{We have no way of testing this piece's allegations beyond what is available to the general public. Prison Planet claims that the story is bogus, citing a letter from Bullion Vault's Adrian Ash. However in response: (1) Bullion vault is not without vested interest. (2) The article does not claim that the gold bars had been hollowed out but plated. (3) The difference in density would NOT show in a 400 ounce bar as the specific gravities of gold and Tungsten are identical at 19.3. Densities differ in the third decimal place, i.e. 0.692 to 0.697, ib/in3 (Perry's Ch.E. Handbook 4th Edition) with only a 0.72% difference. Drilling the bar would be required. (4) The article does not allege that gold was traded on LBMA. (5) The Federal Reserve has admitted to GATA that it has gold swap arrangements with foreign banks that isn't public information. Much of the Fed's response has been redacted by the Federal Open Market Committee (FOMC), a supposedly 'separate entity' ,who just happen to have access to the Fed's records. The mere existence of this rumor and the refusal of the Fed to supply complete information on its activities, is reason enough to call for a thorough audit of the system.
7-8-15 UPDATE: The New American suggests in Has the Federal Reserve Sold the Gold at Fort Knox?: "...That’s right: The Federal Reserve — the ultra-secretive central bank that controls the flow of money in the United States — apparently has monopoly control over the gold, too… since 1986, the vaults have literally been sealed shut. The seals were wax with a ribbon running through them connected to a document declaring the vaults sealed…"The Treasury Office Inspector General (OIG), which is currently responsible for the Deep Storage gold audits, has told me it is absolutely not routine to break the seals. Neither for inspection by a US Mint Director nor for the President of the United States will the seals be broken," Jansen writes…In 2010, however, the seals were broken and new, more durable plastic seals replaced the old wax ones. "
4-26-11 UPDATE: Two film reports now corroborate this story
The article is quite lengthy in developing its scenario but well worth
the read. It poses some intriguing possibilities into the activities of the
Federal Reserve System. Perhaps, this is why the Fed and its Congressional
allies, such as Mass Rep. Barney Frank (D) have opposed Ron Paul's bill to
audit the Fed while others have blocked it in the Senate. So, if the article's
allegations are true, what's left to steal from the country? Just the labor of
it's citizens and that's now in progress with Cap and Trade and health care reform.
Economic hardship from the forced servitude of ordinary Americans, struggling
against outrageous commodity prices, will be used to pay off debt incurred by
its never-ending supply of treasonous politicians. - Ed.}
by Anonymous
When I first
picked up on this tale, my first reaction was that this was another urban
legend. I also thought that counterfeiting a bar of gold was a technical
impossibility not having spent time checking out the possibilities. I finally
made myself read this more recent item because the story remained persistent
and I thought enough time had elapsed for a few obvious questions to be asked.
After reading that gold and tungsten have the same density, I cracked open my
handy copy of ‘The Practicing
Scientist’s Handbook (1978)’ and got the exact values. The density
of gold is 19.32 g/cc and the density for tungsten is 19.3. Ouch! The
difference is in the forth significant digit and no one usually measures beyond
three significant digits.
To do so is no big trick, but everyone is working on three digits as good
enough. One would have needed a very sensitive scale and a very sensitive
volumetric device able to show that you were a few grams short on every ten or
twenty kilos you were measuring.
The bottom line is that someone made a business out of looting the flow of gold
somewhere along its transfer path. Done right, you would simply be in position
to swap out replacement bars as needed. This means a cabal of employees was
involved in some way or the other. It may even have begun with a single bar.
The bar purchased outright was needed to make a dozen or more new bars with
proper serial numbers. Then when the real bars were shipped with correct serial
numbers, the switch took place. One could then produce a much larger number of
bars. In short order you could switch out shipments without any fuss at all.
It will require a full audit of every bar in existence to find out how much has
been stolen.
Anyway, before anyone gets excited about all this, it's long overdue for the
globe to quit maintaining a gold reserve as if it has anything to do with
reserve banking. Canada exited that game decades ago and no one much cares.
Whoever was involved has had ample time to hide and time during the looting
process to create excellent escape plans.
