Is There Any Gold In Fort Knox?

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Many bullion dealers believe that if there is any gold remaining in Ft. Knox it is not ours. Over the past few decades, the gold has been “leased” to bullion dealers who then sold it into the gold market, as a way to protect the value of the US Dollar by holding down the market price of gold.

“Leasing” the gold means the US can still claim ownership of the gold. A sale would need to be recorded or reported, but not a “lease.”

The gold in Fort Knox might also have disappeared through a process known as rehypothecation, which occurs when the gold is used by one party as collateral to guarantee a loan or credit of another party to back their own financing or borrowing practices.

The gold of other countries is also kept in storage in Ft. Knox. Earlier this century, Germany requested its gold reserves from Ft. Knox, and was told their gold would be returned in seven years.  This indicates that gold was used by Washington for some other purpose and was unavailable to be returned to Germany.

For years Representative Ron Paul and Senator Rand Paul have tried to audit the gold in Fort Knox with no success. Neither of these legislators have ever even been permitted to enter Fort Knox to see if any gold was there.

Now that Elon Musk has announced a gold audit, holders of gold contracts have suddenly started demanding settlement of those contracts by taking delivery of physical gold instead of cash. The amount of physical gold delivery being demanded from Comex, the US gold futures market, and its London equivalent has become enormous, putting an enormous strain on Comex to deliver. The only institutions in the United States capable of purchasing tons of gold at $2,900 per ounce are the Federal Reserve and US Treasury. In order to do this they must create new money with which to pay for the gold. The recent rise in the price of gold reflects these increased demand for physical purchases. The Fed & Treasury may be desperate to put gold back into Ft. Knox in advance of Musk’s audit.

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Previously, the Comex or futures market was used to manipulate the price of gold by holding it down and dumping huge amounts of short sale contracts into the futures market all at once; often when there was little to no active trading.

The gold futures market is unique in that the market price of gold can be manipulated by naked shorting. Naked shorting means a options contract can be sold without the seller having to actually own the gold itself outright. Unlike shorting equities where the particular stock needs to actually be owned by the seller of the option. 

This kind of market price manipulation of shorting gold is like being able to print money because the supply of paper gold in the futures market can be increased at any time by simply by printing more paper contracts. In this way, the increase in the supply of gold on paper may be used as a means to suppress the overall market price, because the price of all gold (both physical and paper) is determined by the futures market and not the physical market. The current demand for delivery of physical gold instead of cash when contracts come due, has made it impossible to continue to manipulate the price of gold.

There is speculation in the markets President Trump intends to return the US Dollar to at least a partial backing in gold in order to protect its status as the World’s reserve currency from the competition of the BRICS alternative. Unless and until the runaway US debt can be brought under control, the US Dollar’s international reserve currency status which is essential for the financing of US budget and trade deficits, remains at risk because World central banks hold a large amount of their reserves in US Treasuries. If the Dollar were not the World’s reserve currency, financing the massive US debt would likely be impossible.

If Trump’s attempt to restore normal relations with Russia are successful, that would end the current weaponization of the US Dollar which is driving so much of the world to look for a different means to settle trade balances. This would both greatly reduce the threat of an alternative reserve currency and the urgency of getting US debt under control. However, the pressure of mounting interest payments to foreign central banks on their Treasury holdings would still continue to be a problem.

The good news for Trump is that ending the Russia-Ukraine War would once again increase stability in the Dollar’s role as the World’s reserve currency. ✪

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