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The Los Angeles Times reported yesterday that the
U.S. Treasury Department is "auditing" the gold vaulted at the
Federal Reserve Bank of New York, most of which is held in custody for other
countries, but only to the extent of confirming the gold content of the bars
kept there, and not touching on issues of ownership impairment, like swapping
and leasing, the issues raised by GATA and others aggrieved by manipulation
of the gold market.
Indeed, the "audit" seems intended to
dispel "conspiracy theories" without actually having to disclose
anything about the U.S. government's gold market intervention policy, the
issue at the heart of GATA's freedom-of-information lawsuit against the Fed
in U.S. District Court for the District of Columbia, a lawsuit that was
decided more or less in GATA's favor last year and revealed that the Fed has
secret gold swap arrangements with foreign banks as well as many other
gold-related records that are being kept secret:
http://www.gata.org/node/9917
Responding to the L.A. Times story, Zero Hedge
quickly explained why the Treasury's "audit" of the New York Fed's
gold is a fraud. "What the 'conspiracy theorists' allege," Zero
Hedge notes, "is that claims existing in paper format on the physical
gold held under Liberty 33 are orders of magnitude greater than the actual
physical gold these claims supposedly have recourse to":
http://www.zerohedge.com/news/feds-gold-being-audited-us-treasury
But the L.A. Times story does quote U.S. Rep. Ron
Paul on that point and even mentions the movement in Germany to repatriate
that nation's gold reserves from foreign vaults. And if the Treasury
Department has felt compelled to commission exactly the wrong kind of audit
to deflect rising concerns about gold issues, that's progress too.
The L.A. Times story is appended.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
What's in Your Vault?
Uncle Sam Audits Its Stash of Gold at the New York Fed
The gold audit is a first for the institution and
includes drilling into several hundred ingots. It could put the conspiracy
theories to rest.
By Andrew Tangel
Los Angeles Times
Thursday, August 2, 2012
http://www.latimes.com/business/la-fi-gold-bars-20120803,0,3466318.story
NEW YORK -- For decades, the U.S. government has
stashed gold five stories beneath Manhattan in a vault under the Federal
Reserve's fortress near Wall Street.
Or has it?
Some conspiracy theorists suspect that the billions
of dollars' worth of bullion might have been looted in a dramatic heist, a la
the movie "Die Hard With a Vengeance."
Others claim that the gold has been used in a
shadowy government transaction, or swapped with gold-painted bars. It's even
caught the attention of politicians like Rep. Ron Paul and members of
Germany's Parliament.
Now all of us may finally get some answers.
The federal government has quietly been completing
an audit of U.S. gold stored at the New York Fed. The effort included
drilling small holes in the bars to test their purity.
The Treasury Department has refused to disclose what
the audit has revealed so far, saying the results will be announced by year's
end. But as one former top Fed official said recently, the testing may
finally prove that "Goldfinger didn't sneak in
at night" and take the gold.
"The calls for audits are saying, 'We don't trust the government for the
last 200 years,'" said Ted Truman, a former assistant Treasury secretary
and Fed official. He called perennial questions about the country's reserves
"the gold bug equivalent of the birther
movement."
The Treasury's auditing operation, including
drilling, is a first for the New York Fed. The department's inspector general
previously audited and tested only gold it keeps under heavy guard at Fort
Knox, West Point, and the U.S. Mint in Denver. These three locations hold 95%
of the country's bullion.
In New York, about $21 billion in U.S. gold is
locked inside the Fed's vault. It's stored alongside bullion from three dozen
other countries and organizations such as the International Monetary Fund.
All told, about 23% of the world's official gold reserves are stored in the
central bank's vaults.
The audit, which began in January, took place 80
feet below the Fed's limestone and sandstone Italian Renaissance building in
Manhattan's financial district. Visitors to the vault make their way through
a steel and concrete entrance where a 90-ton door rotates open.
