Fort Knox Gold

The Treasury department tells us that we have just over 147 million troy ounces of gold stored at Fort Knox. At today's prices that's worth approximately $233 billion – not nearly enough to cover the federal government's current debt of $14.29 trillion. Interestingly, today's gold holdings are far less than the 650 million ounces held back in 1941.

The U.S. holds more gold than any other country. The gold stored at Ft. Knox is held in 368,000 bars weighing approximately 400 oz. or 27.5 lbs. each. Not all bars have the same gold content. Some bars are made from melted coins and are called "coin bars." Coin bars are only 90% gold (and 10% copper) just like the pre-1933 coins they were made from. Other bars are made from pure gold, i.e. 99.999% gold.

Security at Fort Knox is extremely high. Not only is it located on an army base that is home to 30,000 troops, but there are multiple levels of security surrounding and within the storage facility. The main vault door weighs 20 tons and the vault walls are 25 inches thick. The U.S. Mint Police are on constant guard around the vault.

Lately some people have questioned if we indeed have that gold in Fort Knox. The Treasury reports that we have 500 million ounces less than we did in 1941. They tell us they conduct an annual audit, but no one outside the Treasury Office has seen the gold since 1974. This has led to a number of conspiracy theories. Congressman Ron Paul, for one, is demanding an audit of Fort Knox's vaults.

With over $950 billion in circulating U.S. currency, what would it mean if we were to go back to pre-1971, before President Nixon "temporarily" took the U.S. Dollar off the gold standard? If we assumed the gold in Fort Knox would be the only reserves backing the dollar, gold would have to be worth approximately $6,450 per ounce, or one ounce of gold would need to back 6,450 dollars. By comparison, before Nixon lifted the gold backing, one ounce of gold was valued at $35, therefore one ounce of gold backed 35 dollars.

The Feral Reserve Chairman, Ben Bernanke, recently testified that he does not consider gold to be money, that it is an asset similar to a treasury bill. So what's going to happen with the gold stored at Fort Knox?