Looks like we don't need to worry about that Fort Knox Gold audit anymore

I’ve got some fantastic news.

We don’t need to worry about that Fort Knox gold audit anymore.

Treasury Secretary Scott Bessent assured us all the gold is there.

His comments came during an interview on Fox News. Host Jesse Watters asked the Treasury Secretary point-blank, “Have you visited Fort Knox?”

"I haven't. People on my staff have. The treasurer has been to Fort Knox, and I'm happy to say all gold is present and accounted for."

There you have it. The fox guarding the henhouse says the hens are all accounted for.

Case closed!

Or maybe not.

Consider this: would you trust a bank that never conducted an external audit?

Would you trust a bank that insisted a thorough audit wasn't even necessary because "everything is fine?"

Would you trust a bank that constantly says, "Trust me!"

You shouldn’t.

Audits serve a variety of functions. In the first place, they catch honest mistakes. Second, they ensure that the players in control of assets and reporting on the organization’s financial dealings are operating above board. Any business that does not implement a regular and rigorous external audit program should be viewed with suspicion.

Now, if you ask, the powers-that-be will assure you that the Fort Knox gold has been thoroughly audited. That’s a little like the kid who stuffed all his dirty clothes under the bed claiming that his room is thoroughly cleaned.

No real audit

If you ask anybody in the government, they will tell you the gold has been audited.

It has not.

Not in any meaningful way since at least the 1970s.

Now, there was a TV show posing as an audit.

In 1974, the government put together a publicity stunt in the name of an audit. The U.S. Treasury opened just one of its 15 Fort Knox vault compartments to politicians and reporters to view the gold and confirm its existence.

Matthew Cortez described this dog-and-pony show:

For about two hours, multiple film and camera crews and smiling politicians filed into a hallway for the chance to hold a gold bar and peek into a room full of gold stacked up to the ceiling.
On their way out, each visitor had to pass by a metal inspector to ensure that none of the gold bars were being snuck out in the process.
Notably, throughout the visit, none of the bars being passed around were matched to a serial number, assayed or tested for purity, or even verified as part of the United States’ holdings. (Foreign countries have at times stored gold there as well.)
It seems the made-for-TV spectacle in 1974 was more of a pep rally than any credible proof of what the amount of U.S. gold purported to be in those vaults.

So, yeah. That's not an audit. It's political propaganda.

In a proper audit, every bar would be counted and inspected. Serial numbers would be matched to records. The gold would be assayed to verify its weight and purity. And the details of the audit would be published and available for public inspection.

None of that has happened.

Following the 1974 publicity stunt, the U.S. Treasury says it conducted a multi-year process of opening and inventorying vault compartments and affixing new tamper-evident seals to the doors of each compartment upon completion. 

They call these audits.

They are not.

These so-called audits failed to meet basic transparency or accounting standards.

Some reports have since gone missing, and there is no record of comprehensive assaying, weighing, or transactional history available to the public.

Furthermore, there is evidence that seals on vault compartments have been broken over the years, bars have been moved for unknown reasons, and seals have been re-affixed without fresh auditing. Subsequent annual reviews of the schedules of compartment seals simply whitewash prior discrepancies.

In sum, the U.S. Treasury's management of U.S. gold reserves is replete with audit "no-nos" that would never pass muster at a responsibly run private depository.

If you have nothing to hide...

The other curious thing is that anytime somebody like me says we should audit the Fort Knox gold, a bunch of government apologists come out and indignantly insist, “We don’t need to!” And then they attack me like I’m some kind of kook for even suggesting such a thing.

I guess I can understand if you opposed an audit due to the cost or some other practical reason. I can't understand why you would become indignant at the mere suggestion of an audit. That's not normal behavior.

Maybe it’s just me, but when somebody gets all upset when I suggest checking their work, I suspect their work might not be up to par.

I mean, think about it; you don’t have anything to hide, why wouldn’t you want the gold holdings to be verified? What’s the harm in an audit? Why this insistence that it isn’t necessary (when audits are necessary in every other business setting)?

In fact, if I were running a gold depository, I'd be clamoring for a public audit, if for no other reason than to calm the public fears. I would want people to know everything is on the up-and-up. The only reason I would resist an audit is if I knew I was hiding something. 

So, what's it going to be?

Are we going to take Bessent's word for it? Or is somebody finally going to step up and do the right thing?