On April 5, 1933, President Franklin D. Roosevelt issued Executive Order 6102, “forbidding the Hoarding of gold coin, gold bullion, and gold certificates within the continental United States.” At the time, the Federal Reserve Act of 1913 required 40% gold backing of banknotes issued, so by the late 1920s, the Federal Reserve was close to its allowable limit. Demanding that citizens sell their gold to the Federal Reserve would allow it to increase the money supply during the depression.
The executive order required everyone to deliver their gold coins, bullion and certificates to the Federal Reserve on or before May 1, 1993, in exchange for $20.67 per troy ounce (equivalent to $391 today). There were a few exceptions – people were allowed to own up to $100 in gold coins, and rare coins as well as gold used for “industry, profession or art” were exempt.
The Gold Reserve Act of 1934 then required the Federal Reserve to transfer ownership of gold to the Treasury. In exchange, the Treasury issued gold certificates to the Federal Reserve for the gold at a price of $42.22 per troy ounce, which is the statutory price of gold set by law, and does not fluctuate with the market.
The government now had a massive amount of gold and needed a place to secure it. In 1935, the Treasury Department began construction on the United States Bullion Depository. Completed in 1936, this fortified vault building is located within the 109,000-acre Fort Knox army post in Kentucky at the intersection of Bullion Boulevard and Gold Vault Road.
Eventually of course, the gold standard was abandoned, meaning our currency was no longer backed by gold. On December 31, 1974, under President Gerald Ford, private gold ownership was once again legalized.
Today, the vault holds 147.3 million ounces of gold, divided between 13 compartments, translating to $186 billion dollars at current value. These particular gold reserves are, as we mentioned earlier, valued much lower, at $42.22 an ounce, primarily to keep the balance sheet stable in case the price of gold drops dramatically. Security measures includes a 20-ton blast proof door, 25-inch thick casing, minefields, electric fences and helicopter gunships. The depository has also been used to secure other historical items at various times. During WWII, it held the original Declaration of Independence and the U.S. Constitution. At one point, it also held millions of dollars worth of morphine and opium in case our foreign supply was cut off.
Peter David Beter
In the 1970s, an attorney named Peter David Beter made several claims that Fort Knox’s vault was empty and the gold had been stolen or sold to European interests at prices vastly below market rates. He was known for his pushing multiple conspiracy theories, including that Lyndon B. Johnson was involved in the Kennedy assassination, Patty Hearst was kidnapped by the CIA, and that the Rockefellers essentially ruled the world and would be responsible for America’s ruin.
Beter’s Fort Knox theory gained traction with the American public, leading the U.S. Mint to open the depository doors to visitors for the first time. On September 23, 1974, Mary Brooks, then the director of the US Mint, led several members of Congress and the media on a tour of the vault.
That was the first, and until last year, the only time the vault was open to civilians. On August 21, 2017, U.S. Treasury Secretary Steven Mnuchin led a delegation of Kentucky politicians including Senate Majority Leader Mitch McConnell on a visit Fort Knox.
This trip became somewhat controversial due to Mnuchin’s use of a government plane, and his wife, Louise Linton, subsequently posting a photo of her stepping off the plane on Instagram. Mnuchin ultimately reimbursed the government for this cost of his wife’s travel.
However, unlike in 1974, there was not a lot of publicity surrounding the actual visit to the vault and no mention of whether any members of the media were invited. No photos of the delegation inside the depositary have been released, although that’s to be expected, given that the vault’s internal structure is classified
This conspiracy theory centers more around whether US in general still has its gold reserves, as it doesn’t directly involve Fort Knox, and seems to be pushed mainly pushed by Russia.
Germany has the second-largest reserve of the gold (after the US). During the Cold War, the country stored 98% of its gold abroad, including at the Federal Reserve Bank of New York, in order to protect it from the Soviet Union.
Even today, it’s not unusual for countries to store their gold abroad – the Federal Reserve Bank of New York holds reserves for over 60 countries.
“In practice, much of the world’s gold is stored in vaults underneath central banks. This is highly convenient; when one government or central bank sells its gold to another, the precious metal can be rolled from one cage to the next, with none of the risk that comes with transporting it across oceans…The system, of course, is built upon trust. Among the world’s central bankers, that trust runs deep, and most governments are content to keep their gold wherever it is most convenient.”