Inside, a massive scale is ringed by 122 blue cages
that hold about 530,000 gold bars -- 34,021 of which belong to Uncle Sam. The
auditing team counted the U.S. stash, selecting more than 350 bars from which
to extract samples for assaying.
The process involved about half a dozen employees of
the Mint, the Treasury inspector general's office and the New York Fed. It
was monitored by employees of the Government Accountability Office, Congress'
investigative arm.
The bars were first weighed on a small electronic
scale, then transferred to a table mounted with a long, thin drill used to
burrow into the gold, said a person familiar with the operation who was not
authorized to speak publicly.
Workers were careful to collect any stray gold bits,
the source said. Based on the market price of about $1,600 per troy ounce,
the Treasury removed more than $110,000 worth of gold samples.
A Mint spokesman said about 1 to 1.5 grams of each
sample is destroyed in the assaying process, with the remaining granules
returned to the government.
The New York Fed refused to comment.
The final results still might not satisfy some.
Paul, the Texas Republican and presidential contender, wants an independent
audit of all U.S. gold.
In 1981, when Paul was on the Gold Commission -- a
panel set up by Congress to explore expanding gold's role in the U.S.
monetary system -- he argued for full gold audits every year. He has pitched
legislation for an exhaustive examination of the country's gold that could
cost as much as $60 million.
"If the gold is there and everything is in
order, they should welcome an audit," Paul said in an interview.
He said he doesn't suspect that anyone has replaced
the gold bars with fakes. He's more interested in examining paperwork that
would show whether the gold has been used in any transactions that were never
disclosed to the public, such as loans to other governments.
He is not alone. In Germany, there have been calls
by some politicians to "repatriate" the country's foreign gold
reserves and return to a gold standard as the euro common currency faces an
uncertain future.
Germany owns the world's second-largest reserve of
gold, much of it stored in central banks in New York, London and Paris. The
German government keeps close tabs on its domestic gold reserves, but some in
Germany are questioning the security and safety of the bullion stored outside
the country.
They've launched a campaign called Gold Action,
supported by politicians, economists, and other German citizens, with the
goal of bringing the bars back home.
Philipp Missfelder, a
prominent German legislator in the country's ruling Christian Democratic
Union party, visited the New York Fed in February seeking to inspect his country's gold.
Missfelder was not given access to Germany's gold bars, though it's unclear why,
according to German magazine Der Spiegel. He declined to comment.
The New York Fed hasn't typically rolled out the red
carpet to the central banks and international organizations wanting to audit
their gold accounts, according to Ernest Patrikis.
He's a former New York Fed official who had stints as the institution's
general counsel and chief operating officer.
"They could come in and take a look," said
Patrikis, now an attorney in private practice in
New York. But if they wanted to count the gold, "you've got to take it
away, count it and bring it back."
America's central bank began taking foreign gold
deposits when it opened in 1924. Gold piled into the New York Fed's vault
during World War II, as countries stored it there for safety. Foreign
reserves quadrupled to $4 billion worth of gold by the war's end, according
to the Fed.
The gold vault swelled with bullion until 1971, when
the U.S. stopped backing dollars with gold. Since then, the Fed role as
keeper of the yellow metal now carries less significance.
These days the New York Fed focuses on more pressing
roles: implementing the country's monetary policy by expanding or tightening
the money supply. It played a central role in propping up the financial
system in 2008.
Paul suggests that the government offload its gold
reserves if they serve little purpose.
"I would just as soon they sell the gold,"
Paul said. "And then we would find out if they really had it."
* * *
Join GATA here:
Toronto Resource Investment Conference
Thursday-Friday, September 27-28, 2012
Toronto Sheraton Centre Hotel
Toronto, Ontario, Canada
http://www.cambridgehouse.com/event/toronto-resource-investment-conferen...
New Orleans Investment Conference
Wednesday-Saturday, October 24-27, 2012
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
http://www.neworleansconference.com/
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