The Gold Conspiracy Never Ends
I see that my old boss Ron Paul wants an audit of the nation's gold holdings to make sure the gold is really there and isn't lead bars covered with gold paint or something. This reminds me of a conversation I had with then-congressman Phil Crane many years ago.
Crane told me that one day he happened to be in Louisville, Kentucky and he had some time to spare so he drove out to Fort Knox. He went to the guard, introduced himself, and said he wanted to see the gold. The guard said that wasn't possible because he didn't have an appointment and a bunch of other reasons.
So Crane asked if he could use the phone and he called the Treasury Department and asked to speak to Bill Simon, who was then Treasury secretary. Because Crane was an important Republican congressman on the House Banking Committee, Simon took the call. According to Crane, Simon asked to talk to the guard and he told him to let Crane see the gold.
So Crane was allowed into the facility. But he was told that there wasn't one vault, but many vaults. And they were all on timed locks with different timers for security purposes. Apparently, there was only one vault that could be opened that day. It was opened and Crane inspected the gold but didn't have a test kit with him to be able to test it to see if it was genuine gold.
Over the years, I have heard various conspiracy theories about the gold that may have this incident at their core. One is that there is only one vault that has any real gold in it. If forced to show the gold to some official, this one vault is always the only one that can be opened that day. I've also heard that the real gold is on some sort of conveyor system and moves around from one vault to another depending on the timer system, so that the real gold is always available in whatever vault may be opened that day.
This is, of course, complete nonsense. The world's gold supply is known to experts within a small margin of error. If the gold in Fort Knox had been secretly sold it would create double counting that would become known. Also, the revenue would have to turn up somewhere in the budget. And it's hard to believe that vast quantities of gold could be removed without the soldiers guarding it knowing about it.
Unfortunately, I know from experience that when someone is committed to believing a conspiracy theory, no matter what evidence is presented against it, the result is simply to further confirm the original theory. I also know from experience that Ron Paul is very conspiracy-minded.
I recall one occasion when I was working at the Treasury Department and he was out of Congress, publishing an investment newsletter. He called to say that he had heard that the Treasury was building a new facility to print money with different designs and colors. The idea was to call in all the old money in order to catch drug dealers, tax cheats and so on. Ron told me that he had heard that a new high-speed currency printing plant was secretly being built in Texas.
As a courtesy to him, I actually looked into this. I was told that there were no such plans and that such a scheme would be impossible to implement without congressional authorization. I told this to Ron, but he published a piece in his newsletter saying that it was true. Of course, in the 20 years since the Treasury still hasn't implemented its secret plan. Maybe it's just waiting until it has enough black helicopters to confiscate all the guns at the same time.
Anyway, it seems that Ron is still on the same kick.
I have found that for some
I have found that for some people gold plays a deeply psychological role, like a sort of mental anchor. The people I've spoken to that feel this intensely about gold are often predisposed to thinking about the world in terms of what most people would call conspiracy theories, (a term they really, really dislike). But I find that psychologically, gold represents absolute stability in a changing world to them. It seems like the answer to every question they have, or the solution to every problem.
Also, I've noticed that when I ask people of this sort about what they would do with their money (in any market) they invariably just say "gold." So I'll ask something like, "which gold company stocks would you buy?" -- and they don't really know the names of any of the companies, so they just say "buy bullion." Again, in a world with tons of erroneous information, they can always go back to gold, it seems. It makes life simpler, and more predictable.
Anyway, I'm not trying to bash gold in general. In fact, everybody -- and I mean everybody -- thinks that gold is ultimately going up over the long run, so there's no dispute there. It's just that there's also an unhealthy infatuation with gold, and that's where I mean to direct my criticism.
Gold's psychological role
This reminds me of a conversation I had recently with my brother. He told me of a friend of his who was stockpiling gold. He (the friend) is convinced that our civilization and economy are about to collapse. No government, total chaos, mobs of cannibals roaming the streets.
My question was, in that situation what good is a bunch of gold going to do you? Are you going to hit the cannibals over the head with bags of it, or what? You can't eat it, drink it, or wear it, and you can't even make anything very useful out of it. Its only value would come in what you could exchange it for, which means you need to have some kind of functioning market economy. If you're going to stockpile something in case of the general collapse of civilization, I just don't see how gold is your best choice.
> I was told that there were
> I was told that there were no such plans...
And this is your proof?
BTW, I do not hold conspiratorial worldview at all. But it seems to me that with so many people raising these doubts publicly it would have been a lot easier to have an actual audit, rather than saying in a 100 different ways why this is impossible. Don't you think?
I was told...
I was told by my friend's, cousin's, roommate's uncle that aliens are being hidden in Area 51. I've heard this from other people tat I can't name with any specificity or back up their credentials, but, obviously, there must be something going on because so many people have heard about this.
Notice how ridiculous that sounds? No re-read your post. No re-read mine. Notice how ridiculous you sound?
You have some weird friends.
You have some weird friends. This probably says something about you too...
> Notice how ridiculous that sounds?
Yes, this is ridiculous.
The subject at hand is not.
Read Greenspan's essay on gold. He is right.
One of the the few times when he got it exactly right.
Looking for the West Wing clip, but it's not on YouTube
There was an episode of TWW where Rob Lowe is talking with a guy whose father was a UFO crazy. Long story semi-short, guy says his dad believed the Au in Ft. Knox was removed to make space for the bodies of the Roswell aliens.
Lowe discovers the guy's dad died a few (six?) months previous, so he has a conversation with Bradley Whitford in the hallway and goes back in and says he spoke with someone with Much Higher Clearance and that there will always be a reason not to let him inspect Fort Knox. Off the record, of course.
