Rises. Recovery In Sight? Really?
  Gold Will Shine Once Again in 2009!
  Car Loans From The Gold Coast
  Going For The Gold
  Black Gold. Worth More than Real Gold?
  That’s Gold In Them Thar Vending Machines
  Gold Will Shine Once Again in 2009! (Part 2)
  How I Called the Breakout in Gold Three Weeks Ago
  Golden Goggles

Article Tags: Alternative Wealth Creation, Central Banking System, Federal Reserve Bank, Fiat Currency, Financial Education, Gold, Mike Farrell aspenIbiz



Related Forum Posts
Hi, from Cary Bergeron - Hi I'm Cary Bergeron from Fort Collins, Colorado and I'm new in this forum too. I hope to share and learn along with you guys. This is our world our business and I believe together we can achieve higher goals.
Re: When something's suffered damage it becomes more beautiful. - This one is for David and all. David lives in Japan I have traveled, lived or worked in over 55 countries, and while we continue to remember the history and barbaric nature of war brought on by few then and now, our various cultures, religions, etc, I find the real beauty is not in the Gold, but in the majority of the people. who ever they are and from where ever they come. Our Japanese craftsman in this piece, showed his beauty to us through his work through the use of Gold to mend this dish. I am further reminded of the power of God with the recent earthquake and tsunami that hit Japan. I was truly amazed at how the beauty of the people came through the crisis. Lines and lines of people all organized waiting their turn; there was no shoving, pushing, do you know who I am mentality, or me first. The sick, disabled and the elderly were given priority not by the organizer by the people I wrote of this discipline in a article for Ezine, but it wasn't accepted. I guess it fell outside my declared resources Our maker gives us beauty, and it may be destroyed by the maker as a reminder, or perhaps by 1 or more of us through war after war, the beauty of the majority must survive and bring back the beauty for all to see .
Re: Hi, from Cary Bergeron - [quote="Dokemion":lx5iirng]Hi I'm Cary Bergeron from Fort Collins, Colorado and I'm new in this forum too. I hope to share and learn along with you guys. This is our world our business and I believe together we can achieve higher goals.[/quote:lx5iirng] Hi Cary, It's great to have you here. I like way you think! Look forward to sharing ideas with you. Take Care, Alan
Congratulations - Hi Shri, Congratulations to your win. Next time you will go for the 'Gold Medal'. This does not happen everyday. All the hard work is paying you off. We wish you well for future projects you have in mind. Be encouraged! Kindest Regards Beat "Unlock People's Potentials!"
Hello Everyone - I would like to introduce myself to the forum. My name is Kyle Lowe and I am the Owner of H&L Motorcars in Fort Worth Texas. We are a small independent dealer that specializes in luxury and specialty cars. In short we offer our clients the ability to purchase, sell and customize almost any type of Automobile. We pride ourselves on being a one stop shop for our clients, and giving them the necessary information and assistance to handle their automotive needs. I look forward to meeting and discussing various topics with the members on this forum, and possibly exploring new ideas for business. Thank you, Kyle Lowe President H&L Motorcars


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

2011 Global Brand Trends Letter

4 Steps To Hypnotize Your Business Prospects

Leader's Success Secret: Celebration

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.