In January 2013, after pressure from nationalist politicians and conspiracy theorists, Germany announced that it planned to relocate 300 tons of gold from the Federal Reserve Bank of New York and 374 tons from the Banque de France in Paris to the headquarters of its central bank, Deutsche Bundesbank. This translated to about 54,000 solid gold bars worth nearly $31 billion.
Although Germany wanted the gold returned within 5 years time, the US asked for a 2020 deadline. This raised the suspicions of conspiracy theorists who felt that even with the logistical hurdles of moving that much gold, 7 years seemed excessive.
After all, between 2000 and 2001, Germany had retrieved 940 tons from the Bank of England in order to cut back on storage costs. Neither the Federal Reserve Bank nor the Banque de France charge Germany for storing its gold.
The US managed to return the 300 tons to Germany by 2016, 4 years ahead of schedule, with France completing its transfer in August 2017.
Jim Rickards, attorney and author of several finance books, said in an interview with Kitco News that this was probably due to political reasons. Since 2013 and 2017 were both election years in Germany, he believes that Angela Merkel arranged for the repatriation to be completed early, in order to appease a small nationalist party that was pushing for the gold’s return.
There are still 1,236 tons of gold in New York, about 37% of Germany’s reserves, and 432 tons at the Bank of England in London. Germany has no plans to repatriate the remaining gold any time soon.”
Sputnik News, run by a Russian government-controlled news agency, quoted Valentin Katasonov, a professor at the International Finance Department at the Moscow State Institute of International Relations, as saying, “There are a lot of signs that the gold was not physically presented in the New York vaults when Germany called it back. Of course, the US began to return it to Germany but there is one interesting detail. When you leave your suitcase in the luggage storage you expect to get back the same suitcase. But Germany took the wrong ‘suitcase.” The article offers no proof or rationale this theory.
Koos Jansen, a writer for BullionStar, which bills itself as “Singapore’s premier bullion dealer,” has written several articles questioning whether Fort Knox’s gold is still there, including analyzing the annual audit reports he was able to get his hands on.
The audits are conducted by the Department of the Treasury’s Office of Inspector General. In 2011, Inspector General Eric M. Thorson told the House Financial Services Committee that they had audited 97% of government-owned gold and placed under “Official Joint Seal.” Since it’s obviously not practical to check every single bar, audits mostly involve making sure the seals have not been tampered with and assaying random samples of the gold.
In 2015, Jansen contacted both the Treasury Department and the National Archives to obtain copies of the audit reports from 1974 to 1986, when the majority of the gold was audited. Neither the treasury nor the archives were able to produce the audits for 7 of those years, claiming they weren’t able to find them.
In 2016, Jansen filed freedom of information requests for the audits carried out between 1993 and 2008, when the remaining gold was reportedly audited. The U.S. Mint initially requested $3,144.96 to fulfill the request, based on the time and labor involved to find and duplicate 1,200 pages. Seems suspicious, but Jansen crowdsourced the money and sent it in.
On December 23, 2016, the Mint finally delivered Jansen with “223 redacted pages that contained 68 pages of reports I didn’t ask for and 21 pages that were copied twice. Effectively I got 134 pages related to my FOIA request.” The Mint ultimately ended up not cashing the check.
What he found after reviewing the documents:
During the 1996 audit, one sealed compartment was opened for inspection, but no obvious reason was given. Theoretically if the seal was deemed intact, there would be no reason to open the compartment.
The sample size of weighed and tested gold had gone down dramatically since the 1950s. During the 1953 Fort Knox audit, about 10% of the gold bars were weighed. In 2000, only 0.65% of the bars were weighed. (This seems like it has a perfectly reasonable explanation, they probably didn’t use the seal verification method in the 50s.)
In another instance, the scale was sent to standard ounces, even though precious metals are weighed in troy ounces. (Why was a scale used for precious metals set to standard ounces in the first place?) Another time, the auditors misread where the decimal point was on the scale.
Conclusion: We may never know!