A House subcommittee’s hearing on the Gold Reserve Transparency Act of 2011 basically became a debate concerning whether or not sufficient information is already available to the American public about the amount of gold the U.S. holds, and what is done to protect it.
House Domestic Monetary Policy and Technology Subcommittee Chairman Ron Paul, R-Texas, contends two thirds of U.S. gold reserves have not been assayed or audited 25 years. “Surely a full audit every 25 years is not too much to ask,” he declared.
Treasury Department Inspector General Eric Thorson contends independent annual audits of the U.S. Government’s deep storage gold reserves have been conducted annually since fiscal year 1993. “In fact, our current fiscal year 2011 audit of those deep storage gold reserves is currently underway.”
During the fiscal year 2008 audit, Thorson’s auditors sampled gold statistically representing inventory valued at $75,036,352.12. Based on the independent assayer’s report on those samples, “we projected the dollar value of the difference between the fine troy ounces determined by the independent assay report and the fine troy ounces recorded in the Mint’s inventory records to be $3,819.84 or 0.005% of the gold inventoried,” Thorson told the subcommittee.
Meanwhile, KPMG has audited the government’s audits of the deep storage gold reserves since the fiscal year 2005 audit, he added.
“As of September 30, 2010, the audit quantity of custodial deep storage gold reserves held by the Mint was 245,262,897 fine troy ounces over 9,300 tons, with a market value of $320.6 billion,” Thorson said.
“In closing, based on the work performed by my office and my own personal observations, I can assure the Subcommittee or anyone else for that matter, that both the quantities and value the U.S. Government’s deep storage reserves held and reported by the mint are reliable and sufficiently audited,” Thorson declared. Therefore, he feels the inventory and audit requirements proposed in Paul’s bill, H.R. 1495 are redundant of the work that is currently performed.
Gary T. Engel, director of Financial Management and Assurance for the GAO, told the subcommittee that the holdings of U.S. gold reserves are presented in a number of financial reports. “As of September 30, 2010, most, or approximately 95%, of the reported gold reserves of the United States were in the custody of the Mint.”
GAO estimated U.S. total gold reserves are 261,498,900 ounces as of Sept. 30, 2010.
Engel took issue with H.R. 1495’s requirement that all U.S. gold reserves could be audited within six months in an assay, inventory, audit, and analysis conducted by the Secretary of the Treasury.
The U.S. Mint has previously declared that such an audit would require 1280 individuals working 1.3 million man-hours to complete the task in six months. Paul responded that since the Mint made $400 billion last year, “it could easily take care of this.”
Rep. Blaine Luetkemeyer, R-Missouri, asked several questions regarding the pledging of U.S. gold reserves to the IMF and exactly in whose custody the gold is held-the U.S. Treasury or the IMF. It is estimated that 17% of total U.S. gold reserves are pledged to the IMF. Both Leutkemeyer and Paul questioned if gold pledged to the IMF is considered part of the U.S. gold reserve holdings.
Paul accused the U.S. government of being less than transparent in releasing information relating to its gold holdings. Thorson responded “transparency is our business…those numbers are out there.”
“We know where it is” and “how much is there,” Thorson stressed.
A request by Ranking Member William Clay, D-Missouri, to allow members of the subcommittee to take a tour of Fort Knox may be under consideration by the Obama Administration. Only one member of the House and one member of the Senate were allowed to visit Fort Knox in the last official congressional tour of Fort Knox taken in the 1970s.