House members express doubt on U.S. gold holdings
- Published: Jun 28, 2011, 8 PM
A 75-minute congressional hearing failed to assuage the fears of House conservatives that something is amiss with the nation’s gold reserves.
“We’re going to keep pestering them,” promised Rep. Ron Paul, R-Texas, after the June 23 hearing before the House Financial Services Subcommittee on Monetary Policy and Technology, which Paul chairs.
What Paul told Coin World most troubled him were the “blank stares” that another member received after challenging a top Treasury official for assurances that none of the U.S. gold had been pledged to the International Monetary Fund.
The Treasury Department’s inspector general and a representative of the Government Accountability Office did their best to assure Paul and other members during the hearing that all was secure with the federal government’s gold reserves.
There was no need, they said, for a Paul-sponsored bill that would require an detailed, six-month audit of the gold reserves.
IMF gold questions
But the officials were unprepared for Rep. Blaine Luetkemeyer, R-Mo., who demanded to know if any of those gold bars were pledged to the International Monetary Fund.
After first asserting that all of the U.S. reserves — all 245.3 million troy ounces — were secure and unencumbered, Eric M. Thorson, the Treasury inspector general, backed off.
The Missouri lawmaker pressed him, asking if those gold reserves included gold that the United States had pledged to the IMF.
Where was that gold? Luetkemeyer wanted to know.
Earlier Thorson had sought to assure the subcommittee that “not one troy ounce is encumbered.”
Paul, a GOP presidential candidate, wondered if the U.S. gold could have been counted twice, once as part of the Treasury resources and a second time as an IMF liability.
“A possibility?” he asked Thorson.
“No,” the inspector general responded.
Thorson attempted to answer Luetkemeyer by telling him that all the gold was securely held in Treasury facilities and was “not moving back and forth” between the U.S. government and the IMF.
When that failed to end the questions, the Treasury executive promised to get “a more definitive answer” after the hearing.
Both Thorson and Gary T. Engel, director of financial management and assurance for the GAO, came on strong to Paul’s charges that the Treasury Department “has been less than transparent with the results of its gold audits.”
“All the audit reports are on the Internet,” Thorson said. “You said we were less than forthcoming. I really don’t understand that, sir.”
Democrats on the panel charged that the gold audit Paul is seeking would cost $60 million and duplicate work already being performed by the inspector general.
“I happen to be the most conservative member of Congress when it comes to spending,” countered Paul.
He maintained that the Treasury information about gold reserves is difficult to find and hard to comprehend.
Funding it should be no problem, Paul said, noting the U.S. Mint could simply dip into the $400 million profit it made last year.
A trip to Fort Knox?
Paul and several committee members did seem favorable to an idea Rep. Lacy Clay D-Mo., mentioned — that they should visit the Fort Knox Gold Bullion Depository to testify to the public about the security of the gold held there.
Members of Congress and the media made just such a trip in 1974 after similar questions had been raised about the security of the gold reserves.
U.S. gold reserves are held at the United States Mint facility on the base of the Army fort in Kentucky and at the Mint’s facilities in Denver and West Point, N.Y. Another 5 percent of the government’s gold is held at the Federal Reserve Bank of New York, the subcommittee was told.
Paul was suspicious of the Federal Reserve System’s gold holdings. “They do a lot of hiding,” he said.
In his opening remarks, Paul noted rumors that the U.S. gold had been secretly swapped with a foreign government and wasn’t pure.
It seems to some that the government “locked up the gold and walked off,” he said.
Paul blamed government secrecy for the rumors, saying it was “not surprising that so much confusion abounds.”
Security, quality of gold
Thorson argued that the security and quality of the gold reserves is certain because it has been untouched for years, held in a sealed compartment after being surveyed and analyzed.
“There is no movement; that’s why it’s secure,” he said.
“It seems it doesn’t comport to my idea of what an audit should be,” Paul replied.
Paul said he wanted more detailed results down to the serial numbers on the gold bars.
“I agree transparency is our business,” Thorson said, offering to do whatever his staff could to answer Paul’s questions.
But he and Engel argued that the audits that have been performed are accurate.
Besides, Engel noted that performing assays on the gold bars would destroy a portion of the gold.
The reserves are now valued at about $340 billion, Thorson said.
Since the United States abandoned the gold standard it has no function.
“So, it’s just sitting there? Luetkemeyer asked.
“Yes,” Engel said. ¦