Jan. 27, 2015 - Freedomain Radio - Stefan Molyneux
17:14
2895 THE GOLD SCANDAL: What They Aren't Telling You!
The Federal Reserve Bank of New York's underground vault supposedly holds 7,716 tons of gold bullion - most of it in trust for foreign nations, central banks and official international organizations. The United States Bullion Depository, known as Fort Knox, is a fortified vault located within the United States Army post of Fort Knox, Kentucky, and used to store a large portion of United States gold reserves. But how much gold is really in these massive vaults - and how easy is it to withdraw reserves? The European debt crisis caused the Federal Bank of Germany to bring home Germany's gold reserves - but it hasn't been very easy - leading to widespread speculation of monetary foul play by the United States.
Hi everybody, it's Stefan Molyneux from Freedom Main Radio.
Yes, it's time to talk about Nazi gold!
What am I, working for the History Channel?
Not really.
So, this is not Nazi gold.
I don't know, maybe some of it is.
But this is Germany's gold.
And the fascinating story of attempting to get back something that somebody's been holding in safekeeping for you, which you're not allowed to see.
A very, very brief history.
Gold and silver, the bimetallic standard, has been what humanity, prior to technology, like modern technology, it's what humanity gravitates toward in the absence of governments taking control of the currency.
Gold is relatively stable in value, like a...
A really nice suit cost an ounce of gold 150 years ago.
It costs about an ounce of gold now.
And if you price things relative to gold, it's pretty stable in value.
It tends to use a little bit more gold mined every year, but the economy grows every year, a couple of percentage points.
So it's a pretty stable way of organizing finances.
I mean, there are cryptocurrencies and other things that have come along since, but traditionally, historically, it's been...
Now, governments hate gold because they can't just snap their fingers and make more of it.
They can print off treasury bills, they can print off money, they can type whatever they want into their own bank account if they control the currency.
And if said currency is not linked to gold, which is why governments have always fought to get beyond the gold standard and portrayed everyone who likes the gold standard as, well, mad, some sort of Bond villain.
And currency used to be backed by gold, right?
So it was risky sometimes to take gold around, so you'd take a paper note from one bank to another, signed to you, like a check.
And paper currency was originally only supposed to represent gold, and then they decoupled, the American government decoupled, in a variety of measures, decoupled the dollar from gold, and now they can print whatever they want, and this is how you get deficits and wars and all late empire stuff.
Now, just today, the European Central Bank has decided to start flooding the European economy with a bunch of made-up money.
On January 16, 2013, right, so two years ago, Germany's central bank, the Bundesbank, said it will ship back home all of the 374 tons of gold it stored with the Bank de France in Paris.
As well as 300 tons held in Manhattan by the U.S. Federal Reserve.
Now Germany is the second largest holder of gold in the world and it's 3,396 tons of German gold.
So they said January 16, 2013 we want to bring back our gold or a bunch of gold from us.
The U.S. Fed holds almost half of the 3,396 tons of U.S. gold.
So The Federal Bank of Germany has only been able to get hold of the 674 tons of gold that it wanted to get back.
It got back 37 tons so far.
Only 5 tons of that came from the U.S. The rest came from Paris.
So the German government's been storing about half of its gold supply with the U.S. Fed in vaults under the New York City Fed.
They wanted to bring home all their gold.
The Fed said, well, we can't really...
We need at least until 2020 to get some of your gold across.
So they said, wait a minute, you've been holding our gold and we'd like it back and you're telling us you can't really get to it until forever from now?
They said, okay, well, the German government said we want to come and visit the Fed vaults to inventory the gold and to make sure it's actually there.
But the Fed said, no.
No, I'm afraid your gold is in the champagne room.
You can maybe look, but no touchy.
In fact, they first of all said you can't even come and look at it.
And the reason they said was, well, we're concerned about security.
If you put something in a safety deposit box in a bank, and then you want to go and get it back, and the bank says, well, we can't let you in there to get it back because of security, you'd say, actually, it's security from other people that I got this safety deposit box, Frank, not security from myself!
Then I might as well just have given it to you.
So they said, well, we're worried about security, so we can't let you see your own gold.
And also, there's no room for visitors.
I mean, that's pretty astonishing.
And Germany did finally send some staff to the Fed, and they were permitted into a vault's anteroom, and they were shown five or six gold bars as representatives of their holdings, and they were permitted nothing else.
Looking at the gold was verbatim.
They were not satisfied with this and came back a second time.
The Fed only opened one of the nine rooms and let the Germans look at the stack of gold.
They were not permitted to either enter or touch.
