The Curious Case of Secretary Mnuchin’s Visit to Fort Knox

Treasury Secretary Steven Mnuchin recently visited the United States Bullion Depository at Fort Knox. According to Bloomberg, Mnuchin stated that “The last time anybody went in to see the gold, other than the Fort Knox people, was in 1974 when there was a congressional visit. And the last time it was counted was actually in 1953.” It’s interesting that Mnuchin said that because it doesn’t jibe with Treasury’s official public stance.

On June 23, 2011, Congressman Ron Paul’s Subcommittee on Domestic Monetary Policy held a hearing entitled “Investigating the Gold: H.R. 1495, The Gold Reserve Transparency Act of 2011 and the Oversight of United States Gold Holdings.” From the hearing record, available from the Ron Paul Monetary Policy Anthology, we read that:

In preparation for this hearing, the Treasury IG reported that between 1975 and 1986 an extremely thorough audit of the gold storage vaults was conducted: the vaults were inventoried, some bars were assayed on a random basis, and those results were audited. The vaults then were sealed with tamper-proof seals, signed by representatives of the U.S. Mint, the bureau that was the predecessor of the Treasury Department’s Financial Management Service, and the Federal Reserve Bank of New York, all of whom were present for the entire audit process. This audit covered roughly 92 percent of the gold in the custody of the Mint.

After 1986 gold audits and inventories continued but were conducted solely by the Mint, without independent parties present for the sealing of the vaults. In 1993, the Treasury IG began conducting inventories again, and between 1993 and 2008 the OIG examined the 8 percent of the Mint’s gold holdings not audited during the 1975-1986 audits. Another 13 percent of the gold was examined during this period for a total audit of roughly 21% of the Mint’s custodial gold.

The Treasury Department’s Inspector General testified in 2011 that:

In June 1975, the Treasury Secretary authorized and directed a continuing audit of U.S. Government-owned gold for which Treasury is accountable. Pursuant to that order, the Committee for Continuing Audit of the U.S. Government-owned Gold performed annual audits of Treasury’s gold reserves from 1975 to 1986, placing all inventoried gold that it observed and tested under an official joint seal.

The committee was made up of staff from Treasury, the Mint, and the Federal Reserve Bank of New York. The annual audits by the committee ended in 1986 after 97 percent of the Government-owned gold held by the Mint had been audited and placed under official joint seal.

Either Secretary Mnuchin doesn’t believe the Treasury’s official stance or he wasn’t properly briefed by his senior staff before making his statements. Whether he believes that the last audit was held in 1953 or if he changes his tune to reflect Treasury’s official position, might he be open to another audit today to make sure that all the gold is still there?