[What's never discussed is the US government's gold reserve is held in other places than just Ft. Knox, including West Point and in Denver. Only about 1/3 of the US gold is (supposedly) at Ft. Knox, the rest is in other places . . . SC]

By Paul Craig Roberts - February 19, 2025

If there is gold in Ft. Knox, whose is it?

Many bullion dealers believe that any gold in Ft. Knox is not ours. Over the decades the gold was “leased” to bullion dealers who sold it into the gold market, thereby protecting the value of the dollar by holding down the gold price.

“Leasing” the gold means that the US can still claim to own the gold. A sale has to be recorded or reported, but not a “lease.”

Gold might also have disappeared through rehypothecation, which is the use by one party of another party’s asset to back their own financial or borrowing practices. The gold of other countries is also in Ft. Knox. Earlier this century, Germany requested its gold from Ft. Knox, and was told that the gold would be returned in seven years. This indicates that the gold was used by Washington for some other purpose and was unavailable to be returned to Germany.

For years Rep. Ron Paul and Sen. Rand Paul have tried to get a gold audit. Neither of these legislators were even permitted to enter Ft. Knox to see if any gold was there.

Now that Elon Musk has announced a gold audit, holders of gold contracts have suddenly started to demand settlement in gold delivery rather than in cash and pocketing the profits. The amount of gold delivery being demanded from Comex, the US gold futures market, and its London equivalent is enormous, putting the ability to deliver under enormous strain. The only institutions capable of purchasing tons of gold at $2,900 per ounce are the Federal Reserve and US Treasury by creating the money with which to pay for the gold. The rise in the price of gold reflects the increase in physical purchases. It seems clear enough that the Fed or Treasury is desperate to put gold back into Ft. Knox in advance of the audit.

Previously, the Comex or futures market was used to hold down the price of gold by dumping huge amounts of short selling in the futures market all at once, often when there was no active trading, as Dave Kranzler and I have explained. The gold futures market is unique in that it can be shorted without the contracts being covered, unlike shorting equities. In effect, shorting gold is like printing money. The supply of paper gold in the futures market is increased simply by printing paper contracts. The increase in the paper supply of gold suppresses the price, because the price of gold is determined in the futures market, not in the physical market. The current demand for gold delivery when the contracts come due, instead of settling in cash, has made it impossible to hold down the price of gold.

There is speculation that President Trump intends to return the dollar to partial backing in gold in order to protect its status as reserve currency from a BRICS alternative. Unless and until US debt can be brought under control, the US dollar’s reserve currency status is essential for the financing of US budget and trade deficits. World central banks hold their reserves in US Treasuries. Thus, an increase in US debt simply means an increase in the reserves of central banks, something that is welcomed. If the dollar were not the reserve currency, financing the massive US debt would likely be impossible.

Trump’s attempt to restore normal relations with Russia, if successful, would require the end of the weaponization of the US dollar that is causing so much of the world to look for a different means of settling trade balances. This would take the pressure off of the dollar from the threat of an alternative reserve currency and reduce the urgency of getting US debt under control, but the pressure of mounting interest payments to foreign central banks on their Treasury holdings would still exist.

The good news for Trump is that ending the conflict with Russia protects the dollar’s role as reserve currency.

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