What's Really Inside Those Fort Knox Gold Vaults?

Welcome to the Money Metals Midweek Memo, news and commentary relating to sound money, the precious metals markets, and the economy. I'm your host, Mike Maharrey. Thanks for tuning in. So, if you're a regular listener to the show, you know that I'm a hockey player. And at this point in my life, I'm what is known as a beer league hockey player. That's just hockey code for adult recreation league hockey. The game we play, it's the same as the NHL game, but it's not. We're much slower, much less skilled, and a lot more uncoordinated. Now, people will pay hundreds of dollars to watch an NHL game. Nobody wants to watch a beer league game. Now, friends and family might show up to a beer league game, especially like if it's a playoff or something, but they don't really want to be there, right? They're just being nice, or they were offered a post-game beer if they showed up. So, my point here is that all hockey isn't the same. Beer league isn't the same as NHL, even though it's technically the same game. And in a similar sense, all gold is not the same. 24-karat gold is different from 14-karat gold. You might call 14-karat gold the beer league of gold. So, here's an interesting factoid. Most of the gold that is stored in Fort Knox is of the beer league variety. So, before I get into all of that, I do want to thank you so much for taking time out of your day to listen to the show. I do appreciate it. I say this every week, but I know there's so much stuff out there vying for your attention, and I do appreciate the fact that you spend a little bit of time with me every single week. And if you want to help us out, you could do me a favor. You could write a review, a good review. Don't write a bad review. If you don't like the show, just turn it off. But, if you like the show, write us a good review. Give us those thumbs up or those stars. And if you would be so kind, share these episodes on your own social media platforms. That will help grow the show and introduce other people to what we're doing here. If you find value in it, other people probably will, too. So, if you do that, that would be great. But, really, I just want to thank you and say I do appreciate the fact that you tune in and give us a listen. So, there's a lot of impure gold in Fort Knox. You know, I actually started thinking about this last week because the French just made an interesting move with their gold reserves, trading out a bunch of impure bars for higher quality metal. And I talked about the reasons for this in the show last week. If you want to get the lowdown on all of that, go back and listen to last week's show if you haven't done so already. Well, the fact that the French have upgraded the purity of their reserves underscores the fact that a lot of the US gold is exactly what the French just got rid of. So, it probably be helpful for if I explain the difference between the various carats, because I'm not sure that's necessarily clear, right? We all know that gold is measured in carats, and I think we all kind of understand that like 24-karat gold is more pure than 14-karat gold. But, what does a carat really mean? Well, gold purity is measured in parts per 24. So, 24-karat gold is basically pure. There may be other traces of metal in 24-karat gold, but in the US, 24-karat is at least. 990 fine or higher. So, if there are any impurities in it, very minimal. So, something that is 22-karat gold, that is 22 parts gold to two parts other metals. And these other metals are typically silver, zinc, copper, or nickel. So, that makes 22-karat gold 91. 6% pure. So, if we keep following the logic, 14-karat gold is 14 parts pure gold, meaning that the 14-karat gold jewelry that is most common at your mall jewelry store is really only 58. 3% gold. Now, you know, I'm not saying that 14-karat gold is necessarily a bad thing. Less pure gold is popular for jewelry because gold is a relatively soft metal. So, if you have a 24-karat gold bracelet or chain, it is easy to bend and and scratch. So, the addition of the other metals makes the jewelry more durable. Now, interestingly, while 14-karat gold jewelry is arguably the most popular in the US, in Asia, jewelry tends to be more pure at 22 carats. And you'll even find 24-karat gold jewelry in Asian markets. That's because they view gold jewelry not just as a pretty adornment

but as an investment. In India, especially, gold jewelry is actually part of a family savings. And here at Money Metals, we actually sell investment-grade 22 and 24-karat jewelry. And you'll find that it's actually prettier, in my opinion, than its 14-karat cousin, because 24-karat gold tends to have a deeper, more yellow color. So, it's really pretty. Money Metals Exchange actually has. 999 fine, so four nines fine, 24-karat pure nebu jewelry, which combines elegant design with properties unique to pure gold bullion into beautiful, luxury, and relatively low-premium jewelry. We also have chains and other products that are at 22 carats. So, you can check that out. If you go to moneymetals. com and just go to the gold section, you'll see the pull-down menu, and you'll see a section for jewelry. If you go there, you'll see the various chains and uh and uh other jewelry pieces that we have there. They're absolutely beautiful, but in this case, they're also