While hurricane Harvey has been doing its devastating merry-g0-round in southern Texas, while NASA has been planning a "controlled venting" of the Yellowstone caldera, while US Navy ships are being rammed and "incompetent crews" are being blamed, and while even more missing money is showing up, the gold story just became a little more bizarre if this article shared this week by Mr. S. is any indicator:
The article is about Dutch Fort Knox gold researcher Koos Jansen, and his attempts to get a straight answer from various US Government departments about the state and size of the US' gold reserves. It is anything but a straighforward "the gold is all there" reassurance from Treasury secretary
Mr. Munchkin Mr. Mnuchen:
Here is more from Koos Jansen analyzing the FOIA release of documents earlier this year which revealed new information on Fort Knox:
What is worrying is that the reports now in my possession reveal the audit procedures have not competently been executed. Combine that with the fact the documents are incomplete and redacted, and the result is suspicion of fraud. In this blog post we’ll have a first critical look at the reports and the problems to be found within.
It should be clear that the US Treasury (owner of the gold), US Mint (main custodian), Federal Reserve Bank Of New York (second custodian), and the Office Inspector General of the US Treasury (head auditor), are reluctant to disclose information about the audits of the gold at the four largest depositories that store over 8,000 fine metric tonnes. Consider that the most seasoned gold analysts aren’t even aware this gold is audited.
When one turns to the actual mechanics of these audits, one runs into "Schachtian problems." Why "Schachtian"? Well, recall for a moment that interwar Reichsbank president Hjalmar Schacht, in his memoirs Confessions of the Old Wizard recounts a visit he made to the New York Federal Reserve's bullion depository in 1928, when the then governor Benjamin Strong informed him that the depository was unable to locate Germany's gold. Schacht records that he simply smiled and said "That's ok, I know you're good for it." One suspects that Mr. Schacht was not saying more than he was saying, and one suspects that this might be connected to those theories that he received such a light sentence at the Nuremberg tribunals because he had blackmailed the west's "powers that be." While I've never seen nor read any speculations that flesh out those allegations in any depth, I've often wondered if this incident was somehow connected to it.
So what are the "Schachtian problems" that Mr. Jansen has run into? Here it's best to let him speak in his own words:
However, in 2016 I embraced the motivation to push through and find out how many gold bars were counted, weighed and assayed in between 1993 and 2008, when allegedly the last series of physical audits was conducted. Not surprisingly, zero US government departments could provide me the information I was looking for, but through certain FOIAs I obtained leads to submit new FOIAs, and so on 12 Augustus 2016 I demanded, inter alia, the “memoranda submitted by the US Mint Director’s representative regarding audits of the Mint Schedule of Custodial Gold and Silver Reserves to the Chief Financial Officer drafted from 1993 through 2008”. The Mint replied this request would costs me $3,144.96 dollars because it would take 40 hours to search the respective documents, 8 hours for review, and additional costs would be incurred to duplicate 1,200 pages. I thought this was hogwash – 1,200 pages seemed out of proportion for such memoranda, how hard can it be to find a few pages and how did they know it were going to be 1,200 pages if they had to search 40 hours for it – but decided to start a crowdfunding campaign to collect the money.
Having caught out the latest "magic bullet" explanation, the article goes on to illustrate the shoddy procedures in evidence in the audit:
First, they barely weigh any gold when they inspect the gold:
We need to discuss the sample size of the gold verification. In 1998 at Fort Knox 19,800 gold bars were inspected but only 105 of them were weighed and assayed (exhibit 7.2). That’s not much in my humble opinion. In any case, I expected a higher sample size.
Secondly, for the tiny bit of gold they did weigh, the scales they were using were not accurate:
When all parties tried to reconcile the weight of samples on 22 and 23 July 2004, they found out, “the scale was reading at ounces rather than fine troy ounces”, because, “a setting on the scale had not been properly changed”. Allegedly this is what caused alternative readings in the books of the Director of the Mint’s Representative and the OIG’s Representative. And presumably because nobody could figure out how to use the scale correctly they decided to postpone re-weighing the samples until 24 August 2004. This failure of how to use a scale is a colossal disaster for the credibility of the Deep Storage audit procedures.
Let that soak in: the audits consist of small samples, leaving one to question whether or not the samples are truly representative of the deposit, and once this small sample is weighed, it's weighed on inaccurate scales! One recalls in this connection the attempts by Congress in the 1970s to conduct a thorough audit; unfortunately, it was anything but an audit, as they were allowed into only one vault in Ft. Knox. The other vaults could have contained anything: air, tungsten, or missing paintings stolen in Europe during World War Two. We simply don't know.
So what's in Fort Knox? More than anything else, the depository contains a long history of secrecy and data obfuscation.
And where have we encountered that before? The budgetary process, the obfuscations surrounding the bearer bonds scandals, and, of course, Herr Schacht, who, whatever else one might say about him, at least pointed out the problem began in 1928...
Sounds an awful lot like a hidden system of finance, and that what may lie at the root of the obfuscation is re-hypothecation...
...and lots of it.
See you on the flip side...