The gold that was supposedly theirs, and they returned home.
And now, I mean, a lot of people might want to come and see the gold that's stored in the Fed that's theirs or their government's.
I mean, who owns this stuff in reality?
But...
The Fed has a system whereby the rooms are numbered and the accounts are numbered and so on.
So you can't actually go and see your gold if you're a representative of the German government.
You can go and see some gold.
It might be someone else's gold.
They might be moving the same pile of gold from room to room.
This all might be a tungsten with gold coating.
Who knows, right?
This, of course, is supposed to be at Fort Knox.
It's supposed to have 3% of all the gold ever mined by mankind.
But nobody's seen the gold at Fort Knox for a very long time.
The last, and I'm going to put this in loose air quotes, the last audit and the last public visit was in 1953.
Yes, that's correct.
Just after U.S. President Dwight Eisenhower took office.
No outside experts were allowed during that audit, and the audit team tested only about 5% of the gold there.
So there really hasn't been a kind of comprehensive audit or even any audit of Fort Knox in over 60 years.
Now, there are estimates to take 400 people six months to fully test the gold at Fort Knox.
It costs about $15 million.
But really, who has an incentive to do it?
The overseas governments don't really want to find out if their gold is gone because they then have to not have it as an asset on their ledgers and it would cause a lot of problems.
Of course, if the gold is there, there'd be no reason not to let people see it if the gold is gone or...
Somewhat gone or whatever.
Then nobody on the American side wants to have that happen.
In 1974, with regards to Fort Knox, six congressmen, one senator, and some press agents were allowed to enter the Fort Knox to see for themselves if the gold was there or not.
The tour showed that there was gold in Fort Knox, but at the same time it did spark more controversy.
So when a tiny fraction of the gold reserves were made available for viewing, and One congressman published a report saying, well, the gold that was held there seemed to be less heavy than you would expect.
Also, there was some complaints that the gold was orange in color.
Now, gold coins usually are too soft in and of the rub off.
So gold coins usually have copper, like 10% of copper or whatever, injected to make them more firm.
And, of course, the U.S. government stole or took from the American public in the 30s a whole bunch of gold coins when they made it illegal to own gold.
And...
So if they'd melted down those gold coins, it would explain the orange color, which would be copper.
So it's like you're paying someone to store your car, and you want it back, and they show you a hubcap that's somewhat associated with the model of your car.
And that really wouldn't be that satisfying for you, right?
Now, of course, if America has the gold, then it has leverage over Germany.
And, you know, it makes Germany support Libya.
It was in Libya, Ukraine, bombing Syria, and all that kind of stuff.
And so the German central bank said recently that it stepped up the repatriation of its gold reserves from overseas storage last year.
And...
Yeah, the US has the most gold, and then Germany has the second.
So according to the German central bank's own data, 1,447 tons of gold are stored at the Federal Reserve Bank in New York, 438 tons of the Bank of England in London, and 307 tons of the Bank de France in Paris.
And there is a...
The European debt crisis and now, of course, the printing of money from the ECB is freaking people out.
And there was a political campaign to bring the gold reserves home because they're worth about $144 billion, which, you know, is quite a lot.
Austria also wants to audit the 150 tons of gold it stores in the UK. Some sources put this at 280 tons.
According to Austrian Trend magazine, quote, there is a rising disbelief among Austrians about the existence of the gold.
Now, as far as getting your gold back, you're supposed to get back the exact bars that you deposited into Austria.
The Federal Reserve or into these banks.
So the Federal Reserve website states, quote, All bars bought into the vault for deposit are carefully weighed, and the markings on the bars are inspected to ensure they agree with the depositor instructions and recorded in the New York Fed's records.
This step is vital because the New York Fed returns the exact bars deposited by the account holder upon withdrawal.
Gold deposits are not considered fungible, i.e.
you don't care which quarter it is, it's just got to be a quarter.
That's not the case with gold.
There's a variety of...
They have different chemical signatures.
There's a variety of purities and so on.
So that's what the Federal Reserve website states.
Or, rather, that's what the Federal Reserve website used to state.
A few months ago, the Fed returned melted and recast bars to Germany, not the original ones that had been stored.
The link to the message I just read to you about returning the exact bars now leads to a page unavailable.
I guess the Germans are hoping that their gold is not going to be 404 as well.
The page may have been eliminated because a blogger pointed out that the Fed promises to deliver the exact gold bars back, but didn't in the case of some of the bars with Germany.
So, and it is actually because there was a political movement and German Federal Court has ruled that Germany must conduct annual audits and inspections of the gold reserves worldwide.
