An audit by Treasury’s Inspector General’s Office of the Federal Reserve’s NY vault gold and a L.A. Times story on the audit may be misleading, an economist maintains.
Posted: Wednesday , 20 Feb 2013
RENO (MINEWEB) -
The first-ever U.S. Department of the Treasury audit of the U.S. government’s gold bars in the New York Federal Reserve vault revealed 13,378,981 fine troy ounces in gold bars are being held by the Federal Reserve’s New York branch.
The New York Fed Branch also holds 73,829.5 ounces of gold coins, according to the audit report completed last month by the Office of the Inspector General of the Department of the Treasury.
The statutory value of the New York-held Federal Reserve Bank (FRB) gold is $568,007,257 while the market value as of September 30, 2012, was $23,892,191,505, according to the report.
The Inspector General’s audit observed, “The Federal Reserve Bank of New York holds 99.98% of the total United States-owned gold bars and coins held by FRBs within its vault. The remaining 0.02% of the United States gold bars and coins held by FRBs are on display at the Federal Reserve Bank of Richard, Atlanta, Kansas City, Minneapolis, San Francisco, New York and Dallas.”
However, economist and publisher Robert Wenzel contends most or all of this gold is not actually the property of the U.S. government, but rather is gold being held for foreign governments, a fact the audit report does not mention.
In a Jan. 4, 2013, letter to Nani Coloretti, assistant treasury secretary for management, Michael Fitzgerald, director of financial audits for the Office of Inspector General, wrote, “We identified no material weaknesses in internal control over financial reporting and no instances of reportable noncompliance with laws and regulations.”
The Los Angeles Times, which e-mailed questions to the Inspector General’s Office about the audit, reported that the auditors performed 367 tests on a sample of the government’s 34,201 gold bars held in the New York Fed’s vault five stories below Manhattan’s financial district. Auditors drilled tiny holes into the bars to remove samples that were assayed. In three of the tests, the gold was more pure than Treasury records had indicated, according to the Inspector General.
The assaying process consumed 10 ounces of gold and the remaining 69 ounces removed for sampling were returned to the Treasury.
“At this point, we do plan to conduct this audit annually,” the Inspector General’s Office told the LA Times. However, since the U.S. gold at the New York Fed has been placed under Official Joint seal, the auditors “would not anticipate weighing, counting and assaying unless the seal shows signs of tampering.”
'Some major disinformation about America's gold'
However, economist Robert Wenzel, editor and publisher of the online website, Economic Policy Journal, contends that the problem with the Office of Inspector General’s audit “is that the gold held at the New York Federal Reserve is not ‘The U.S. government’s gold.’ It is the gold held, for the most part, by the Federal Reserve for foreign countries.”Wenzel also questioned why an independent auditing firm was not brought in to conduct the audit of the New York FRB gold. “…Since the gold is held for countries, like Germany, why didn’t Germany and others who have gold on account get to pick the auditor?”
Wenzel asserted, “This audit was designed to confuse. Expect more stories about how the Treasury conducted an audit of US gold. Not true, Fort Knox gold, where America’s gold supposedly sits, is off limits to all and has never been audited.”
In his article, Wenzel observed that the gold reserves that actually belong to the U.S. Government are held elsewhere in Fort Knox, West Point and Denver.
“Of course, the full truth is this gold has never been audited,” he noted.
“Bottom Line: The audit of the NY fed gold will be used to deceive and give the impression that the gold supposedly held for Americans has been audited,” Wenzel concluded.
Former U.S. presidential candidate, Rep. Ron Paul, R-Texas, has questioned if the New York Fed has loaned or otherwise encumbered U.S. gold in financial arrangements. Paul has sponsored legislation aimed at requiring a full assay and audit of U.S. gold reserves.
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