December 13, 1999 – In the 1970’s a very courageous gentleman named Edward Durrell claimed that substantially all of the US Gold Reserve being stored at Ft. Knox was gone. Only 1,000 tonnes or so of the 8,500 tonnes supposedly being stored there remained. The rest had been secretly taken from Ft. Knox and shipped to London in 1967 and early 1968 for sale by President Johnson in an ill-fated attempt to keep the price of Gold at $35 per ounce.
Mr. Durrell provided a lot of anecdotal evidence to support his claim. These included eyewitness accounts of hundreds of Army trucks leaving Ft. Knox in the middle of the night over a period of many weeks, supposedly loaded with the Gold bounty. Other interesting but circumstantial evidence was the sudden and unexpected dismissal of Gordon Tether, business editor for London’s Financial Times, who published Mr. Durrell’s claims. To my knowledge, no mainstream US newspaper dared to publish Mr. Durrell’s allegations.
More circumstantial evidence emerged in the late 1970’s when the US Treasury auctioned some Gold in an attempt to keep the Gold price from rising rapidly. The bullion banks bidding in the auction received ‘coin-melt’ bars, not good delivery bars. The coin-melt bars were fabricated in the 1930’s after the Gold confiscation at that time. Coins are only 90% pure Gold, with 10% other metals added to provide durability to the Gold so that it can be used as coin without excessive wear or damage. In contrast, good delivery bars are 99% pure.
Mr. Durrell alleged that the coin-melt bars were not taken to London because their source could easily have been identified, the US being the only country that seized their citizens’ Gold. Had the coin-melt bars been sold, the secret nature of the operation would have been compromised, so the coin-melt bars remained at Ft. Knox while the good delivery bars were sold in London in President Johnson’s diabolical, unsuccessful scheme. Subsequent administrations, too afraid of the consequences from telling the truth, have continued the cover-up.
Clearly, the above examples are not sufficient to prove Mr. Durrell’s claim, but one piece of evidence does raise serious questions. He claimed that a proper audit of the Gold reserve had not been made since the late 1950’s during the Eisenhower administration. Moreover, despite his best efforts to get an audit completed, including as I recall offers to pay for the audit himself (which were not hollow promises because he was a very wealthy businessman), no audit was undertaken. The reason? The US Treasury said it was unnecessary ‘because everyone knew that the Gold was still in Ft. Knox’.
The Treasury’s curious response always seemed incredulous to me, so I have remained open-minded about whether the Gold was there or not. After all, we now know that President Johnson had lied to the nation about the Gulf of Tonkin incident that dragged the US into war in Viet Nam, so who is to say that he didn’t also lie about the Gold in Ft. Knox?
Mr. Durrell passed away at age 90 in the early 1980’s. With his passing, and the decline in inflation and the Gold price from the 1980 highs, over time this controversy was largely forgotten. I too put it largely out of mind until the early 1990’s when I came to know a very wealthy industrialist with an interesting story.
I wrote about this gentlemen and his story in April 1994 (FGMR #143, Thinking the Unthinkable). He had requested anonymity, so I only refer to him as André, which is not his real name. André provided some additional interesting details, many of which filled in some unexplained gaps in Mr. Durrell’s allegations.
Earlier in the year I reprinted this article because it was becoming clear to me that Mr. Durrell’s and André’s contention that the US Gold reserve was missing helped explain what was happening in the Gold market. As the huge weight of Gold being loaned and borrowed grew seemingly without end, it appeared to me that the Gold supposedly in Ft. Knox must be part of the equation. So I asked myself what could I do about it?
My answer was to try getting to the bottom of this matter for once and for all. And the only way to answer the question of whether the Gold was really in Ft. Knox was to complete an audit. Therefore, on August 30th, 1999, I wrote the following letter to US Treasury Secretary, Lawrence Summers:
Dear Mr. Summers:
Re: US Gold Reserve at Fort Knox
It is my understanding that a proper audit of the US Gold Reserve at Fort Knox has not been completed since the Eisenhower administration. I further understand that some visual inspections have been completed, but clearly, these can not be considered as a proper audit. The proper audit of bullion reserves is one undertaken by independent third parties, and includes among other safeguards, a review of security procedures and assays of Gold bars selected at random.
I am therefore concerned that the Gold Reserve at Ft. Knox may be at risk. My concerns could be alleviated if you would be kind enough to answer the following questions and provide me with the following information:
1) Is it true that a proper audit, as I’ve explained above, of the Gold Reserve at Fort Knox has not been completed since the Eisenhower administration? If it is not true, please provide me with a copy of the report prepared by the auditor.
2) Is it true that Treasury Department policy states that a proper audit will not be undertaken because the cost of an audit is considered to be unnecessary? If so, please explain why this expenditure, even if it were to cost a few million dollars, is unnecessary in view of the fact that it would ensure the safety of an asset that not only is of key importance, but is also worth about $70 billion at current market prices.
3) If a proper audit of the Gold Reserve at Fort Know has not been completed for a number of years, please explain why a proper audit has not been undertaken, and further, why a proper audit is not undertaken yearly as is the practice for other government assets.
I look forward to receiving your response, and I thank you for your assistance.
Yours sincerely,
James Turk
Weeks passed without any reply. Consequently, I sent the letter again on October 13th. Again, no reply.
On the surface, it would seem that my letter is a very simple one to answer. Why no reply? Why not even a letter from Mr. Summers acknowledging receipt? Does he not want to answer these seemingly very simple questions?
In any case, I am pursuing the truth. On November 22nd I wrote to my Congressman, John Sununu. I provided him with my letter to Mr. Summers, and requested that he contact Mr. Summers in order to see if he could get answers to my questions.
On December 1st, Congressman Sununu responded to me saying he had sent my letter to Secretary Summers. He also said that he would send to me Mr. Summers reply. We’ll see whether or not Mr. Summers ignores my Congressman.
Why doesn’t the Treasury complete an audit, thereby putting the rumors to rest? Is the Gold in Ft. Knox or not? We have a right to know.
My objective is to share with you my views on gold, which in recent decades has become one of the world’s most misunderstood asset classes. This low level of knowledge about gold creates a wonderful opportunity and competitive edge to everyone who truly understands gold and money.