In a way this is almost funny. You would have thought that the USA had been
embarrassed enough this past year. When markets crash, it's normal for the
accumulation of bad acts to become apparent and very public. This bit of
skullduggery will not be surpassed for a century or two so I do not think we
have to be worried about what is next.
It is difficult to think that this was ever a sanctioned operation because
institutional memory would make sure that no fake gold ever went out of country.
Most likely a key player retired or died and that was that.
It's one thing
to counterfeit a twenty or hundred dollar bill. The amount of financial damage
is usually limited to a specific region and only affects dozens of people and
thousands of dollars. Secret Service agents quickly notify the banks on how to
recognize these phony bills and retail outlets usually have procedures in place
(such as special pens to test the paper) to stop their proliferation.
But what about gold? This is the most sacred of all commodities because it is
thought to be the most trusted, reliable and valuable means of saving wealth.
A recent discovery -- in October of 2009 -- has been suppressed by the main
stream media but has been circulating among the "big money" brokers
and financial kingpins and is just now being revealed to the public. It
involves the gold in Fort Knox -- the US Treasury gold -- that is the equity of
our national wealth. In short, millions (with an "m") of gold bars
are fake!
Who did this? Apparently our own government.
Background
In October of 2009 the Chinese received a shipment of gold bars. Gold is
regularly exchanged between countries to pay debts and to settle the so-called
balance of trade. Most gold is exchanged and stored in vaults under the supervision
of a special organization based in London, the London
Bullion Market Association (or LBMA). When the
shipment was received, the Chinese government asked that special tests be
performed to guarantee the purity and weight of the gold bars. In this test,
four small holed are drilled into the gold bars and the metal is then analyzed.
Officials were
shocked to learn that the bars were fake. They contained cores of tungsten with
only an outer coating of real gold. What's more, these gold bars, containing
serial numbers for tracking, originated in the US and had been stored in Fort
Knox for years. There were reportedly between 5,600 to 5,700 bars, weighing 400
oz. each, in the shipment!
At first many gold experts assumed the fake gold originated in China, the
world's best knock-off producers. The Chinese were quick to investigate and
issued a statement that implicated the US in the scheme.
According to
the Chinese investigation, the balance of this
1.3 million to 1.5 million 400 oz tungsten cache was also gold plated and then
allegedly "sold" into the international market. Apparently, the
global market is literally "stuffed full of 400 oz salted bars".
Perhaps as much as 600-billion dollars worth.
An obscure news item originally published in the N.Y. Post [written by Jennifer
Anderson] in late Jan. 04 perhaps makes sense now:
DA investigating NYMEX executive Manhattan,
New York, --Feb. 2, 2004. A top executive at the New York Mercantile Exchange is being investigated by the Manhattan district attorney.
Sources close to the exchange said that Stuart Smith, senior vice president of
operations at the exchange, was served with a search warrant by the district
attorney's office last week. Details of the investigation have not been
disclosed, but a NYMEX spokeswoman said it was unrelated to any of the
exchange's markets. She declined to comment further other than to say that
charges had not been brought. A spokeswoman for the Manhattan district
attorney's office also declined comment."
The offices
of the Senior Vice President of Operations -- NYMEX -- is exactly where you
would go to find the records [serial number and smelter of origin] for EVERY
GOLD BAR ever PHYSICALLY settled on the exchange. They are required to keep
these records. These precise records would show the lineage of all the physical
gold settled on the exchange and hence "prove" that the amount of
gold in question could not have possibly come from the U.S. mining operations
-- because the amounts in question coming from U.S. smelters would undoubtedly
be vastly bigger than domestic mine production.
No one knows whatever happened to Stuart Smith. After his offices were raided
he took "administrative leave" from the NYMEX and he has never been
heard from since. Amazingly, there never was any follow up on in the media on
the original story as well as ZERO developments ever stemming from D.A.
Morgenthau's office who executed the search warrant.
Are we to believe that NYMEX offices were raided, the Sr. V.P. of operations
then takes leave -- all for nothing?