an investment, unlike that 14-karat gold that you're going to pick up, you know, at your mall jewelry store. So, you know that there's a bunch of gold stored in Fort Knox, right? — [snorts] — Well, no, you don't really know that. I'll get to that in a minute, but I should say we assume there's a bunch of gold at Fort Knox. We're told So, here's a fun fact for you. The bulk of the gold reserves held in Fort Knox is made up of impure, non-standard bars that don't qualify for use in international settlements. Let that sink in for a minute. Most of the US's gold is not really reserve-quality gold. So, if you listened to the show last week, and I've already mentioned it earlier, you know that the French Central Bank recently sold 129 tons of similar non-standard gold that was stored in New York, and it replaced it with higher-quality bars that are going to remain in France. And again, if you didn't listen to that show, it's pretty interesting to kind of read between the lines as to why they made this move, because I don't think it just has to do with purity, although that's part of it. But, so check that out if you haven't had a chance. But, you know, notwithstanding the lack of any credible physical audits for decades, US gold reserves are reported to be at 8,133. 5 metric tons. So, that's roughly 261. 5 million troy ounces of gold. It's the largest gold reserves in the world. About half of that, or 147. 3 million ounces, and this is according to the US Mint, half of the gold is stored at Fort Knox, and the rest of the US's gold is spread out between the Denver Mint, the West Point Bullion Depository in New York, and also the Federal Reserve Vault in New York City. Now, America's gold is actually valued at $42. 22 per ounce by statute. So, they've just set the price. That's what they value the gold at. If you look at, you know, a balance sheet, that would be the value of that asset, even though at nearly $5,000 an ounce, the gold in there is worth much more than just 42. 22 an ounce, but that's how they do things. The price does not fluctuate with market movements. So, the reserves are just kind of at this set price that goes back to the gold standard days when gold was basically pegged at a certain dollar amount. So, $42. 22 is where we are on the value of America's gold, according to the London Bullion Market Association, the LBMA. And that's the organization that it's kind of the biggie, although not the only player in gold pricing and standards. But, according to the LBMA, gold bars must contain 350 to 430 fine troy ounces and have a minimum fineness of. 995 parts per thousand to be acceptable for international settlements. In fact, the good delivery standards across the globe have been transitioning to. 999 fineness. So, typically, we're having very pure gold. Basically, you know, nearly 24-karat gold bars are kind of the standard. Based on documents released during a 2011 House Committee on Financial Services hearing, however, we find that only around, get this, 17% of the gold bars held by the US government in Fort Knox meet any modern-day purity standards.

So, here's the breakdown. I actually found a document and it breaks down the purity of the gold bars that are held in Fort Knox. We have 64% are between 899 and 901 fineness. Now, remember what I said, according to the LBMA, 995 is the minimum fineness. So, we have 60% nowhere near that, between 899 and 901. 2% of the bars are between 901. 1 and 915. 4. We have 17% that have a fineness between 915. 5 and 917. And then we have 17% that is a fineness of. 995 or higher. So, only that last 17% is actually up to purity standards according to the LBMA and international protocols. So, if you kind of average all of that, the average fineness of US gold reserves is 916. 7 or 91. 67 pure gold. So, basically, if you kind of remember the carats, basically most of America's gold is 22-karat average, which is nowhere near again that international standard. Now, keep in mind, we're operating on guesswork here because the US government's gold holdings have not been properly audited since at least the 1970s. In 1974, the government put together what basically was just a publicity stunt in the name of an audit, right? The US Treasury opened just one of its 15 Fort Knox vault compartments to politicians and reporters to view the gold and confirm its existence. Now, they've called this an audit. However, none of the bars that were passed around and showed on TV were ever matched to a serial numbered serial number, assayed, or tested for purity, or even verified as being part of the US gold holdings. As Sound Money Defense League director Matthew Cortez pointed out, it seems the made-for-TV spectacle in 1974 was more of a pep rally than any credible proof of what the amount of US gold purported to be in those vaults. Following the 1974 media event, the US 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. However, these so-called audits failed to meet basic transparency or accounting standards. Now, keep in mind, auditing is not just some, you know, random, make-it-up-as-you-go kind of process. Auditing is a very it's a very structured process, right? There are steps you take. There are things that you do for an audit to be certified. And the United States has not done this with its gold holdings, no matter what they say. Some reports