The Ghost of Fort Knox Past: Part 3

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

We’ve been looking into an extremely complex and controversial issue over the past two weeks.  Does Ft. Knox contain the historical gold it claims?  Gold no longer backs our circulating money.  Still, those who hold fiduciary responsibilities to safeguard our gold are the ones who actually do issue our money.  If you can’t trust them with the gold, how can you trust them with the money?

As best I can tell at the present time, the Federal Reserve presently owns the gold that is or isn’t in Ft. Knox.  Not the Treasury and not U.S. citizens!  Future articles will deal with this subject.  You can be well assured the Fed is scared witless that its mishandling of this globally recognized treasure might just become common knowledge.

Ft. Knox and its presumed contents are part and parcel of the American legend.  The U.S. dollar is under extreme strain at the present time … and deservedly so, unfortunately.  If it became known that the Fed had also squandered their bounteous hoard of gold, there would be an incredible outcry against them.  They might just, once again, be thrown out on their arses.

Toss the Fed?  Is that possible?  Sure it is.  The Constitution demands it.  So do their many decades of total mission failure.  They were charged with price and monetary stability when chartered in 1913.  Check out a chart of the dollar’s purchasing power over the last 95 years.  Does it take an entire century to recognize such a colossal failure?  Where do you apply for that job?

If you like a good mystery novel, you will definitely want to continue reading this essay.  If not, it’s time to push the exit button.  We’re going to hit some links for some extreme “conspiracy theory” stuff this week.  Truth is often much stranger than fiction.

If nothing else, you will learn that the precious metals arena is one wild, wooly, and murky place.

In case you’re wondering, I don’t believe Ft. Knox presently holds significant amounts of gold.  Our government continues to prove untrustworthy.  The American people and our ruling hierarchy are not the same thing.  It is not “un-American” to question the actions and track record of an out-of-control regime.  In fact, it is distinctly American.

Last week, I demonstrated how the U.S. government has uneconomically dumped some five billion ounces of silver over the last 50 years.  This week, we’re going to look into the many allegations that President Lyndon Johnson long ago squandered our national gold treasure.  Once again, this topic is deserving of a book.  A series of articles hardly scratches the surface.

Let’s start with the official denial from Ft. Knox authorities that the gold has ever been compromised.  From the United States Bullion Depository at Ft. Knox:

“The security around the Depository has in part led to a popular and recurring conspiracy theory, as alleged by Edward Durrell, Tom Valentine and others, that claims that the Vault is mostly empty, with most of the gold in Fort Knox removed to London in the late 1960s by Lyndon Johnson.

  In response, on September 23, 1974, Senator Walter Huddleston of Kentucky, twelve congressmen, and about one hundred members of the news media toured the Vault and opened various cells and doors, each filled with gold.  Radio reporter Bill Evans, when asked if it seemed like the gold might have been moved in just for the visit, replied that ‘all I can say is that I saw gold there’ and that it seemed like it was always there.

  Additionally, audits of the gold by the General Accounting Office (in cooperation with the United States Mint and the United States Customs Service in 1974 and the Treasury Department) from 1975-81 found no discrepancies between the reported and actual amounts of gold at the Depository.  Approximately ten percent of the bullion is audited annually to ensure the amount and purity matches official records. 

The theory continues to persist, however.  In 2007, KPMG will carry out an independent audit.”

In the sphere of those who tend not to trust the government, nothing is confirmed until it is officially denied a time or two.  That’s a pretty clear denial above.  The mentioned “audits” of Ft. Knox gold are complete shams.  Taking a peek at a little “show gold” or allowing the fox to inspect the hen house won’t cut it.  The controversy refuses to go away.

Edward Durrell and Tom Valentine are mentioned in the official denial.  They long ago claimed that President Johnson was snookered out of the gold in a vain attempt to hold down global gold prices in the late 1960s.

Durrell was a Virginia industrialist and a board chairman for the Union Fork and Hoe Company.  He was a proponent of honest and Constitutional money and came to believe the gold was disgorged from Ft. Knox in the late 1960s and early 1970s.  There were eyewitness accounts of Army trucks hauling regular shipments of cargo in the middle of the night.  Durrell forced the Army to admit that some of the trucks did indeed carry gold.  The 1974 hokey gold audit, mentioned in the official record above, was a result of Durrell’s investigations.

Tom Valentine, also mentioned in the official denial, was an independent journalist for a national magazine out of Chicago.  He also clamored for an independent Ft. Knox gold audit.

An unnamed Army general was also a key player in this scandal.  I have not been able to track down a name or much detail about him.  We’re told the following from this link:

“A U.S. General, at a later date, stated off the record to some, that he headed a military convey of trucks that took the Fort Knox gold to the East Coast, where it was shipped to England in the 1960s, to stem a run on the Bank of England.  The British had a lot of trouble caught repeatedly denying they were going to devalue the Pound Sterling.  Amid their bank panic, some other countries apparently ended up with the U.S. Fort Knox gold.”

Another key player on the Ft. Knox gold scene was Dr. Peter Beter.  He was an ultra-successful attorney and was appointed as General Counsel for the Export-Import Bank of Washington.  His book, The Conspiracy Against the Dollar, was a bestseller.  Beter wrote a series of “Audio Letters” from 1975 to 1982.  Many of these letters exposed details of the Ft. Knox heist.  Here’s a link to Audio Letter #2.

Another gold investigator happened to be a 22-year U.S. Congressman from Kentucky.  In fact, Ft. Knox was in his district.  He also claimed gold was being taken out secretly at night.  His affidavit can be found in the Beter link above.

As you can see, the clear claim is that it was President Lyndon Johnson who supposedly squandered the massive gold hoard in Ft. Knox.  LBJ is not exactly known as our most honest President (see Gulf of Tonkin and Vietnam).  Did he also lie about U.S. gold?

More recently, James Turk, a true advocate of honest money and markets, has been hiking the Ft. Knox gold trail: click here (some of the links in this article are defunct) and here for two of his articles.

The most recent work demanding an independent audit comes from the honest money and market advocates at the Gold Anti-Trust Action Committee (GATA).  From a 9/19/07 news release:

“Metal Bulletin's story appended here is strong evidence that Western central banks are having trouble mobilizing enough real gold with which to maintain their gold-price suppression scheme.  The story's reference to GATA's being ‘believed’ to have made a freedom-of-information request in regard to the long-unaudited United States gold reserves is easily clarified: The request is still being devised by GATA's consultant, constitutional scholar and lawyer Edwin Vieira, with the hope of making it un-dodgeable by the Treasury Department. 

GATA hopes to submit the request in the next month.”

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

I’ll be the first to admit that this Ft. Knox gold trail is about as winding and murky as it could get.  We’ve just spanned four decades of controversy.  Will the truth ever be known?

I think it will in the near future.  The global fiat money system is now centered on the U.S. dollar.  This structure is collapsing and will have to be replaced sooner or later.  The gold of Ft. Knox will either come to the forefront at that time or it will disappear into a black hole.

It’s possible the dollars you hold are still as good as the gold in Ft. Knox.  But that might not be saying much.

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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