Wednesday, December 9, 2009

What's Really In Fort Knox?

The Trading with the Enemy Act, enacted in 1917, gave the President the power by law to oversee or restrict any and all trade between the U.S. and her enemies in times of war. Franklin D. Roosevelt amended the act to extend its scope to the hoarding of all gold. As part of the New Deal, Congress approved legislative changes which removed gold from circulation as money. Private ownership of gold in the U.S. became illegal on April 5, 1933 with the passage of Executive Order 6102.

An exception was made allowing each individual to retain five troy ounces, or $100.00. Rare and unusual numismatic gold coins - having recognized special value to collectors - were exempted. But millions of gold pieces - $20 St. Gauden's and Liberty Head double eagles, $10 eagles, $5 half-eagles, and $2.50 half eagles, that had either been in circulation or hidden away in safety deposit boxes - funneled into the coffers of the Treasury Department. A facility was needed to house them all.

Thus began construction of The Gold Vault. Completed at a cost of $560,000, the doors were opened to accept bullion in December 1936. Wikipedia states: "the first gold shipments were made from January to July 1937. The majority of the United States gold reserves were gradually shipped to the site, including old bullion and more newly made bars made from melted gold coins. The transfer needed 500 rail cars and was sent by registered mail, protected by the U.S. Postal Inspection Service."

Fort Knox, more correctly named the United States Bullion Depository, is located within the confines of the real Fort Knox, a United States Army post in Kentucky. The 109,000 acre base is located south of Louisville, and sports a population of over 23,000 soldiers, family members and civilians. The U.S. Army Armor Center is based there, as well as the U.S. Army Armor School. Training - for both the Army and Marine Corps - is conducted there for crews on the M1 Abrams battle tank. Well guarded, wouldn't you say?

Doesn't Fort Knox evoke memories of Goldfinger, Ian Fleming's 1959 novel? In which Auric Goldfinger - planning Operation Grand Slam - is intent upon heisting the gold contained in that vault? James Bond thwarts this attempt. If you didn't read the novel you've seen the 1964 film. Gert Fröbe is "The Man With The Midas Touch" and Sean Connery his 007 nemesis. In that version, it's up to Bond to foil a plan by the villain to force open the 22 ton blast-proof doors and detonate a device that would irradiate the reserves.

If you really want to watch things blow up, we should write our Senators and implore them to support senate bill S604, Representative Ron Paul's "audit the Fed" manifesto. The companion bill - HR 1207 - already passed the House of Representatives Financial Services Committee. Can you imagine the explosion - of disbelief, consternation, and vengeful litigation that would ensue - if ever such a bill passed permitting inspection of the contents of Fort Knox, and we discovered that the vault was empty?

What would happen if a bipartisan regulatory committee were allowed to physically canvass the premises scouting for the 4,603 tons - 147.4 million troy ounces - that the U.S. Department of the Treasury claims is stockpiled there? If such an inspection revealed there were gold, but not in the specified amount? If an assay determined that the reserves safeguarded there were not what they appeared to be? That the cache of bullion bars deposited their were suspect in their purity?

China Tungsten Online, headlines Tungsten Alloy for Gold Substitution: "its density of 19.25g/cm3 is just about the same density as gold (19.3g/cm3), which bears the similar specific gravity. These advantages make tungsten... the best substitute for the costly metal of gold or platinum... a coin with a tungsten center and gold all around it could not be detected as counterfeit by density measurement alone. We are well accustomed to exploit more innovative applications of tungsten products. Gold-plated tungsten is one of our main products."

Could there be any truth to the talk of 400oz gold-plated tungsten bars seemingly proliferating in bullion depository vaults? Rob Kirby states that just such a thing could well be the case. He has been making some specious statements, but tempers their strength several times by the use of modifiers. In "Doing God's Work," his recent column of November 12, 2009 details in greater length the statements that follow.

Quote: "reports of 400 oz. 'good delivery' bricks of gold found gutted and filled with tungsten within the confines of LBMA approved vaults in Hong Kong... the amount of 'salted tungsten' gold bars in question was allegedly between 5,600 and 5,700 – 400 oz – good delivery bars.
This was apparently all highly orchestrated by an extremely well financed criminal operation. Within mere hours of this scam being identified – Chinese officials had many of the perpetrators in custody." He goes on to say: "And here’s what the Chinese allegedly uncovered."

"Roughly 15 years ago – during the Clinton Administration (think Robert Rubin, Sir Alan Greenspan and Lawrence Summers) – between 1.3 and 1.5 million 400 oz tungsten blanks were allegedly manufactured by a very high-end, sophisticated refiner in the USA (more than 16 thousand metric tonnes). Subsequently, 640,000 of these tungsten blanks received their gold plating and WERE shipped to Ft. Knox and remain there to this day."

"I know folks who have copies of the original shipping docs with dates and exact weights of 'tungsten' bars shipped to Ft. Knox. The balance of this 1.3 million – 1.5 million 400 oz tungsten cache was also plated and then allegedly 'sold' into the international market. Apparently, the global market is literally 'stuffed full of 400 oz salted bars.' ” And in a followup comment, relating to a story which first surfaced in 2004 he states:

"In light of what has occurred – regarding the Gold ETF, GLD – after reviewing their prospectus yet again, it becomes pretty clear that GLD was established to purposefully deflect investment dollars away from legitimate gold pursuits and to create a stealth, cesspool/catch-all, slush-fund and a likely destination for many of these 'salted tungsten bars' where they would never see the light of day – hidden behind... legalese 'shield' from the law." End quotes.

Trace Mayer sent me this link "Why Gold Bugs Are Nuts," written by Alex Stanczyk. Stanczyk pens the ‘Rapid Trends Insider’ newsletter. He writes from the perspective of one who has been thoroughly vetted in all things bullion. Stanczyk, without identifying the author or resorting to an ad hominem attact, points out the weaknesses in Kirby's allegations. "This story is tainted," my words, not Stanczyk's, "taint nothing but bullion crap."

He writes that unsubstantiated Intranet rumors has set gold bugs to running around screaming "the sky is falling." On that premise, I would assume that Stanczyk feels such a tale to be fantastical. He contends the author's allegations are unfounded if proof cannot be produced corroborating such claims. "Reports?" Alex says,"reports by whom? These conclusions are based on what? Where is the evidence?" Like Clara Peller - of 1984 commercial fame - stated, "where's the beef?"

If there really are such faux bars taking up floor space in vaults around the world, there are tests that could determine their verity, without them being fubar. Tests to ascertain authenticity include actually drilling the core and assaying the sample or, less obstrusively, to non-invasively determine actual lattice structure of the metal electromagnetically. And why would these fakes have been substituted in the first place? A criminal undertaking of unprecedented scope? Or something even more nefarious?

Were these bullion bars - if now vanished - part of a sinister scheme to suppress gold prices? Chris Powell of GATA explains: "While central banks traditionally have said they lease gold to earn a little money on a supposedly dead asset, in 1998 Federal Reserve Chairman Alan Greenspan told Congress that this was not true. Central banks lease gold, Greenspan admitted, to suppress its price."

So many questions, so many lies. Our only hope to discovering the truth may rely upon the passage of Representative Paul's bill - backed by thirty Senate co-sponsors - being approved by Congress. Even then, it would be subject to Presidential veto. When it comes to the subject of gold and Presidents, the Oval Office doesn't display the best track record. So then, have we come full circle? Central banks leasing gold into the market, to suppress the price? Isn't that trading with the enemy?

Buy Silver. Buy Gold. Save Copper. Start Now.

No comments:

Post a Comment