For decades, we have had to speculate about how much gold our government has in its reserves. However, thanks to legislation introduced in early May, we may soon have the first audit of United States gold reserves since the Eisenhower Administration.
The Gold Reserve Transparency Act (H.R. 2559) is backed by the Sound Money Defense League and government accountability advocates. If the legislation gets approved, the Comptroller of the United States is to conduct a “full assay, inventory, and audit of all gold reserves, including any gold in ‘deep storage,’ of the United States at the place or places where such reserves are kept.”
Some of the gold reserves may be burdened with third-party obligations, both domestic and international. For instance, it has been alleged over the years that the US Treasury has sold, swapped, leased, or otherwise placed encumbrances upon some of the US gold reserves. So, the bill also requires “a full accounting of any and all sales, purchases, disbursements, or receipts… a full accounting of any and all encumbrances . . . [and] an analysis of the sufficiency of the measures taken to ensure the physical security of such reserves.”
Gold is a crucial and strategic financial asset that does not carry the risks associated with unbacked currencies, such as the US dollar. The financial dominance of the US was for decades based on the assumption that our gold reserves can back the dollar. When that backing was removed by President Nixon because our gold could not back the money Nixon’s administration needed to print to cover the war effort in Vietnam, the dollar began its many decades of being backed by the good faith in our country. While this may have been enough for many years, having a currency backed by gold is better than having a currency backed by good faith. Therefore, our dominance—and, ultimately, our national security—is threatened by Russia and China, who are accumulating physical gold at an alarming rate.
According to US Representative Alex Mooney, who introduced The Gold Reserve Transparency Act, the bill seeks to restore confidence in our government’s ability to back our currency with physical gold. He says the Treasury Department has failed by not giving Americans an understanding and inventory of US gold holdings. The bill, he argues, will provide transparency in accounting for our gold reserves.
The latest audit of US gold holdings dates back to 1953, yet private holdings in precious metals depositories are routinely audited. And, the 1953 audit was never actually completed! It would be more than reasonable to expect that our Treasury is being held—at a minimum—to the standards of private depositories and public companies. The suggested legislation will clear the way for the first true audit ever and mandates a new audit every 5 years. Audit results are to be provided both to Congress and to the public.
At Gold Alliance, we completely support this legislation. There should never be any doubt about the status and security of US gold reserves. Gold is the most economically strategic asset for a nation to own. It has immense monetary importance. Major competing economies to the US, like Russia and China, are buying gold in historically unprecedented quantities—this is too significant a fact to leave investors, bankers, and governments guessing and speculating about how much gold the US possesses.
We fully support this bill and think it will promote confidence in the US dollar or give us enough time to pressure Congress to allocate more funds to purchase gold and place it in our reserves, matching Russia’s and China’s gold purchases. One day, when the world’s superpowers directly compete for monetary dominance, a different type of “golden rule” will apply: He who has the gold will make the rules. I can only hope we will have enough gold by that time.