No Gold at Fort Knox

Gold reached a record high of $1,376 per ounce this Thursday morning but I’m writing about Fort Knox because of an unexpected conversation I had yesterday with a distant friend. We have known each other for 35 years but have only seen each other once over the last two decades due to busy schedules and distance. He had a long distinguished career in the gold business before retirement and is now battling a terminal cancer which can be treated but not cured.

I had been talking about the alternative Budwig flaxseed cancer cure and he stopped me in mid-sentence.

“Ron, I didn’t call to talk about me or my health issues. I hope to beat the cancer but regardless of the outcome I specifically called you today to tell you about a chance meeting I had back in 2005 related to Fort Knox that I have never told anyone else.”

“Only God knows if I will have the opportunity to publicize this in the future so I wanted to pass it on to you. The message needs to get out so people will know the truth as I heard it about America’s gold reserves. I read your LRC earlier essay, ‘Swiss Investors Ask: Where’s the Gold’ and since we are old friends, here is my story.”

As you well know I have always enjoyed going out and having a few beers after work and one evening back in 2005 I was drinking at a local watering hole with a few stock broker friends. As always, they talked the conventional Wall Street BS and I always enjoyed making them uncomfortable with my pro-gold discussions.

The bar was crowded and one of the brokers spotted a friend he hadn’t seen a while and made the normal introductions but I didn’t catch the guy’s name. He said he had been working up in Kentucky for 18 months. Just making conversation, I asked what he did for a living and he responded that he was a plumbing or electrical contractor and had just finished working up at Fort Knox, Kentucky.

Of course, he knew nothing about my background in gold but again just making conversation I asked, “Did you get to see the gold bullion depository building there at the fort?” He laughed, “Yes actually we were involved in renovating the building over the vault as the electrical and plumbing was in rough shape and we were bringing it up to code.”

Both of us had obviously already had a few beers and although I had just met this guy, I seized the moment and asked the one question every gold bug would if given the opportunity. “So is there any gold at Fort Knox?” He looked around the room a little uncomfortable and then laughed and replied, “The place is totally empty and the only gold at Fort Knox is in the teeth of the guards. I had full access to the building and the running joke we had with the guards was ‘how was the gold today’.”

This guy didn’t know my friend and probably thought this drinking conversation wouldn’t go any further than the bar but I have related the story as it was told to me yesterday.

Now to be fair, this was an offhand conversation after a large number of beers. Also the supposed gold is actually stored in an underground vault at the depository and there is no way a contractor would have had access to the area even if the entire building above ground was empty. Finally, any gold in the building could well have been moved during the renovation process for security reasons.

Still this is food for thought and another reason we should get behind Congressman Ron Paul’s proposal and bill to Audit Fort Knox which should be introduced in January 2011. Also, if the gold isn’t at Fort Knox as the beer discussion suggests, then gold investors owning substantial amounts should take efforts now to secure the gold by storing it offshore in a program like the Perth Mint or Switzerland’s Global Gold.

I believe the life cycle for the central banking fiat currency Ponzi scheme is about over. After the coming dollar and debt collapse, government and hopefully competing private alternatives will eventually require some form of precious metal or commodity backing guarantee in order to restore faith and trust in currencies. As always, private alternatives will buy gold etc. on the open market while governments will likely confiscate and steal what they need to create a new dollar after hyperinflation and currency collapse.

If you trust the gold reserves are in Fort Knox then just buy more gold from time to time on price dips. But, if you believe “it’s not just the beer talkin,” then take actions while you still can to secure your gold now before we have a crisis and a repeat of Roosevelt’s confiscation program.