The United States Treasury’s inspector general conducted an audit of the department’s gold held at the Federal Reserve Bank of New York. The report concluded that the Fed’s gold is secure and is purer than previous estimates, at least according to the federal government.
Last year, auditors spent weeks five stories under the island of Manhattan measuring, weighing and drilling tiny holes into the gold bars owned by the Treasury. Auditing officials found that the Federal Reserve’s operations are up to par and the gold is finer than what has been recorded over the years.
“Our audit disclosed no material weaknesses and no instances of reportable noncompliance with laws and regulations,” the Treasury’s audit report said.
According to the New York Fed, there are approximately 530,000 gold bars as of 2012 worth about $368.5 billion. This is a combined weight of 6,700 metric tonnes. Also, since the gold is finer than originally thought, the inspector general increased the value of its holdings by $43,500.
Following the results of its audit, the inspector general’s office confirmed that it will conduct the audit annually, but it would not weigh, count or assay because the gold is now under the Official Joint Seal.
Although it is the general consensus that the gold held by the New York Fed is U.S.-owned, most of it is actually comprised of gold owned by foreign governments, official international organizations and central banks from across the globe. Gold owned by the U.S. government is mostly held in Fort Knox, Kentucky, West Point, New York and Denver, Colorado.
The audit comes as retired Texas Republican Congressman Ron Paul questioned the federal government’s holdings of gold. He told a congressional hearing in 2011 that the New York Fed has the power to sell or swap gold with other countries in secret without anyone knowing.
“The Fed is pretty secret, you know. Congress doesn’t have much say on what’s going on over there. They do a lot of hiding,” stated the three-time presidential candidate. “This is one of the few legitimate functions of government: To check our ownership and be fiscally responsible and find out just what we own and whether it’s really there.”
Even Ted Truman, a former assistant Treasury Secretary and top Fed official, conceded that last year’s audit of gold doesn’t “prove there’s not a secret agreement.” However, he admitted that he was not surprised by the audit’s findings.
“I would be flabbergasted if they found some huge discrepancy or even a substantial discrepancy between what they said they had and what they found,” stated Truman. “I would be surprised if anyone’s convinced of anything. They’ll conspire now about whether the audit was aboveboard.”
Last month, it was reported that Germany’s Bundesbank announced that it would be withdrawing billions of dollars of its gold held at the Fed, Bank of England and Banque de France. It confirmed at a press conference that it wants half of its gold holdings back home by 2020.
“The two most important functions of gold reserves are to build domestic confidence and to ensure the option that the gold can be quickly exchanged into foreign currency,” said Carl-Ludwig Thiele, a board member of the Bundesbank, at news conference.
At the time of this writing, gold is trading at $1,611 after dipping below the $1,600 mark on the final trading session before the President’s Day long weekend.
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