It has been postulated, I’ve just recently been made aware, that there may in fact be no gold in the United States Bullion Depository, otherwise known more simply as Ft. Knox, in Kentucky.
It is alleged that Ft Knox holds 5,046 tons (147.2 million troy ounces — as gold is customarily measured in ounces) of gold. In contrast, The Federal Reserve Bank in New York‘s Manhattan underground vault is alleged to hold 7,716 tons of gold, but some of it held “in trust” for foreign nations, central banks and international organizations.
The necessity for the USBD at Ft Knox came about by then-President Franklin Delano Roosevelt’s — to be blunt — illegal Executive Order 6102, which resulted in the physical confiscation of gold in all forms from private American citizens on April 5th of 1933. What is known now as Ft Knox was completed in 1936.
EO 6102 criminalized the possession of physical gold by anyone other than the United States government. People were paid $20.67 per troy ounce for the gold they possessed. People who, then, had large amounts of gold sent it physically to countries such as Switzerland because of various private banking laws.
The US government, of course, realized a profit from EO 6102 and used that money to create the Exchange Stabilization Fund brought about by the Gold Reserve Act in 1934.
The Gold Reserve Act had economic ramifications far beyond national finance. At that time many contracts stipulated that their monetary terms could be demanded in gold.
Such gold clauses were intended to protect against the United States devaluing the dollar.
When the Emergency Banking Act of 1933 and the Gold Reserve Act of 1934 outlawed the use of gold, then such contracts became sources of controversy.
In the gold clause case Norman vs. Baltimore & Ohio Railroad Co., 294 U.S. 240 (1935), the U.S. Supreme Court ruled that gold clauses were invalid. However, Congress later reinstated the option to use gold clauses for obligations (new contracts) issued after October 1977 in accordance with 31 U.S.C. § 5118(d)(2).
A viable country runs on what is called the Gold Standard. Meaning that, basically, whatever paper money exists is backed by an actual physical asset.
But note this:
The total amount of gold that has ever been mined has been estimated at around 142,000 metric tons.[25] This is less than the value of circulating money in the U.S. alone, where more than $8.3 trillion is in circulation or in deposit (M2).[26]
Therefore, a return to the gold standard, if also combined with a mandated end to fractional reserve banking, would result in a significant increase in the current value of gold, which may limit its use in current applications.[27]
A point little realized: the United States stepped completely away from the Gold Standard. All links were finally severed when President Richard Milhous Nixon ended any possible association between gold and the US dollar on August 15th of 1971.
In retrospect, that one move placed this nation — by extension, later, the entire world — into the situation it finds itself now. The die was cast. [A great UK article is here.]
From then on, until today, the dollar has not been “backed” by anything resembling a physical asset, but by trust and confidence.
Let me repeat that again, for those of you who may just have tuned in:
From then on, until today, the dollar has not been “backed” by anything resembling a physical asset, but by trust and confidence.
And that, ladies and gentlemen, is quite how precariously our current dollar stands.
With this in mind, your understanding of the US stock market should have expanded exponentially.
It’s not solely predicated but upon physical assets or hard commodities, but primarily upon emotions.
Feelings.
As in: how do you feel about your money today? What trust do you have in your portfolio?
Even more base: what kind of CONFIDENCE do you have in your American government?
You, I’m certain, see where I’m going with this.
With that in mind, you remember about Ron Paul, don’t you?
You remember that Ron Paul is about the only person in DC politics who has called for an actual audit of the Federal Reserve? And that would include the Treasury Department. Which, by extension, would call for an audit and examination of our United States Bullion Depository at Ft Knox.
This is the one crucial point that I credit to Ron Paul.
The last president, to my knowledge, who actually visited Ft Knox — for reassurance — was then-President Ronald Wilson Reagan.
Please allow me to cut to The Proverbial Chase:
Our US government alleges that there is still over 5,000 tons of gold in Ft Knox.
With that in mind, there are those persons — locally as well — who say that there is little if any gold left in Ft Knox and that, over the years, it has been sold, ransomed, distributed, sown to the four winds, for political purposes.
Which brings up a literal host of excellent questions, to include:
1. If that is true, do you want, in this economy, an actual audit of the Federal Reserve to include the USBD at Ft Knox?
2. Do you really want to know if Ft Knox is packed with gold, or if it merely hosts a primarily-empty room surrounded by an incredible series of over-the-top security measures?
3. Do you want to make that result public?
4. Or is that an issue that should lie dormant until the country is emplaced into a much stronger political and economic position than it is now?
Because here is what would occur:
If Ft Knox were found to contain little or no gold as the result of a physical, public audit, the local, national and global confidences in the Unites States of America and its dollar would plummet, literally, overnight.
The average American could wake up one morning to discover that his or her assets were mostly worthless, that the dollar was predicated solely upon paper, and that this paper was just that: paper.
Do the math and what I call The Logical Extension:
A running flood on banks, not nearly enough physical paper to cover everyone’s assets and investments, a run on commodities, a run on water, food, fuel, hard assets, an absolute hoarders’ mentality.
Because of our current thinnest of margins on warehousing and the perilous but necessarily demanding transportation of products within not just days but hours — current supplies in most any realm would last, at most, perhaps three days. Trains and trucks. Stalled by a national dollar paralysis.
And that gets back to a few of my more Basic Questions.
- Are you prepared?
- Could this happen?
Is there gold?
If not, then why not?
And what can you do, if anything?
BZ
