Swiss Institutions Ask: Where's the Gold?

[Groenewolf]

Daily Bell

"He who owns the gold makes the rules." – An old adage

Have you ever wondered what would happen if most of the claimed US gold reserves do not really exist? Can Washington continue to operate under its own questionable and often non-existent accounting rules if it doesn't have the gold reserves as promised? Should we worry about the old idiom, "When the chickens come home to roost" when a person, entity or a government pays dearly for a mistake or something bad they have done in the distant past?

Well, the gold has to be somewhere but what if it is in France, Germany and Switzerland rather than in Fort Knox? The price of gold probably wouldn't change much except in dollars which would likely dramatically fall in value as would US Treasury obligations. While the monetary elites and their central banks might prefer to keep the question under wraps, American citizens and foreign holders of dollars and US debt deserve the same full disclosure and transparency as required in the private sector.

Congressman Ron Paul Questions Whether There's Gold at Fort Knox and the NY Fed

Quoting from The Hill website, "Rep. Ron Paul (R-Texas) said he plans to introduce legislation next year to force an audit of U.S. holdings of gold. Paul, a longtime critic of the Federal Reserve and U.S. monetary policy, said he believes it's "a possibility" that there might not actually be any gold in the vaults of Fort Knox or the New York Federal Reserve bank."

Is Washington Still # 1 In Gold Reserves?

Most of the 8,965 tons of gold is supposed to be at Fort Knox and valued at over $350 billion dollars but is this still true today? First the gold hasn't really been audited since the Eisenhower Administration. Although a spokesman for the US Treasury recently stated US gold holdings are audited every year by the Treasury's Office of Inspector General, I fear this is more like the internal audits of Fannie Mae or the supposed audits of Madoff, AIG and Enron.

The Swiss well remember the calls for an audit of Fort Knox made after the 1974 Nixon impeachment following the 1971 Nixon Shock. This action unilaterally closed the gold window and ripped off the nation of Switzerland but the "fake audit" was little more than a photo opportunity designed for home consumption in the United States.

Will the Nixon Shock of August 15, 1971 Be Followed By An Obama Event?

Why should Switzerland and other nations or investors trust the US Treasury? There are ominous parallels between 1971 and today and this is why I support Ron Paul's call to audit the gold at Fort Knox in 2011. In 1971 the costs, deficits and debts of the Vietnam War were worrying foreign nations just like the deficits and overhanging national debt today threaten the dollar and Treasury obligations. Therefore many nations including Switzerland and France began demanding that Washington redeem their dollars for gold as required by the Bretton Woods agreement. Switzerland had redeemed $50 million in paper dollars for gold in July but was stuck with the rest when Nixon arbitrarily and without warning "closed the gold window," ending convertibility between US dollars and gold on August 15, 1971.

I fear that much of Washington's gold reserves were lost back in 1971 prior to the Nixon emergency closure of the gold window and was the reason for the sudden, secret announcement sprung on investors and nations without even consulting other members of the international monetary system. In addition, the world's central banks have kept very quiet when questions arise about whether the Federal Reserve has used the remnants of the US gold reserves through international swap agreements to keep gold prices artificially low and to hold up the dollar earlier in this decade.

Why Trust Washington?

The US Treasury claims to have the gold bullion reserves but why should we believe them? Since the government stretches the truth about almost everything else today, I seriously wonder if they are giving us the true condition about Washington's gold ownership.

A recent poll has shown that 80% of the American people don't trust their government and when you add the 22 million government employees and their families, one could say zero percent of productive Americans in the private sector trust the government. So why should global investors have any more confidence or faith in Washington than the American people?

Just think back over the last few years. From the wars in Iraq and Afghanistan, to the real estate bubble and collapse, the Wall Street meltdown, the Gulf oil spill, the recession that wasn't expected, the recovery that never happened, promised change with Obama, the bailouts from both political parties etc. Can you think of one political promise kept or one true statement out of Washington, the Federal Reserve or Treasury? Therefore why should American citizens, foreign nations or international investors believe for a moment the US has the gold reserves claimed?

Here in Switzerland at Appenzeller Business Press AG publisher of "The Daily Bell" and "Freedom Matters" we believe American citizens certainly deserve a full and complete outside audit of "claimed" United States gold reserves during these trying economic times.

The same can be said in even stronger terms for international investors, central bankers and sovereign funds that have purchased trillions in US treasury obligations. Those who still use the dollar as their currency of choice in business transactions and as a safe haven in times of crisis on the world financial stage need to do their due diligence concerning the US gold holdings out of responsibility to their investors and citizens.

Foreign investors are rightly concerned about accountability and openness about supposed assets when there has been no real audit for decades. Certainly, an audit is required following the regulatory breakdown and oversight of the American financial system and the misplaced trust in institutions like Fannie Mae and Freddie Mac and the Fed which led the world to the brink of another 1930's style collapse. A gold audit is only prudent due diligence and this should be welcomed in order to help restore confidence in the US. It is time to bring down the wall of secrecy and restore confidence and accountability to the US balance sheet. Therefore I endorse Congressman Ron Paul's initiative to audit the American gold reserves.

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Rest at the above link.

[Loki]

Science moves on. One day we will be able to manufacture gold cheaply if we developed such technology, and gold could lose all its value.

[Psychonaut]

Science moves on. One day we will be able to manufacture gold cheaply if we developed such technology, and gold could lose all its value.

Only if we could manufacture if quickly and cheaply. One of the main reasons that precious metal prices have been tracking the way they are is because we're consuming them in non-recoverable forms faster than we can mine them. After all, who rips out the .001 ounces of gold from the circuit boards that are in just about every piece of electronics they throw out?

[Great Dane]

Science moves on. One day we will be able to manufacture gold cheaply if we developed such technology, and gold could lose all its value.

Gold was first synthesized from mercury by neutron bombardment in 1941, but the isotopes of gold produced were all radioactive[3].

Gold can currently be manufactured in a nuclear reactor by irradiation either of platinum or mercury. Since platinum is more expensive than gold, platinum is economically unsuitable as a raw material. Only the mercury isotope 196Hg, which occurs with a frequency of 0.15% in natural mercury, can be converted to gold by neutron capture, and following electron capture-decay into 197Au with slow neutrons. Other mercury isotopes are converted when irradiated with slow neutrons into one another or formed mercury isotopes, which beta decay into thallium. Using fast neutrons, the mercury isotope 198Hg, which composes 9.97% of natural mercury, can be converted by splitting off a neutron and becoming 197Hg, which then disintegrates to stable gold. This reaction, however, possesses a smaller activation cross-section and is feasible only with un-moderated reactors. It is also possible to eject several neutrons with very high energy into the other mercury isotopes in order to form 197Hg. However such high-energy neutrons can be produced only by particle accelerators.

The annual production of mercury is low, between 1000 and 2000 metric tons annually. Of this only .0015% is 196Hg which is capable of being converted into gold. In 2000 1800 metric tons of mercury were mined. 1800 multiplied by .0015 equals 27 tons of 196Hg. Average production of gold is around 2500 metric tons per year. So the amount of gold that could be produced artificially is only around 1% of the natural gold mined annually. Even if 196Hg could be converted to gold cheaply, the supply is so limited that it shouldn't have an effect on gold prices.