Financial writer Gary North today is heartened that all the candidates for the Republican presidential nomination support auditing the Federal Reserve, and he echoes GATA's observation that the big question about the U.S. gold reserve is not just whether and how much gold is held in the vaults but also whether its ownership is encumbered in any way, as through gold swaps and leasing.
North writes: "If the Fed is fully audited, it is likely that the audit will reveal that the gold is encumbered. Foreign central banks have leased their gold. This is a phrase for 'sold the gold,' since the people who borrowed it at 1% per annum then sold it for money and bought government bonds paying 5% or more. They cannot sell these bonds at face value; the bonds have fallen in value. They cannot afford to buy gold in the open market to return the gold to the central banks. The price is already far above what they sold it for. The central banks dare not demand a return of this gold. The gold is still on their books. The IOUs they received from the borrowers are counted as being as good as gold. The voters do not know that the gold is missing."
North's commentary is headlined "Auditing the Fed's Gold" and it's posted at GoldSeek here:
http://news.goldseek.com/LewRockwell/1327072200.php
And at Lew Rockwell here:
http://lewrockwell.com/north/north1089.html