have gone missing since then. There's no record of any comprehensive assaying, in other words, testing the purity. There's no comprehensive record of weighing or any transactional history available for the public. And that transactional history is important. Now, in my opinion, and I don't know, I've not been in there, but in my opinion, I think most of the gold is probably in the vault. I don't think Fort Knox is empty. That's just my opinion. That's just kind of my gut. I'm really can't explain why. That's just kind of It's kind of how I feel like it is. But, I do think that we would be surprised at how much of the gold in Fort Knox is actually pledged to other things, right? It's still sitting in the vault, but other entities have ownership either through leases or loans. We don't know that transactional history. And that's part of an audit, right? Auditing is not just counting gold bars. It's not just weighing gold bars, matching up records. That's a big part of it, but it's also tracing the transactions. So, if any gold was leased or loaned, there should be a record of that. And I would be surprised if there weren't some shady things going on there. Again, just my opinion. You know, we don't know. And that's really the crux of the matter, right? The fact that I have to sit here and speculate about it, that's the problem. There should be an audit. You know, we have a beautiful gold depository in Eagle, Idaho. I've been there. It's really cool, and the security measures are pretty amazing. I talked about that before. But, when I was there the last time, one of the guys sat down with me and kind of explained to me some of the auditing processes that they go through. And it's

not just internal auditing, right? We audit stuff all the time ourselves. There's also an external auditor. There's all of these checks and balances to make sure that what we say is in the depository is actually there. And to make sure that the gold that you have stored there is really there. That's important. That's a big part of just being secure, right, in holding gold. And the US doesn't do that. — [snorts] — There's also evidence that the seals on some of these vault compartments have been broken over the years. Bars have been moved for unknown reasons, and seals have been reaffixed without fresh auditing. Again, none of this meets basic accounting standards. Subsequent annual reviews of the schedules of compartment seals serve only to whitewash prior discrepancies. So, you know, kind of sum it all up. The US Treasury's management of US gold reserves is replete with audit no-nos that would never pass muster at a responsibly run private depository. Now, there is an audit the gold bill that's been introduced by Senator Mike Lee, and I believe Thomas Massie has introduced a companion in the House. This was last year. It would not only require a comprehensive audit of US gold reserves, including importantly an accounting of any transactions involving said gold. It would also require the Treasury to refine all non-standard bars so that they meet modern requirements for international settlements, a process that would take several years, but an important process. It's what France just did, right? If you're going to have gold reserves, they should meet international standards. I mean, I would think, right? So, how in the world did the United States end up holding so many impaired gold bars that are illiquid on global markets? Well, it's basically a legacy of US policy that abandoned the gold standard, leaving us with the fiat monetary system that we have to live with today. Needing to expand the money supply to support his spending plans, President Franklin D. Roosevelt decided to expropriate the public's gold and add it to the national reserves. Expropriate, that's a fancy term for steal. On April 5th, 1933, President Franklin D. Roosevelt signed what is known as Executive Order 6102, and effectively he made private gold ownership illegal. Private entities and businesses could no longer hold gold on their own. It was literally illegal to own gold. You were allowed to have a few ounces, but by and large, they wanted to get the gold out of the hands of the public and into government. FDR claimed that this measure was to prevent hoarding. However, by creating an expansive definition of hoarding, the executive order was really designed to take virtually all of the gold coins and bars out of private hands and again transfer them to the US government. Now, when people talk about this, you'll often hear them talk about it as gold confiscation, but I kind of think that overstates what actually happened because if you think of the word confiscation, it sounds like, you know, jackbooted thugs came and beat down people's doors and demanded their gold. That's really not what happened. You know, the government didn't go to door-to-door taking gold. They basically just suggested. It said, "Hey, look, this is the order. It's illegal to have the gold, turn it in. " And um yeah, bureaucrats still obtained huge amounts of gold even without, you know, aggressively trying to take it. Especially gold held by institutions and depositories and banks. Many Americans also just turned their gold over voluntarily as an act of obedience. You know, some likely did so because they trusted the government. They thought, "Oh, this is a good idea. You know, we got to help the president with the hoarding. " Others out of a sense of patriotism, right? We're doing it for America. And some probably turned their gold in out of fear, right? Don't want to go to jail. Now, they didn't actually just take the gold. They did compensate people for the gold. Everyone was paid $20. 