And this is about, this is from 2012 audit, US Inspector General of the Treasury.
99.98% of the gold held by the US is housed at the New York Fed.
This is probably American gold, but This is how the gold is sometimes used.
During the Cold War, the CIA parachuted millions of dollars worth of gold bars into Poland in hopes of helping a nascent resistance movement.
As it turns out, the resistance movement had been penetrated and taken over by the Soviets years before.
They basically had radioed saying, hey, it'd be really great if we could get some gold to help with the resistance.
Straight face.
So the CIA parachuted a whole bunch of gold and was basically taken by the Soviet government.
So I just sort of want to be clear.
So good delivery gold is gold that is at least 0.995% pure.
Pure gold is 0.999%.
9999% fine.
Gold is allowed to be 0.995% fine and still be acceptable to buyers like central banks and sophisticated investors.
All of the gold that had left Fort Knox before its window closed 39 years ago today was good delivery gold.
Now, one official admitted that only a small part of 24.4 million ounces of the official gold was of a quality of 0.995% or better.
In other words, less than 10% of the 264 million ounces of gold held by the Treasury could be considered good delivery gold.
And that's important stuff to remember because this stuff has not been audited.
It has not been inspected.
It has not been verified.
And there's lots of shady stuff.
I don't know if the gold's there.
I mean, nobody knows for sure, but there is some shady stuff, it would appear, going on.
So back in 1933, when the Americans gave up their gold to the government, they were paid $20.67 for each ounce they surrendered.
Now, if they just lost one of the ounces behind the sofa...
They could exchange it for, you know, whatever gold's at at the moment, 1,300, 1,400 bucks.
So this is what happens.
This is why governments like having gold, because in 1933, you could either have given the gold to the government and got 20 bucks and 67 cents, or if you'd lost it behind a couch.
Your gold would have risen in value to $1,300, $1,400.
But if you took that $20.67 in 1933 and lost it behind the couch, you would have $1.32 today, right?
So it's a difference of $1,000, right, in terms of devaluation of the $20.67 versus the increased valuation of gold.
It's gone, it's $1,000, it's 1,000 times, not 1,000, but 1,000 times.
And that's, again, quite significant.
There's lots of countries that are trying to maneuver away from the dollar and get back to gold.
Netherlands and Azerbaijan also discussing repatriating their foreign gold holdings.
And you can hear about central banks increasing gold reserves.
Russia and Kazakhstan, Brazil, countries from Brazil all the way to Turkey, have been adding up their gold holdings in order to diversify away from fiat currency reserves.
The long-term value of fiat currency throughout history has been the paper that it's on, which you could maybe use to wipe your butt if you're willing to deface the president.
Now, China, of course, was once the biggest purchaser of U.S. bonds.
It is now a net seller of treasuries, but it's gobbling up gold.
At the same time, China has officially surpassed Germany by some sources as second largest holder of gold in the world.
So there does seem to be sort of some rats on a sinking ship with regards to fiat currencies.
I think everyone recognizes the level of debt and printing of money is unsustainable.
And so what is going to happen?
Well, of course, there's no fundamental reason why central banks should even have gold to begin with.
I mean, that's not a gold-based currency.
Why do they even bother?
Bernanke said, well, it's tradition.
And Alan Green, the former federal chairman, and Greenspan said, oh, just in case we need it.
Very nice.
Very nice.
And that's really not...
Really not very satisfying as an answer.
And, I mean, Ron Paul did call for an audit of the gold and of the Fed as a whole.
Nothing really in particular came from it.
Because, again, there's no particular interest that anyone has in it if it wasn't for the German court and for the...
Like, they wouldn't be forced to do it.
And if it wasn't for general skepticism about the long-term viability of fiat currency, nobody would be bothering.
So...
You know, nobody knows how the economy is really doing, but there are people who are more in the know than you and I, assuming that you're not deep in the more of the government, in which case you're probably not watching this.
But we can take the indications that there does seem to be a bit of a panic around the world as governments begin to grab up gold.
And this could be because if they recognize that the dollar and the euro and so on are doomed to go the way of the dodo, then they will have gold reserves which they could use to back a gold-based currency, which would be...
Approximately 95% shrinking of the size and power of the state.
The state rests on Fiat currency is the power of the state.
It's the only way that they can pretend to give you something for nothing is through fiat currency.
So these are very subtle underground seismic movements in the world economy that we should really pay close attention to and mark what's happening.
They know a lot more about the economy than we do, the real state of the economy, and they are grabbing gold like an epileptic miser.
