In this commentary at U.S. News, hedge fund manager/gold bug Jim Rickards provides two very good reasons why the U.S. government will probably never subject its 8,000+ tonne stash of gold bullion to a public audit, that is, unless Rep Ron Paul (R-TX) is somehow successful in getting legislation passed to require an audit.

The first has to do with the credibility of gold as a component of international reserves and monetary systems in general. Gold was officially demonetized by the International Monetary Fund in 1973 not long after President Nixon ended the convertibility of dollars into gold in 1971. Since then gold has been continually disparaged as a monetary asset, most recently in the remarks of Federal Reserve Chairman Ben Bernanke that the possession of gold by the United States was a mere “tradition.” If that were so, why would the United States audit something so unimportant? An audit suggests that gold is somehow meaningful and deserving of respect. The official position is that gold is a legacy asset of no particular importance. In this context, refusing an audit makes sense. An audit would give gold too much credit and start to erode the official propaganda that gold is not a monetary asset. After all, no one audits the number of acorns in the national parks—they are too unimportant.

Another reason has to do with not calling attention to a host of ancillary questions. Assume the audit were conducted and everything was in good order, that the United States had the right number of ingots of 99.99 percent purity and everything was numbered and in its place. This would immediately lead to other questions. Is the gold leased? To whom? On what terms?

Some naively assume that if the gold is leased to commercial banks such as J.P. Morgan that the leasing bank backs up a truck and takes it away. That is not true. The gold can be leased in paper transactions without ever leaving Ft. Knox or West Point. The leased gold can then be rehypothecated by J.P. Morgan to other banks and so on until multiple parties all claim some title to the same physical gold. That gold goes on to support an even larger inverted pyramid of “paper gold” transactions in futures, options, forwards, swaps, and so-called unallocated storage. One reason not to do an audit is to avoid all of the awkward legal title questions that would arise once the physical existence issue was settled. The Treasury would rather ignore gold than open Pandora’s Box.

A corollary to this discussion is the oft-raised concern about the U.S. government confiscating gold, to which I normally reply that this should be the least of any gold owner’s concern. Why? If the day ever comes when the government feels the need to call in all the nation’s gold (as FDR did in 1933 when the currency was backed by gold), there would likely have already been such upheaval in the global monetary system and social order that you would already have missed the opportunity to trade in some of your gold and silver for guns and ammo.

Of course, if you already own guns and ammo in addition to gold and silver, then, in the event of a worst case scenario, you’re one step ahead of everyone else.