67 per ounce for their gold. That was the uh the set rate, right? That's what the dollar was pegged to. — [gasps] — But, 6 months later, FDR pulled a fast one. He formally devalued the dollar by some 40% when he declared gold was then worth $35 per ounce. So, you see what he did. He took everybody's gold, gave them $20. 67 in Federal Reserve notes, and then said, "Oh, wait, gold's really more valuable than that. It's worth $35 an ounce. " So, what all of this did is they expanded the gold supply, right? At the time, the dollar was pegged to gold, and in order

to print more dollars, there had to be enough gold. And the government was up against it. It wanted to create more money. It needed to spend, right? This is the Keynesian solution for a depression. And they couldn't do it. The the gold standard was preventing them from this monetary expansion. So, the solution, get more gold, right? If you've got more gold, then you can print more money, and that's exactly what Roosevelt did. And to add to it, then he just valued the gold higher. You know, they could do that today. The United States could very easily revalue the gold in Fort Knox and say, "Hey, it's worth a thousand dollars an ounce. " And then all of a sudden, you know, America would be richer. Although, not really. So, that's the game of politics. But, that's what happened. So, much of this confiscated gold was in the form of coins that were generally 90% pure, right? At the time, private banks, along with the Federal Reserve, held a large number of gold coins. That's because Federal Reserve notes were redeemable for gold. If you had a Federal Reserve note, a dollar, you could go to your bank and trade that in for gold. You had to have 20 bucks, and then you could get a 1-oz gold coin. And so, the gold was actually the heart of the monetary system, right? The paper just represented an amount of gold. And Franklin D. Roosevelt began to kind of do away with that system. He undermined it by making that private gold ownership illegal. So, with private ownership of gold effectively banned, people no longer could trade paper for metal. They just had to hold on to their paper and trust that the metal was there. And there was no need for them to hold a bunch of coins. So, the banks didn't need that anymore. The government melted those coins down and formed them into bars, which now sit in Fort Knox vaults, as far as we know. In a 1994 essay published by the Journal of Economic Education, William C. Wood called the Fort Knox Depository, {quote} an artifact of the gold standard days. And he said, {quote} "The gold currently in Fort Knox came from the melting of depression era gold coins, from lend-lease arrangements in World War II, and from government operations under the gold standard. " Wood specifically noted, {quote} "The gold resulting from melting of coinage has considerably lower quality than the fine or good delivery gold commonly used in international trade. The majority of the gold in Fort Knox is the lower quality coin gold. " So, now you know why we've got a bunch of impure gold sitting in vaults in Fort Knox. And, you know, in some ways it makes sense that the US gold reserves are impure and useless on the international market because it reflects the nature of the fiat system that replaced it, right? The fiat system where they just print money at will, where your purchasing power is devalued by 10% every five years as a matter of policy, right? This fiat system that at some point is going to collapse because they all do, because governments cannot restrain themselves when they have an unlimited printing press. Mises Institute editor-in-chief Ryan McMaken called the US gold reserves, {quote} "A legacy of theft and lies. " Pointing out that the gold reserve was never intended to be a {quote} static, untouchable hoard of the US government. {unquote} He went on and he said, "It was supposed to be there for Americans and other users of dollars who traded in their dollars for gold. Gold was supposed to flow in and out. Then the US government slammed the door of the federal gold vault shut and declared, 'The gold is ours forever. '" Like most everything else the US government owns, the gold in the US gold reserves is there due to many years of lies, gaslighting, and deception. The gold is there because the US regime defaulted on its debts and reneged on its promises to back dollars in gold. That really sums it up, and really is a good history lesson of fiat and gold standards. I talked about this last week, right? Why do governments love a fiat system? Because there's no restraint. We saw how the gold standard was restraining Roosevelt, and he had to take steps to decouple from gold in order to expand the money supply. Fiat systems are the germ of big government, right? I've said before, the Federal Reserve is the engine that drives one of the biggest governments in the history of the world. If you like big government, then you should love fiat money systems because fiat money systems enable it. They allow unlimited money printing. It also allows inflation, right? It allows the government to levy an inflation tax on you, which it's doing every single day, by the way. And you don't see that in the same way that you see

