MISSING AUDITS OF THE FED’S GOLD?

Joseph P Farrell, Giza Death Star: 

I read this article – shared by Mr. V.T. – and was stunned, and, I suspect you will be too, particularly in the context of those stories about gold repatriation that we’ve been following over the past few years.  You’ll recall that the whole “repatriation” game wa kicked off by the late Venezuelan President, Hugo Chavez, when he repatriated some of that country’s gold. Others quickly jumped on the bandwagon – Ecuador, Austria, the Netherlands – and then it became serious when Germany wanted to repatriate its gold from the New York Federal Reserve, from Paris, and from London.  You’ll recall that when that happened, there was a great deal of thumb-twiddling, stuttering, hemming and hawing from all parties concerned, including the Bundesbank, but the bottom line was that Germany did not recover very much. Then China and India and Russia started buying the stuff in record amounts, only to find (in China’s case), that some of the bars, at least on the commercial markets were filled with tungsten.

Now there’s this:

US Government Lost 7 Fort Knox Gold Audit Reports

That’s right, not one, not two, not even three, but seven audit reports.

A closer look is in order. The article’s author, Mr. Koos Jansen, points out a reassuring statement to Congress made by Mr. Eric Thorson:

“Currently the Office Inspector General of the Treasury is responsible for the audits of the gold reserves at the US Mint. At the congressional hearing of the Gold Transparency Act in 2011 Inspector General (IG) Eric Thorson stated:

“‘Before I discuss the details of the audits that are the topic of this hearing, I want to make one point very clear: 100 percent of the U.S. Government’s gold reserves in the custody of the Mint has been inventoried and audited. Furthermore, these audits found no exceptions of any consequence. I also want to assure you that the physical security over the gold reserves is absolute. I can say that without any hesitation, because I have observed the gold and the security of the gold reserves myself.’

“He said this, but there is no proof. His statement “100 percent of the U.S. Government’s gold reserves in the custody of the Mint has been inventoried and audited“ is impossible to confirm, as we’ll see later on.”(All emphases in the original)

But, as Mr. Jansen searched for these audits, he couldn’t find them:

“In short, the US National Archives could not extradite the 7 audit reports I requested.The reports were not present at the National Archives, the OIG or at the Treasury Department. I doubt an attempt to “submitting a FOIA request directly to the Treasury Department” will bring me anything; likely it will be a waste of time as I had already contacted all possible government departments separately, which could not deliver me the reports I was looking for despite none of them was unwilling to help me. I will, however, submit a couple of new FOIA’s at the US government regarding gold audits.

“The reports I did find, and are now publicly available, are:

• * 1974 audit (released by the GAO 2/10/1975)
• * 1977 audit (released by the GAO 5/5/1978)
• * 1981 audit (and 1980 summary, released by the GAO 10/1981)
• * 1985 audit (released by the OIG 4/25/1986)
• * 1986 audit (released by the OIG 4/24/1987)

“Coincidentally, or not, these reports are exactly the same ones as listed by Thorson at the congressional hearing in 2011 (exhibit 1, framed in red). It seems these 6 reports (5 documents) are the only ones “currently in existence” and the remaining 7 have mysteriously disappeared.”
(All emphases in the original)

Digging further, Jansen noticed what he calls “anomalies”:

“The compartments at the Mint were placed under official joint seal, whereas the FRBNY compartments were never placed under official joint seal (as we can read on page 11 of the 1980 audit report).

“This suggests the gold at the FRBNY was stored so it could be easily transported in and out of the vaults, possibly through a corridor to the adjacent private vault at 1 Chase Manhattan Plaza – read thispost by BullionStar gold researcher Ronan Manly for more information on the construction of the FRBNY vault and the connection to the vault across the street that was owned by JP Morgan, but recentlybought by Fosun (October 2013), a Chinese investment conglomerate.

“Let’s read more about the audits at the FRBNY conducted under the continuing audits program, a quote from the 1981 report:

‘The audit procedures followed [at the FRBNY] are essentially the same as those followed at Bureau of the Mint depositories, except that assay samples are not taken to verify the purity of the gold.‘

“A quote from the 1985 report:

‘Although the quality of the gold in the custody of the Federal Reserve Bank of New York cannot be readily assayed, …’

“Not only were the vault compartments at the FRBNY exempt from being sealed, in addition, for an unknown reason assay tests were never performed at the FRBNY!”((All emphases in the original)

Now, if this is true, then it would go a long way to explain why Germany has been experiencing such difficulties getting its gold back if such conditions have persisted over time. Jansen continues by pointing out the implication of this:

“More from the 1985 report:

‘The audit procedures followed [at the FRBNY] were essentially the same as those followed at Mint institutions except that assay samples were not taken to verify the purity of the gold and the audited gold was not under committee control after the audit. As a result, the gold at the Bank [FRBNY] is considered unaudited.’

“According to the reports available to us, in 1985 the committee had to conclude the gold at the FRBNY was never audited! The intention in 1975 was to audit the gold at the FRBNY, but then, a few years down the road the gold at the New York Fed was mysteriously exempt from the continuing audits program.”(All emphases in the original)

Then there’s another anomaly, namely, the lack of any credible documentation indicating independent assays:

“Moving on to the assay tests conducted at the US Mint. An overview starting from 1953:

*In the 1953 report we could read 26 bars (0.00002 % of the total stash at that time) were assayed from bore samples. The assay tests found no irregularities. The assayer is unknown and there was no assay report included in the audit report.

*In 1974 the New York assay office tested 95 bars. Two tetrahedron-shaped chips were removed form the top and bottom of each bar assayed. The assay tests found no irregularities. There was no assay report included in the audit report.

*In 1977, presumably, one bar in every fiftieth melt (one melt is approximately 20 bars) was assayed,irregularities were found in two melts, “the vault had to be opened twice more in the presence of the Joint Sealing Committee and the gold reevaluated”. The assayer is unknown and there was no assay report included in the audit report.

*For all other ‘publicly available’ audit reports (1980, 1981, 1985, 1986) it’s very briefly mentioned assay tests were conducted, presumably for one in every fiftieth melt. No irregularities were found. The assayer is unknown and no assay reports have been included in the audit reports.

*For the audits performed in 1975, 1976, 1978, 1979, 1982, 1983 and 1984 under the continuing audits program allegedly 1 in 50 melts has been assayed, although there are no audit reports, nor assay reports, nor do we know who the assayer was.

*It’s likely 97 % of the audited gold by the continuing audits committee has not been assayed by an independent assayer. In 1977 the New York assay office, which is a subsidiary of the US Mint, conducted the assays. For the other years we don’t know what office performed the checks.”
(All emphases in the original)

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