The revelations of additional fake gold bars explains another highly
unusual story that also happened in 2004:
LONDON, April 14, 2004 (Reuters) -- NM
Rothschild & Sons Ltd., the London-based unit of investment bank Rothschild
[ROT.UL], will withdraw from trading commodities, including gold, in London as
it reviews its operations, it said on Wednesday. Interestingly, GATA's Bill
Murphy speculated about this back in 2004;
What
is the GLD?
GLD is a short form for Good London Delivery. The London Bullion
Market Association (LBMA) has defined "good delivery" as a delivery
from an entity which is listed on their delivery list or meets the standards
for said list and whose bars have passed testing requirements established by the
association and updated from time to time. The bars have to be pure for AU in
an area of 995.0 to 999.9 per 1000. Weight, Shape, Appearance, Marks and Weight
Stamps are regulated as follows:
Weight:
minimum 350 fine ounces AU; maximum 430 fine ounces AU, gross weight of a bar
is expressed in troy ounces, in multiples of 0.025, rounded down to the nearest
0.025 of a troy ounce.
Dimensions:
the recommended dimensions for a Good Delivery gold bar are: Top Surface: 255 x
81 mm; Bottom Surface: 236 x 57 mm; Thickness: 37 mm.
Fineness:
the minimum 995.0 parts per thousand fine gold. Marks: Serial number; Assay
stamp of refiner; Fineness (to four significant figures); Year of manufacture
(expressed in four digits).
After reviewing their prospectus yet again, it becomes pretty clear that GLD
was established to purposefully deflect investment dollars away from legitimate
gold pursuits and to create a stealth, cesspool/catch-all, slush-fund and a
likely destination for many of these fake tungsten bars where they would never
see the light of day -- hidden behind the following legalese "shield"
from the law:
[Excerpt from the GLD
prospectus on page 17]
"Gold bars allocated to the Trust in connection with the creation of a Basket may not meet
the London Good Delivery Standards and, if a Basket is issued against such
gold, the Trust may suffer a loss. Neither the Trustee nor the Custodian
independently confirms the fineness of the gold bars allocated to the Trust in
connection with the creation of a Basket. The gold bars allocated to the Trust
by the Custodian may be different from the reported fineness or weight required
by the LBMA's standards for gold bars delivered in settlement of a gold trade,
or the London Good Delivery Standards, the standards required by the Trust. If
the Trustee nevertheless issues a Basket against such gold, and if the
Custodian fails to satisfy its obligation to credit the Trust the amount of any
deficiency, the Trust may suffer a loss."
The Gold Antitrust Action Committee (GATA) is an organization which has been nipping at the heels of the US Treasury Federal Reserve for several years now. The basis of GATA's accusations is that these institutions, in coordination with other complicit centralbanks and the large gold trading investment banks in the US, have been manipulating the price of gold for decades.
The Federal Reserve knows but is apparently part of the schemeEarlier this year GATA filed a second Freedom of Information Act (FOIA) request with the Federal Reserve System for documents from 1990 to date having to do with gold swaps, gold swapped, or proposed gold swaps.
On Aug. 5, The Federal Reserve responded to this FOIA request by adding two more documents to those disclosed to GATA in April 2008 from the earlier FOIA request. These documents totaled 173 pages, many parts of which were redacted (blacked out). The Fed's response also noted that there were 137 pages of documents not disclosed that were alleged to be exempt from disclosure.
GATA appealed this determination on Aug. 20. The appeal asked for more information to substantiate the legitimacy of the claimed exemptions from disclosure and an explanation on why some documents, such as one posted on the Federal Reserve Web site that discusses gold swaps, were not included in the Aug. 5 document release.
In a Sept. 17, 2009, letter on Federal Reserve System letterhead, Federal Reserve governor Kevin M. Warsh completely denied GATA's appeal. The entire text of this letter can be examined at http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf.
The first paragraph on the third page is the most revealing.
"In connection with your appeal, I have confirmed that the information withheld under exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you."
The above statement is an admission that the Federal Reserve has been involved with the fake gold bar swaps and that it refuses to disclose any information about its activities!
Why use tungsten?
If you are going to print fake money you need to have the special paper, otherwise the bills don't feel right and can be easily detected by special pens that most merchants and banks use. Likewise, if you are going to fake gold bars you had better be sure they have the same weight and properties of real gold.