you know, your income taxes coming out. Speaking of which, today is the 15th, so you better get your taxes done. Sorry, [snorts] I had to throw that in there. So, anyway, when you look at this, you back up, you take the 20,000-ft view. In practice, most of America's massive gold stockpile is illiquid and wouldn't be readily accepted on the international market should the need arise. And my boss, Money Metals CEO Stefan Gleason, he summed it up so well. He said, "It is a decrepit relic just like our monetary policy is. With respect to America's gold stockpile, we hold ourselves to a lower standard than the rest of the world. " So, there you go. You know, that kind of reminds me of an article I wrote this week chronicling how mainstream economists from Keynes forward have fought a war with gold, right? We all know that the mainstream doesn't really like gold. We know that your government-oriented economists and your academics at the big schools that follow this Keynesian model, they hate gold because they like big government. They like intervention, right? So, they've been fighting this war with gold. And the economists have won a few battles, but gold is winning the war. And I'll link to that article on the show notes page, and you can check it out when you get a chance. moneymetals. com/news, it's also there. But, I think it's interesting to kind of look at the history of how the US has effectively walked away from sound money and into this system that we have today that's essentially robbing you on a daily basis. So, before I close the show, I want to wrap up with an interesting bit of silver news that I came across last week. A move by China could exacerbate already tight silver supplies. So, what is that move? Well, Chinese officials have indicated that they're going to stop exporting sulfuric acid beginning in May. And reportedly, the ban could last through the rest of 2026. According to mining. com, {quote} "Some sulfuric acid producers in the country recently received notifications about the change, and one large buyer has been told about it by their Chinese supplier, according to people familiar with the matter who asked not to be identified discuss discussing confidential information. " So, well, what does this have to do with silver? We're talking about sulfuric acid here, right? Well, sulfuric acid is a key input in copper mining. Copper miners pour acid over crushed ore to dissolve out the copper. A significant shortage of sulfuric acid or spiking prices could impact copper output. Well, okay, now you're thinking, "Okay, Mike, are you losing it? " Because copper isn't silver. Here's the catch. About 70% of the annual silver mining supply is a byproduct of copper production. So, copper and silver are intimately linked at the production level. Blue Line Futures chief market strategist Philip Streible summed it up succinctly. Less copper mined means less silver produced. So, what's causing this? Well, the Iran conflict supplies it has squeezed global sulfuric acid supplies and prices have skyrocketed in recent weeks. The Middle East produces about 1/3 of the words of the world's sulfur, and the closure of the Strait of Hormuz has limited outbound shipments. According to mining. com, {quote} "That squeeze will hit the copper mining industries in key producers such as Chile, the Democratic Republic of Congo, and Zambia. " So, the reason for this is pretty simple. China wants to protect its own domestic supply. And of course, that's going to impact all of the other countries that buy sulfuric acid from the Chinese. Chile ranks as the world's top copper producer. Sulfuric acid prices in that South American country have already spiked by 44% in the last month. Chile buys around 1 million tons of sulfuric acid from China every year. According to an acid analyst, yes, apparently that is a thing, an acid analyst. It sounds oddly specific, but it is a job. And this acid analyst was quoted by mining. com, and he said, {quote} "The loss of Chinese volumes will be difficult to offset given the parallel shortage of sulfur feedstocks. " And even with some apparent progress in resolving the Iran conflict and uh, possibility of getting the Strait of Hormuz reopened. Some analysts say the damage to the sulfuric acid supply has already been done, and China will likely keep the export ban in place for an extended period of time. And, of course

