First
published on December 13, 1999
in FGMR Letter #256
In the 1970's a very courageous gentleman named
Edward Durrell claimed that substantially all of the US Gold Reserve being stored
at Ft. Knox was gone. Only 1,000 tonnes or so
of the 8,500 tonnes supposedly being stored there remained. The rest had been
secretly taken from Ft. Knox and shipped to London in 1967 and early 1968 for sale by
President Johnson in an ill-fated attempt to keep the price of Gold at $35
per ounce.
Mr.
Durrell provided a lot of anecdotal evidence to support his claim. These
included eyewitness accounts of hundreds of Army trucks leaving Ft. Knox
in the middle of the night over a period of many weeks, supposedly loaded
with the Gold bounty. Other interesting but circumstantial evidence was the
sudden and unexpected dismissal of Gordon Tether, business editor for London's Financial
Times, who published Mr. Durrell's claims. To my knowledge, no mainstream
US
newspaper dared to publish Mr. Durrell's allegations.
More
circumstantial evidence emerged in the late 1970's when the US Treasury
auctioned some Gold in an attempt to keep the Gold price from rising rapidly.
The bullion banks bidding in the auction received 'coin-melt' bars, not good
delivery bars. The coin-melt bars were fabricated in the 1930's after the
Gold confiscation at that time. Coins are only 90% pure Gold, with 10% other
metals added to provide durability to the Gold so that it can be used as coin
without excessive wear or damage. In contrast, good delivery bars are 99%
pure.
Mr.
Durrell alleged that the coin-melt bars were not taken to London
because their source could easily have been identified, the US being the
only country that seized their citizens' Gold. Had the coin-melt bars been
sold, the secret nature of the operation would have been compromised, so the
coin-melt bars remained at Ft. Knox while the good delivery bars were sold in London in President
Johnson's diabolical, unsuccessful scheme. Subsequent administrations, too
afraid of the consequences from telling the truth, have continued the
cover-up.
Clearly,
the above examples are not sufficient to prove Mr. Durrell's claim, but one
piece of evidence does raise serious questions. He claimed that a proper
audit of the Gold reserve had not been made since the late 1950's during the
Eisenhower administration. Moreover, despite his best efforts to get an audit
completed, including as I recall offers to pay for the audit himself (which were
not hollow promises because he was a very wealthy businessman), no audit was
undertaken. The reason? The US Treasury said it was unnecessary 'because
everyone knew that the Gold was still in Ft. Knox'.
The
Treasury's curious response always seemed incredulous to me, so I have
remained open-minded about whether the Gold was there or not. After all, we
now know that President Johnson had lied to the nation about the Gulf of Tonkin
incident that dragged the US
into war in Viet Nam, so
who is to say that he didn't also lie about the Gold in Ft. Knox?
Mr.
Durrell passed away at age 90
in the early 1980's. With his passing, and the decline
in inflation and the Gold price from the 1980 highs, over time this
controversy was largely forgotten. I too put it largely out of mind until the
early 1990's when I came to know a very wealthy industrialist with an
interesting story.
I
wrote about this gentlemen and his story in April 1994 (FGMR #143, Thinking
the Unthinkable). He had requested anonymity, so I only refer to him as
André, which is not his real name. André provided some
additional interesting details, many of which filled in some unexplained gaps
in Mr. Durrell's allegations.
Earlier
in the year I reprinted this article because it was becoming clear to me that
Mr. Durrell's and André's contention that the US Gold reserve was
missing helped explain what was happening in the Gold market. As the huge
weight of Gold being loaned and borrowed grew seemingly without end, it
appeared to me that the Gold supposedly in Ft. Knox
must be part of the equation. So I asked myself what could I do about it?
My
answer was to try getting to the bottom of this matter for once and for all. And
the only way to answer the question of whether the Gold was really in Ft. Knox
was to complete an audit. Therefore, on August 30th, 1999, I wrote the
following letter to US Treasury Secretary, Lawrence Summers:
Dear
Mr. Summers:
Re: US Gold Reserve at Fort Knox
It is my understanding that a proper audit of the US
Gold Reserve at Fort
Knox has not been
completed since the Eisenhower administration. I further understand that some
visual inspections have been completed, but clearly, these can not be
considered as a proper audit. The proper audit of bullion reserves is one
undertaken by independent third parties, and includes among other safeguards,
a review of security procedures and assays of Gold bars selected at random.
I am therefore concerned that the Gold Reserve at Ft. Knox
may be at risk. My concerns could be alleviated if you would be kind enough
to answer the following questions and provide me with the following
information:
1) Is it true that a proper audit, as I've explained above, of the Gold
Reserve at Fort
Knox has not been
completed since the Eisenhower administration? If it is not true, please
provide me with a copy of the report prepared by the auditor.
2) Is it true that Treasury Department policy states that a proper audit will
not be undertaken because the cost of an audit is considered to be
unnecessary? If so, please explain why this expenditure, even if it were to
cost a few million dollars, is unnecessary in view of the fact that it would
ensure the safety of an asset that not only is of key importance, but is also
worth about $70 billion at current market prices.
3) If a proper audit of the Gold Reserve at Fort Know
has not been completed for a number of years, please explain why a proper
audit has not been undertaken, and further, why a proper audit is not
undertaken yearly as is the practice for other government assets.
I look forward to receiving your response, and I thank you for your
assistance. Yours sincerely, James Turk
Weeks
passed without any reply. Consequently, I sent the letter again on October
13th. Again, no reply.
On
the surface, it would seem that my letter is a very simple one to answer. Why
no reply? Why not even a letter from Mr. Summers acknowledging receipt? Does
he not want to answer these seemingly very simple questions?
In
any case, I am pursuing the truth. On November 22nd I wrote to my Congressman,
John Sununu. I provided him with my letter to Mr. Summers, and requested that
he contact Mr. Summers in order to see if he could get answers to my
questions.
On
December 1st, Congressman Sununu responded to me saying he had sent my letter
to Secretary Summers. He also said that he would send to me Mr. Summers
reply. We'll see whether or not Mr. Summers ignores my Congressman.
Why
doesn't the Treasury complete an audit, thereby putting the rumors to rest? Is the Gold in Ft. Knox
or not? We have a right to know.
James Turk
Goldmoney.com
Read
all the other articles by James Turk
Measure the
price of goods and services in Gold or Silver with 24hGold’s Currency
converter
James Turk is the founder of
GoldMoney (www.goldmoney.com) and the co-author of
The Coming Collapse of the Dollar (www.dollarcollapse.com). Copyright © 2007 by James Turk. All
rights reserved.
Published by GoldMoney
Copyright © 2008. All rights reserved.
Edited by James Turk, alert@goldmoney.com
This material is prepared for general circulation and may not have regard
to the particular circumstances or needs of any specific person who reads it.
The information contained in this report has been compiled from sources
believed to be reliable, but no representations or warranty, express or
implied, is made by GoldMoney, its affiliates,
representatives or any other person as to its accuracy, completeness or
correctness. All opinions and estimates contained in this report reflect the
writer's judgement as of the date of this report, are subject to change
without notice and are provided in good faith but without legal
responsibility. To the full extent permitted by law neither GoldMoney nor any of its affiliates, representatives, nor
any other person, accepts any liability whatsoever for any direct, indirect
or consequential loss arising from any use of this report or the
|