1953
72 years and counting.
That was a while ago.
That was the last time there was a full independent physical audit of the US gold reserves. There was a partial audit in 1974. Back in March, Trump and Musk were getting noisy about performing a full physical audit on the reserves to ensure that they were indeed all there....
Tumbleweed blows through.
.... more silence.
So, what happens if it is being overreported? And what happens if as many suspect, China, the largest buyer of gold, is actually underreporting their holdings? The audit Trump and Musk were calling for was to bring faith back to the sceptical public and increase confidence in US gold, yet for someone who loves gold so much, Trump doesn't seem to be very keen to do this now, does he? Perhaps he had a peek inside Fort Knox, and the cupboard was bare.
Gold is interesting though, as while it does have some unique characteristics that make it valuable as a material, it is largely only used as an expression of value, such as in jewellery, or as bullion. However, as a store of value (as it has been for many, many centuries), it is very, very impractical. It is hard to divide, it is difficult to transport and of course, walking around with a lump of gold opens a person up to all kinds of issues. Paying with gold is difficult.
Buying gold, well that is pretty easy. But, unless that gold is in your hand, is it yours? I think we all know the answer to that. Yet, lots of people are willing to buy their gold and have it stored in a bank in another country, as if it is theirs. Even if it is there, if war breaks out, do you think that the bank is going to grant access to it and fly it around to wherever the investor is at the time? I suspect not.
I was talking with a friend over coffee last night and he was talking about buying some gold, just to have some. Which I get. I don't have any, but it is kind of a "cool thing" to have, like a psychological safety net. However, then what? It doesn't travel well and if war breaks out, it means having to carry it on the person, through checkpoints and guards and all kinds of risky situations, in an environment that is likely already hostile.
As I said to my friend, back in say, 1938 Germany, it would have been possible for someone to pack up most of their belongings onto a cart or in a truck and leave with at least some of their value. However, the following year, that is unlikely and instead, those valuables become a target of sanctioned government theft. Yet, if value was digitally accessible back then as it is now, the same people would have been able to just walk away. Sure, they would still be missing a lot of their wealth in the form of material goods, but they would be able to have their wealth, without having to carry it at all.
This is revolutionary.
Of course, we know all about this here, but it is also why there is so much pushback from governments against crypto. Because if value can be transferred without them, they don't have a lot of control over their citizens. If value is lockable, brickable, and they can't access the wealth, it can't be stolen from the citizens and used to finance whatever the government wants. When people have mobile wealth, they are less prisoner of the country, and more owner of the country. They can choose to leave, if the government does what they don't like, without financial loss.
But it is interesting too, because while most people in the world still see crypto as something fake because it doesn't exist, they don't realise that everything of financial value, whether it be money, gold, silver or a Picasso, also don't exist in the sense of value. It is all about the perception of value, a very different thing. If perceptions change, the value changes also.
What happens if the US audit shows overreporting of gold holdings?
Well, economic destabilisation and the severe weakening of the US dollar to the point that trust erodes in it as the major global reserve currency. And if China is significantly underreporting? Well, that does the same, doesn't it? Economic turmoil, lack of faith and a shift in the way countries store their reserves. It could bring the US to a cataclysmic financial end as we know it, because so much of the US power and control comes through perception.
What do you think - is the all the gold there?
I guess we have to wait for an audit.
Will it be another 72 year wait?
Taraz
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