this comes at a time when silver supply is already under significant pressure. I've talked about this, uh, several times on the show, but I will run through the numbers quickly. Silver demand is forecast to outstrip supply for the sixth straight year in 2026. And that's going to be driven by a, uh, projected 20% increase in physical investment off-take. Based on preliminary data that's compiled by the Silver Institute, silver demand outstripped supply by about 95 million ounces last year, and that led to the fifth straight market deficit. So, when I say market deficit, all I mean is that the amount of silver that was supplied to the market through mining and recycling was less than the amount of silver that was used by investors and industry. So, if you include last year's shortfall, the five-year market deficit will likely climb above 800 million ounces. That's an entire year of mining output. So, in other words, over the last five years, the world has used a year's worth of mining supply more, uh, than the number of years that have gone by. So, when silver demand exceeds the supply generated and recycling, users are forced to tap into above-ground stocks. Doesn't mean there's no silver, but they have to tap into supplies that are already there. People already own that silver, and this generally requires higher prices to incentivize the people holding the silver to release it into the market. So, that's part of the reason we've seen this big spike in silver prices over the last year or so, because the supply and demand dynamics are starting to catch up with the market. Persistent shortfalls have taken their toll on above-ground stocks. According to the Economic Times of India, inventories across COMEX, London vaults, and Shanghai have steadily declined over recent years, reinforcing concerns about tightening physical availability. London Bullion Market Association vaults have lost around 40% of their holdings over the last five years, while COMEX registered inventories in the United States are down by nearly 70%. Meanwhile, Shanghai inventories have fallen to their lowest in a decade. So, all of these major silver hubs are low on actual metal. Now, there's plenty of paper silver out there, but not enough actual metal. — [snorts] — And the shortage of metal was a factor in the two recent silver squeezes that drove the price to over $100 per ounce. Um, I'll link to a couple of articles in the show notes page relating to those silver squeezes that'll kind of give you a sense of, uh, how those dynamics played out. Now, it's unclear just how much China's move, uh, to limit sulfuric acid imports is going to impact copper mining and silver production by extension, but definitely something else worth watching. And it's just one more thing that is creating this tightness in the silver market. It's just one more reason to be bullish silver. Um, it's yet another factor pressuring the persistent silver shortages. And, you know, that's the difference between a fiat system and a metal-based money system. You can't print metal, right? Can't print silver, can't print gold. You can print a lot of dollars, but you can't print real money. And that's why you want to hold real money, right? It's have gold and silver, because it holds its value over time. It does not devalue. There's no government oversight board, uh, deciding that we're going to, uh, lower the purchasing power of your gold by 2% every year. They can't do it, right? Like they can with fiat money. So, that's why I say every month you want to hold gold and silver. To me, fundamentally, that's why I have gold and silver, because it is real money, and I don't want my wealth, hard work frittered away by some government official somewhere. So, if you want to have gold and silver, now is a great time, because prices are arguably still down a little bit, right? We had a correction, uh, we've had some dips. Dips are opportunities to buy. And when you see those dips, I highly encourage you to call 800-800-1865, talk with the Money Metals precious metals specialist. I say it every week, but these folks are fantastic. They're knowledgeable. They love answering your questions, uh, and so give them a call if you want to learn more about gold and silver investing. Uh, this is a great opportunity to do that. Now, I know a lot of people don't want to talk on the phone. You can actually chat online if you go to moneymetals. com. Or, if you know what you want, you know you want to go get some of that, uh, investment grade gold jewelry, you can just go to moneymetals. com, you can make your purchase online. We'll package it up, we'll ship it right to you. Uh, or if you want to, you can also store gold and silver in the state-of-the-art

bullion facility that our bullion depository that I mentioned earlier in the show. Uh, so but do it today, right? Time's a wasting. And, uh, the fiat money is not going to suddenly start getting more valuable, right? So, you want to make that move as quickly as you can to preserve your wealth. So, that's a wrap for this episode of the Money Metals Midweek Memo. You can get more information on everything that I talked about on the show today and a whole lot more over at moneymetals. com/news. And if you want to get the latest news and information relating to gold and silver right in your inbox, uh, make sure you sign up and get on our email list. Now, of course, you could subscribe to the Midweek Memo podcast on your favorite podcasting platform, and when you do, you'll also be able to tune into our Market Wrap podcast every single Friday, where you're going to get a quick overview of the week in precious metals, along with conversations between yours truly and interesting people from the world of gold, silver, economics, and investing. As always, thank you so very much for listening to the show. I do appreciate it. I hope you have a fantastic rest of your week. Remember to get your taxes in if you haven't done that already, I'm sorry. And, uh, again, have a great week, and I'll be back behind this microphone again next Wednesday.