The Ghost of Fort Knox Past
Dr. Russell McDougal

The U.S. dollar is "as good as gold," right? Well, not exactly. Those days and decades are long gone. The U.S. remains in the midst of currency woes and a global credit crisis that refuses to go away. Let's look into what was once the foundation for the buck - gold bricks in Ft. Knox, Kentucky.

There are reports that more than 8,000 tons of gold are stored within Ft. Knox and a few other national depositories. That's definitely a national treasure. How did it initially get there?

The U.S. used to be on a gold standard. The Constitution says that Congress is responsible for producing the nation's currency. Unfortunately, Congress abdicated this responsibility in 1913 to what is now known as the Federal Reserve. Of course, the Fed is neither federal nor a reserve. It's been downhill ever since.

In most cases, privatizing a national service is not a bad idea. Check your local post office if you need further clarification. On the other hand, giving monopolies to greedy bankers might not be the wisest thing to do. Where exactly do you sign up for a license to print money? Do you have to be born into that privilege?

The Ft. Knox depository was completed in 1936. The gold that was initially placed within its vaults was a function of two historic events: 1) The U.S. held a gold hoard as per its Constitutional duties, and 2) Franklin Roosevelt confiscated U.S. citizens' gold in 1933.

The old fort has also been the storage point for the Constitution, Lincoln's Gettysburg Address, the Declaration of Independence, the Magna Carta, and even some of the Queen's crown jewels.

Up until 1933, U.S. citizens could exchange their personal holdings of currency for either gold or silver. The government willingly obliged. In 1933, after the gold theft by Roosevelt, local currency could no longer be traded for gold metal. U.S. citizens still held currency backed by silver, however. These were called Federal Reserve Silver Certificates. They were deemed irredeemable by President Johnson in 1968. Silver coinage was changed to base metals in 1965 and 1966. Silver thus followed gold and it's been paper ever since.

As a side note, the U.S. Treasury has squandered some five billion ounces of citizens' silver since the 1950s. Where did it go? To elitist insiders for the most part. This enormous hoard was also used to suppress the price of silver. That game is now over, and you can well expect silver to continue trading significantly higher on its own merits.

Foreign nations could trade their currency for gold until 1973, when Nixon reneged on that global promise. There has been nothing but "good faith and credit" backing any global currency since that ignominious event. We're in a total fiat world. You can judge for yourself how that's worked out.

Whose gold lies within the walls of Ft. Knox? Clearly, if it is there, it belongs to the citizens of the United States. The Fed and Treasury had fiduciary responsibilities to safeguard this national treasure. It hasn't backed our currency for decades, but it deserves to be protected and managed with care.

An entire book needs to be written on the Ft. Knox gold subject. We will delve into a few highlights of the issue for the purposes of this initial brief essay.

The last independent audit of the Ft. Knox hoard transpired during the Eisenhower administration. A reliable audit is accomplished by drilling and assaying random bricks of the shiny stuff. Independent means someone other than the government, Enron, O.J., or Arthur Anderson performed the audit.

The sphere of gold is an incredibly murky place. There are shenanigans wherever you look. Apparently, gold is more important than some would have you believe. The current global debt and dollar crisis is transpiring because there is no substance or discipline behind any global currency. Both gold and silver have been stripped of their Constitutional duties.

Since WWII, the U.S. dollar has been the world's reserve currency. Governments and citizens across the globe hold dollars as a store of wealth. It is a tremendous advantage and responsibility to issue the world's reserve currency. It's even been called an exorbitant privilege.

That privilege has been exceedingly abused and is now coming to an end. When you neglect and misuse the foundation of a house long enough, it eventually crumbles.

We're there.

Do I believe the Feds have also squandered our national treasure of gold? There are definitely serious reasons to doubt that it remains intact. It is our patriotic duty to demand openness and honesty from our government. Even with such an esoteric subject as the contents of Ft. Knox.

Ft. Knox gold used to back circulating currency, but those days are long gone. Whatever gold remains within this U.S. fortress is now just another Treasury "asset."

Gold is always in vogue when currencies fall upon hard times, as is now the case with the U.S. dollar. U.S. citizens need to know whether our gold assets are still in responsible hands. If your government is not trustworthy, it's best to recognize this fact ASAP.

How have the U.S. Treasury and Fed performed over the decades with their fiduciary responsibility of safeguarding this national treasure? This is one murky and mysterious topic. It's best to simply present some historical facts as well as some conjecture, and allow you to form your own opinion.

