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The Ghost of Fort Knox Past - Part I

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From the Archives : Originally published May 26th, 2009
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Category : History of Gold





The U.S. dollar is “as good as gold,” right?  Well, not exactly.  Those days and decades are long gone.  The U.S. remains in the midst of currency woes and a global credit crisis that refuses to go away.  Let’s look into what was once the foundation for the buck - gold bricks in Ft. Knox, Kentucky.

There are reports that more than 8,000 tons of gold are stored within Ft. Knox and a few other national depositories.  That’s definitely a national treasure.  How did it initially get there?




The U.S. used to be on a gold standard.  The Constitution says that Congress is responsible for producing the nation’s currency.  Unfortunately, Congress abdicated this responsibility in 1913 to what is now known as the Federal Reserve.  Of course, the Fed is neither federal nor a reserve.  It’s been downhill ever since.

In most cases, privatizing a national service is not a bad idea.  Check your local post office if you need further clarification.  On the other hand, giving monopolies to greedy bankers might not be the wisest thing to do.  Where exactly do you sign up for a license to print money?  Do you have to be born into that privilege?

The Ft. Knox depository was completed in 1936.  The gold that was initially placed within its vaults was a function of two historic events: 1) The U.S. held a gold hoard as per its Constitutional duties, and 2) Franklin Roosevelt confiscated U.S. citizens’ gold in 1933.




The old fort has also been the storage point for the Constitution, Lincoln’s Gettysburg Address, the Declaration of Independence, the Magna Carta, and even some of the Queen’s crown jewels.

Up until 1933, U.S. citizens could exchange their personal holdings of currency for either gold or silver.  The government willingly obliged.  In 1933, after the gold theft by Roosevelt, local currency could no longer be traded for gold metal.  U.S. citizens still held currency backed by silver, however.  These were called Federal Reserve Silver Certificates.  They were deemed irredeemable by President Johnson in 1968.  Silver coinage was changed to base metals in 1965 and 1966.  Silver thus followed gold and it’s been paper ever since.

As a side note, the U.S. Treasury has squandered some five billion ounces of citizens’ silver since the 1950s.  Where did it go?  To elitist insiders for the most part.  This enormous hoard was also used to suppress the price of silver.  That game is now over, and you can well expect silver to continue trading significantly higher on its own merits.

Foreign nations could trade their currency for gold until 1973, when Nixon reneged on that global promise.  There has been nothing but “good faith and credit” backing any global currency since that ignominious event.  We’re in a total fiat world.  You can judge for yourself how that’s worked out.

Whose gold lies within the walls of Ft. Knox?  Clearly, if it is there, it belongs to the citizens of the United States.  The Fed and Treasury had fiduciary responsibilities to safeguard this national treasure.  It hasn’t backed our currency for decades, but it deserves to be protected and managed with care.

An entire book needs to be written on the Ft. Knox gold subject.  We will delve into a few highlights of the issue for the purposes of this initial brief essay.

The last independent audit of the Ft. Knox hoard transpired during the Eisenhower administration.  A reliable audit is accomplished by drilling and assaying random bricks of the shiny stuff.  Independent means someone other than the government, Enron, O.J., or Arthur Anderson performed the audit.

The sphere of gold is an incredibly murky place.  There are shenanigans wherever you look.  Apparently, gold is more important than some would have you believe.  The current global debt and dollar crisis is transpiring because there is no substance or discipline behind any global currency.  Both gold and silver have been stripped of their Constitutional duties.

Since WWII, the U.S. dollar has been the world’s reserve currency.  Governments and citizens across the globe hold dollars as a store of wealth.  It is a tremendous advantage and responsibility to issue the world’s reserve currency.  It’s even been called an exorbitant privilege.

That privilege has been exceedingly abused and is now coming to an end.  When you neglect and misuse the foundation of a house long enough, it eventually crumbles.

We’re there.

Do I believe the Feds have also squandered our national treasure of gold?  There are definitely serious reasons to doubt that it remains intact.  It is our patriotic duty to demand openness and honesty from our government.  Even with such an esoteric subject as the contents of Ft. Knox.

I will delve further into the golden ghost of Ft. Knox and my reasons for doubting its presumed content in coming articles.  You need to comprehend the times and protect yourself with real assets.

Invest resourcefully,



Russel McDougal

Investor’s Daily Edge



 



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Dr. McDougal writes about natural resource investing for Investor's Daily Edge and has been an active investor for 25 years, holding everything from stocks, bonds and mutual funds, to options, futures, currencies, limited partnerships, private placements and rare coins.
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