An investigation by the Treasury Department’s Office of Inspector General into the U.S. Mint’s practices in securing gold bullion for its bullion and numismatic gold coin and medal products has determined “the Mint cannot ensure that the majority of gold coin produced are minted from newly mined U.S. gold and in compliance with U.S. law,” according to the OIG’s 32-page audit report.

Findings

The audit was initiated at the Mint’s request June 13, 2019, and a Draft Report was provided to the Mint on Aug. 13, 2020, followed (after a 2020 Mint response and other complications and follow-up procedures) by a revised Draft Report Jan. 9, 2024.

OIG investigators concluded:
Finding 1: Reasonable assurance exists that the Mint’s gold is responsibly sourced, but further engagement would enhance controls. OIG investigators discovered that despite the Mint procuring more than $500 million in gold bullion annually, “the Mint has limited engagement with its gold bullion suppliers or approved gold refineries to reaffirm that responsible sourcing requirements are being conducted in according with U.S. law. …
“This is in part due to the Mint’s lack of documentation from its gold refiners certifying the amount of newly mined U.S. gold acquired. It is also questionable as to whether the Mint methodology used to determine what constitutes newly mined gold is permissible under current U.S. law.”
Investigators learned the Mint relies heavily on its contracted gold refiners’ adherence to London Bullion Market Association requirements.
The OIG recommended the Mint implement additional procedures including LBMA-required third-party audits and obtaining supporting documentation. The OIG also recommended that the Mint publish online on the Federal Register its procedures in acquiring newly mined gold. Mint management under the direction of David J. Ryder in 2019 agreed with the OIG’s first finding and recommendations for resolution, and his successor, Ventris C. Gibson concurred in 2024.
Finding 2: The Mint cannot ensure gold is acquired in accordance with U.S. law.
The Mint’s management under Ryder disagreed with the second finding and emphasized that the bureau’s gold allocation system is the most appropriate method of satisfying the statutory requirements. The Mint stopped requesting and securing pertinent documentation on newly mined U.S. gold processed by refiners starting sometime in 2002. The bureau also ceased maintenance of a Hallmark Balance Sheet. These were primary elements of the Mint’s procedures established to ensure compliance with the Gold Bullion Act of 1985.

The Mint under Director Gibson is in the process of reopening relationships with the refiners to provide the proper documentation at designated intervals disclosing detailed information on the amount of raw gold received at their facilities and refined into good delivery bars. The Mint is also in the process of developing and maintaining an ongoing Hallmark Balance Sheet.

“Further, management commits to the development and submittal of a legislative proposal to Treasury within 180 days which would seek technical amendments of the legislative provisions concerning the use of newly mined U.S. gold that were enacted in Public Law 99-185 and Public Law 109-145 and codify the Mint’s existing gold allocation system,” according to the OIG’s audit report.

Trigger

The OIG’s audit of the bureau’s gold acquisitions was triggered at the request of the Mint, after Mint authorities were alerted in June 2019 to an allegation that the U.S. Mint had been supplied gold obtained from illegal mines in Colombia, South America.

According to the OIG’s 32-page audit report, “Reportedly, these mines were linked to illegal activities that included terrorist financing and money laundering.”

“Our audit included a review of the Mint’s process and controls to acquire gold for use in the Mint’s gold bullion and numismatic programs, including controls used by the Mint’s gold bullion suppliers and refiners to ensure ‘responsible sourcing,’ ” according to the OIG’s audit report.

The terms “responsible sourcing” or “responsibly sourced” means that “sufficient due diligence was conducted to provide reasonable assurance about the gold source integrity in complying with local, international and U.S. laws and not being linked to illicit activities that include money laundering and terrorist financing,” according to the OIG report.

According to law

Public Law 99-185 — also known as the Gold Bullion Act of 1985, that established the American Eagle gold coin program — and Public Law 109-145, the Presidential $1 Coin Act of 2005, specifically mandate that the Treasury secretary must secure gold for coins issued by gold mined from natural deposits in the United States or territory or possession, within one year after the month in which the ore from which it is derived. This gold is referenced in the OIG audit as “newly mined U.S. gold.”

The OIG report finds that without adequate source documentation, the U.S. Mint’s representations that the gold in its products is compliant with these requirements cannot be verified, and representations indicating otherwise at its website are “inaccurate and potentially misleading to purchasers.”

“The majority of the gold coins produced by the Mint are minted under the authority of the two laws,” according to the OIG.

Extent of investigation

OIG investigators conducted their probe from June 2019 through November 2019, with subsequent follow-up through April 2020.

“After completion of fieldwork, and receiving Mint management’s response to our draft report in August 2020, issuance of the final report was delayed due to follow-up related to Mint management’s non-concurrence with our second finding and recommendation, as well as competing priorities during the Coronavirus Disease 2019 pandemic,” according to the OIG audit, but its findings remained unchanged.

Fieldwork conducted by the OIG included documentation of gold procurement procedures at the West Point Mint.

Former U.S. Mint Director Ryder, who stepped down as the bureau’s chief executive in October 2021, had disagreed with the OIG’s second finding, requiring further assessments.

In May 2024, OIG investigators met with Ryder’s successor, Director Gibson, to discuss the OIG’s revised draft report and the May 20 revised Mint management response, which mainly agrees with the OIG’s findings and outlines future Mint actions in response to OIG recommendations.

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