To some, this analysis might smack of "conspiracy theory." That doesn't bother me, especially when it comes to precious metals. That particular label tends to close down a lot of inquiring minds and is utilized accordingly. The ones who totally dismiss these issues are the naïve ones in my book.

As the dollar continues to erode, so will the accounts of those who rely solely on the usual stocks and bonds. But the demise of the dollar won't be a calamity for everyone...

Let's start digging. What are some key components of this Ft. Knox gold controversy?

#1: Look at how silver has been handled.

#2: The Edward Durrell story of President Lyndon Johnson losing our gold.

#3: Changing categories of U.S. gold hoard reporting

#4: Official gold is in play across the globe.

Silver is the world's most common form of historical money. I've owned silver at one time or another since 1973 and read most everything written about it for the past 15 years. It is every bit as complex a subject as gold.

The record shows that the U.S. once held a tremendous hoard of silver. It was used to back currency and as a "strategic reserve." An approximation of this hoard is some 5 billion ounces in 1950. That's a lot of silver!

But this silver hoard has been almost totally squandered over the past half century. It has been doled out on the cheap to government-connected corporations and cronies. This is fact, not conjecture. I suggest reading the prolific works of two silver analysts – Theodore Butler and Charles Savoie - for further detailed information.

Both of these gentlemen eat, drink, and sleep silver. They have done yeomanly work with their analysis. We have our differences of opinion, but all clearly believe silver prices have been manipulated downward for decades.

The key point is that U.S. citizens' silver hoard is kaput. Both gold and silver compete with unbacked paper currency and that is not to be allowed. Silver has supposedly been "demonetized" and now is just another industrial commodity.

Don't believe it.

The markets should be free to decide what is "money" and what is not. I don't trust central planners on any continent. Fiat experiments always fail. Our current experiment is hanging by the skin of its teeth. This is a global problem. The world is set to soon rediscover silver.

What does silver have to do with Ft. Knox gold? I see a definite parallel. Incredible amounts of silver have been squandered on the cheap. That is not up for debate. This is in spite of silver being a "strategic" metal.

Can you trust these same blokes with our national gold treasure? Especially a treasure that hasn't received an independent official audit since the 1950s?

Good luck with that.

Unfortunately, you must at least suspect that gold has been treated similarly to silver over the decades. A highway robbery has transpired. Methinks it's a federal highway.

As best I can tell at the present time, the Federal Reserve presently owns the gold that is or isn't in Ft. Knox. Not the Treasury and not U.S. citizens! Future articles will deal with this subject. You can be well assured the Fed is scared witless that its mishandling of this globally recognized treasure might just become common knowledge.

Ft. Knox and its presumed contents are part and parcel of the American legend. The U.S. dollar is under extreme strain at the present time … and deservedly so, unfortunately. If it became known that the Fed had also squandered their bounteous hoard of gold, there would be an incredible outcry against them. They might just, once again, be thrown out on their arses.

Toss the Fed? Is that possible? Sure it is. The Constitution demands it. So do their many decades of total mission failure. They were charged with price and monetary stability when chartered in 1913. Check out a chart of the dollar's purchasing power over the last 95 years. Does it take an entire century to recognize such a colossal failure? Where do you apply for that job?

If you like a good mystery novel, you will definitely want to continue reading this essay. If not, it's time to push the exit button. We're going to hit some links for some extreme "conspiracy theory" stuff this week. Truth is often much stranger than fiction.

If nothing else, you will learn that the precious metals arena is one wild, wooly, and murky place.

In case you're wondering, I don't believe Ft. Knox presently holds significant amounts of gold. Our government continues to prove untrustworthy. The American people and our ruling hierarchy are not the same thing. It is not "un-American" to question the actions and track record of an out-of-control regime. In fact, it is distinctly American.

Let's start with the official denial from Ft. Knox authorities that the gold has ever been compromised. From the United States Bullion Depository at Ft. Knox:

"The security around the Depository has in part led to a popular and recurring conspiracy theory, as alleged by Edward Durrell, Tom Valentine and others, that claims that the Vault is mostly empty, with most of the gold in Fort Knox removed to London in the late 1960s by Lyndon Johnson.

In response, on September 23, 1974, Senator Walter Huddleston of Kentucky, twelve congressmen, and about one hundred members of the news media toured the Vault and opened various cells and doors, each filled with gold. Radio reporter Bill Evans, when asked if it seemed like the gold might have been moved in just for the visit, replied that ‘all I can say is that I saw gold there' and that it seemed like it was always there.