Guy leaves happy.
Hadn't realized that Aaron Sorkin knew Rand Paul. Or last year's model.
anyway gold only valued at $35 or so an ounce, not $1,200
see subject
And if there were, indeed,
And if there were, indeed, absolutely no gold there, what difference would it make for the US economy, the value of the dollar, or anything else?
Beck making oodles of money scamming the gold bugs
See Glenn Beck's gold scam (Click on graphic to enlarge):
http://www.ritholtz.com/blog/wp-content/uploads/2010/07/GoldlineGlennBec...
Remember all those people who built bunkers, guns, and ammo for Y2K?
There's serious money to be made off the crazies, and nobody is regulating most of these scams, ponzi schemes, etc.
Experts?
"The world's gold supply is known to experts within a small margin of error"
What experts? Who the heck are you talking about? Give me one name. Are you talking about Fed officials, IMF bureaucratic, Treasury spokesman?
If this kind of lazy thinking passes for journalism, we really are doomed.
"The world's gold supply is
"The world's gold supply is known to experts within a small margin of error"
What experts? Who the heck are you talking about? Give me one name. Are you talking about Fed officials, IMF bureaucratic, Treasury spokesman?
According to the World Gold Council (who are market makers on international gold exchanges), 165,000 metric tons of gold have been mined as of the end of 2009. (Yes, they offer more precise figures, but they're behind a paywall. Cough up the money yourself, if you're curious.)
http://www.gold.org/faq/answer/76/how_much_gold_has_been_mined/
Of that total, about 8,000 metric tons (or 4.8%) are the US currency reserves.
http://www.gold.org/assets/file/value/stats/statistics/archive/pdf/World...
Now, for as closely as the gold market is watched worldwide, if the supply rose by a hundredth of a percentage more than expected (from mining, conversion of old jewelry, etc.), inquiries would be made by market traders.
Thanks
For saving from answering a stupid question.
I discuss politics and
I discuss politics and economics on the Internet. I'm used to those who don't know how to use Google and/or never learned how to tell a probably trustworthy information source form a probably unreliable one.
For the second lesson, it's amazing how easy it is to apply what I learned in 6th grade (1972-1973) to the Internet.
Has been done before
I seem to remember reading sometime in the late 19th / early 20th century congress actually did mandate all the gold be counted. The total was off by some minascule amount - like $4 or so and the then Treasurer of the United States sent a check in to cover the difference.
That aside, why do we care? This is all part of Paul's Quixotic quest to get us back on the gold standard. Even if we choose to go back on the gold standard and we had one ounce of gold in the vault - we could just declare the price of gold to be $30 Trillion and ounce. Money and value are a concept - if we decided slipper shells were worth money Paul would be clamoring to count the shells in fort knox. (and my kids would have become millionairs on the beaches of Cape Cod this summer.)
Phil Crane
Thanks for bringing up Phil Crane. I had forgotten about my former Congressman and his slimy brother, who's name escapes me. Phil once voted against invoking a cease and desist order to stop a railroad strike, even though the strike would have crippled commuter transportation in his suburban Chicago district. Phil also decided to sober up, as he thought he might have a chance to head Appropriations in the 1994 takeover of the House. It's one thing to be the village idiot, but in Phil's mind you could not be the drunk village idiot as a committee chair.
I bring this history up in light of my concerns over all the wackos running for Congress. we have survived these folk before. Pray that we will do it again.
BTW his brother had a relationship with a page, as I recall.
Crane
His brother's name was Dan, I believe, and I think he did have an inappropriate relationship with one of the female pages, who are usually about 16 years old. And Phil was on Ways & Means, not Appropriations. When his seniority put him in line to be chairman he did sober up, but it was too late. His wife was also crazy, as I recall.
Dan Crane
"On July 14, 1983, the House Ethics Committee recommended that Crane and Rep. Gerry Studds (D-MA) be reprimanded for having engaged in sexual relationships with minors, specifically 17-year-old pages. Both men acknowledged the accuracy of the charges. The full House voted to censure the two men. Crane was defeated for re-election in 1984 and returned to dentistry." -- Wikipedia
I'm lost
Tell me again how if I had taken all the Ft Knox gold and buried it in my backyard the IMF would know? Also, a story about some random congressman that shows up to Ft Knox totally unannounced back in the '70s, demands to "see the gold", and then is allowed to call the treasury sec long distance from the gate guard phone sounds more far fetched than most of the conspiracy theories to me. I'm guessing Bill Simon gave him the secret password so the guard would let him in.
I almost hesitate to go
I almost hesitate to go there, but... what is being alleged in these conspiracy theories? - That we've secretly sold all the gold? Even if true, so what? Or are there people who imagine that we still have a gold-backed currency?
Why doesn't Ron Paul go inspect the Strategic Petroleum Reserve, instead? Now, THERE's a stockpile with some practical importance!
In any society where you feel
In any society where you feel you need gold to survive, lead will be much more valuable.
Back yard storage
"Tell me again how if I had taken all the Ft Knox gold and buried it in my backyard the IMF would know?"
They wouldn't. But then again, that wouldn't be a problem--just a change of where the gold was stored. The whole point of taking the gold out would be to use it somewhere. Putting all that gold back into the commodities markets would cause a disturbance in the Force that would surely be detected.
$200B
$200B is the market value of the gold in Ft Knox.
It's ~50 years of the current production of South Africa, so nothing to sneeze at, but not that significant in the scheme of things.
> $200B is the market value
> $200B is the market value of the gold in Ft Knox
So it's like four months of US defense spending?