In early 2008 millions of dollars in gold at the central bank of Ethiopia turned out to be fake. What were supposed to be bars of solid gold turned out to be nothing more than gold-plated steel. They tried to sell the stuff to South Africa and it was sent back when the South Africans noticed this little problem.
The problem with making good-quality fake gold is that gold is remarkably dense. It's almost twice the density of lead, and two-and-a-half times more dense than steel. You don't usually notice this because small gold rings and the like don't weigh enough to make it obvious, but if you've ever held a larger bar of gold, it's absolutely unmistakable: The stuff is very, very heavy.
The standard gold bar for bank-to-bank trade, known as a "London good delivery bar" weighs 400 troy ounces (over thirty-three pounds), yet is no bigger than a paperback novel. A bar of steel the same size would weigh only thirteen and a half pounds.
According to gold expert, Theo Gray, the problem is that there are very few metals that are as dense as gold, and with only two exceptions they all cost as much or more than gold.
The first exception is depleted uranium, which is cheap if you're a government, but hard for individuals to get. It's also radioactive, which could be a bit of an issue.
The second exception is a real winner: tungsten. Tungsten is vastly cheaper than gold (maybe $30 dollars a pound compared to $12,000 a pound for gold right now). And remarkably, it has exactly the same density as gold, to three decimal places. The main differences are that it's the wrong color, and that it's much, much harder than gold. (Very pure gold is quite soft, you can dent it with a fingernail.)
A top-of-the-line fake gold bar should match the color, surface hardness, density, chemical, and nuclear properties of gold perfectly. To do this, you could start with a tungsten slug about 1/8-inch smaller in each dimension than the gold bar you want, then cast a 1/16-inch layer of real pure gold all around it. This bar would feel right in the hand, it would have a dead ring when knocked as gold should, it would test right chemically, it would weigh *exactly* the right amount, and though I don't know this for sure, I think it would also pass an x-ray fluorescence scan, the 1/16" layer of pure gold being enough to stop the x-rays from reaching any tungsten. You'd pretty much have to drill it to find out it's fake.
Such a top-quality fake London good delivery bar would cost about $50,000 to produce because it's got a lot of real gold in it, but you'd still make a nice profit considering that a real one is worth closer to $400,000.
What's going to happen now?
Politicians like Ron Paul have been demanding that the Federal Reserve be more transparent and open up their records for public scrutiny. But the Fed has consistently refused, stating that these disclosures would undermine its operation. Yes, it certainly would!
UPDATE: Audit of Fed Reserve Amendment Passes!
"In an unprecedented defeat for the Federal Reserve, an amendment to audit the multi-trillion dollar institution was approved by the House Finance Committee with an overwhelming and bipartisan 43-26 vote on Thursday afternoon despite harried last-minute lobbying from top Fed officials and the surprise opposition of Chairman Barney Frank (D-Mass.), who had previously been a supporter.
The measure, cosponsored by Reps. Ron Paul (R-Texas) and Alan Grayson (D-Fla.), authorizes the Government Accountability Office to conduct a wide-ranging audit of the Fed's opaque deals with foreign central banks and major U.S. financial institutions. The Fed has never had a real audit in its history and little is known of what it does with the trillions of dollars at its disposal. "
The manufacture of fake gold bars goes back years and, because of this, it is not likely that the originator of this scheme will ever be revealed or brought to justice. Meanwhile the world is just beginning to learn that much of its national reserves of gold may be fake. If more testing reveals that this gold was guaranteed by Fort Knox and the US Treasury then perhaps they will demand an exchange for "real" gold -- wouldn't you?
This is all happening at a time when the US economy is at its lowest and most vulnerable. The effects could be devastating.
Some investors are already selling gold commodities before these facts are widely known. They are investing instead in silver -- the next best metal. This will undoubtedly drive silver prices up.
According to Jim Willie, 24 year market analyst and Ph.D in statistics, "The bust cometh, and it will be spectacular. The stories told in the press will be peculiar, since not told objectively. The headlines might be a comedy, with phony reports of foreign subterfuge, when the perpetrators are home grown."