Additionally, audits of the gold by the General Accounting Office (in cooperation with the United States Mint and the United States Customs Service in 1974 and the Treasury Department) from 1975-81 found no discrepancies between the reported and actual amounts of gold at the Depository. Approximately ten percent of the bullion is audited annually to ensure the amount and purity matches official records.

The theory continues to persist, however. In 2007, KPMG will carry out an independent audit."

In the sphere of those who tend not to trust the government, nothing is confirmed until it is officially denied a time or two. That's a pretty clear denial above. The mentioned "audits" of Ft. Knox gold are complete shams. Taking a peek at a little "show gold" or allowing the fox to inspect the hen house won't cut it. The controversy refuses to go away.

Edward Durrell and Tom Valentine are mentioned in the official denial. They long ago claimed that President Johnson was snookered out of the gold in a vain attempt to hold down global gold prices in the late 1960s.

Durrell was a Virginia industrialist and a board chairman for the Union Fork and Hoe Company. He was a proponent of honest and Constitutional money and came to believe the gold was disgorged from Ft. Knox in the late 1960s and early 1970s. There were eyewitness accounts of Army trucks hauling regular shipments of cargo in the middle of the night. Durrell forced the Army to admit that some of the trucks did indeed carry gold. The 1974 hokey gold audit, mentioned in the official record above, was a result of Durrell's investigations.

Tom Valentine, also mentioned in the official denial, was an independent journalist for a national magazine out of Chicago. He also clamored for an independent Ft. Knox gold audit.

An unnamed Army general was also a key player in this scandal. I have not been able to track down a name or much detail about him. We're told the following from this link:

"A U.S. General, at a later date, stated off the record to some, that he headed a military convey of trucks that took the Fort Knox gold to the East Coast, where it was shipped to England in the 1960s, to stem a run on the Bank of England. The British had a lot of trouble caught repeatedly denying they were going to devalue the Pound Sterling. Amid their bank panic, some other countries apparently ended up with the U.S. Fort Knox gold."

Another key player on the Ft. Knox gold scene was Dr. Peter Beter. He was an ultra-successful attorney and was appointed as General Counsel for the Export-Import Bank of Washington. His book, The Conspiracy Against the Dollar, was a bestseller. Beter wrote a series of "Audio Letters" from 1975 to 1982. Many of these letters exposed details of the Ft. Knox heist. Here's a link to Audio Letter #2.

Another gold investigator happened to be a 22-year U.S. Congressman from Kentucky. In fact, Ft. Knox was in his district. He also claimed gold was being taken out secretly at night. His affidavit can be found in the Beter link above.

As you can see, the clear claim is that it was President Lyndon Johnson who supposedly squandered the massive gold hoard in Ft. Knox. LBJ is not exactly known as our most honest President (see Gulf of Tonkin and Vietnam). Did he also lie about U.S. gold?

More recently, James Turk, a true advocate of honest money and markets, has been hiking the Ft. Knox gold trail: click here (some of the links in this article are defunct) and here for two of his articles.

The most recent work demanding an independent audit comes from the honest money and market advocates at the Gold Anti-Trust Action Committee (GATA). From a 9/19/07 news release:

"Metal Bulletin's story appended here is strong evidence that Western central banks are having trouble mobilizing enough real gold with which to maintain their gold-price suppression scheme. The story's reference to GATA's being ‘believed' to have made a freedom-of-information request in regard to the long-unaudited United States gold reserves is easily clarified: The request is still being devised by GATA's consultant, constitutional scholar and lawyer Edwin Vieira, with the hope of making it un-dodgeable by the Treasury Department. 

GATA hopes to submit the request in the next month."

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

I'll be the first to admit that this Ft. Knox gold trail is about as winding and murky as it could get. We've just spanned four decades of controversy. Will the truth ever be known?

I think it will in the near future. The global fiat money system is now centered on the U.S. dollar. This structure is collapsing and will have to be replaced sooner or later. The gold of Ft. Knox will either come to the forefront at that time or it will disappear into a black hole.

It's possible the dollars you hold are still as good as the gold in Ft. Knox. But that might not be saying much.

Invest resourcefully,


P.S. To let me know what you thought of today's article, send an e-mail to: [email protected].

[Ed. Note: Dr. Russell McDougal has dedicated years of study and investing in the natural resources exploration sector. During that time he has closed out DOZENS of gains of 500%... 1,000%... 2,000% and more! Currently he is sitting on multiple thousand percent winners, including one stock that is up a whopping +5,000%. And for a select group of investors, Rusty has agreed to share his secrets of success... and his top stock recommendations. Click here to learn more... ]

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