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Audit of gold at New York Fed fails to cover leases and swaps
Multiple claims to the same metal are far more important than any possible imperfections in particular bars.
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Gold at New York Fed is Intact, Some Purer than Thought, Audit Finds
By Andrew Tangel
Los Angeles Times
Monday, February 18, 2013
http://www.latimes.com/business/money/la-fi-mo-gold-new-york-fed-audit-p...
NEW YORK -- The U.S. government's gold in New York is safe in a vault underneath Manhattan, and some of the precious metal there is purer than previously thought.
That's according to a first-ever audit conducted last year by the Treasury Department of U.S. gold on deposit at Federal Reserve banks in New York and elsewhere.
As part of the audit, the Treasury tested a sample of the government's 34,021 gold bars in the New York Fed's vault five stories below Manhattan's financial district, according to the inspector general's office. Auditors drilled tiny holes into the bars to remove samples that were tested for fineness in a process called assaying.
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Opinion Around the World Is Changing
in Favor of Gold -- Find Out Why
When Deutschebank calls gold "good money" and paper "bad money". ...
http://www.gata.org/node/11765
When the president of the German central bank, the Bundesbank, pays tribute to gold as "a timeless classic". ...
http://www.forbes.com/sites/ralphbenko/2012/09/24/signs-of-the-gold-stan...
When a leading member of the policy committee of the People's Bank of China calls the gold standard "an excellent monetary system". ...
http://www.forbes.com/sites/ralphbenko/2012/10/01/signs-of-the-gold-stan...
When a CNN reporter writes in The China Post that the "gold commission" plank in the 2012 Republican platform will "reverberate around the world". ...
http://www.thegoldstandardnow.org/key-blogs/1563-china-post-the-gop-gold...
When the Subcommittee on Domestic Monetary Policy of the U.S. House of Representatives twice called on economist, historian, and gold standard advocate Lewis E. Lehrman to testify. ...
World opinion is changing in favor of gold.
How can you learn why and what it will mean to you?
Read the newly updated and expanded edition of Lehrman's book, "The True Gold Standard."
Financial journalist James Grant says of "The True Gold Standard": "If you have ever wondered how the world can get from here to there -- from the chaos of depreciating paper to a convertible currency worthy of our children and our grandchildren -- wonder no more. The answer, brilliantly expounded, is between these covers. America has long needed a modern Alexander Hamilton. In Lewis E. Lehrman she has finally found him."
To buy a copy of "The True Gold Standard," please visit:
http://www.thegoldstandardnow.com/publications/the-true-gold-standard
In three of the 367 tests, the gold was more pure than Treasury records indicated, according to the Treasury's inspector general. As a result, the government notched up the value of its gold holdings by approximately 27 fine troy ounces -- or about $43,500, based on gold’s market value Monday.
The audit of the Fed gold came after 2012 presidential contender and former U.S. Rep. Ron Paul, R-Texas, questioned the central bank's gold holdings. While he was in Congress, Paul questioned whether the New York Fed had loaned or otherwise encumbered U.S. gold in financial arrangements, and he advanced a bill that would have required a full assay and audit of the country's gold reserves.
The assaying process consumed 10 ounces of gold, and the remaining 69 ounces removed for sampling were returned to the Treasury, according to the inspector general's office.
The U.S. gold at the New York Fed has been placed under so-called Official Joint Seals, attesting to the results of the audit.
"At this point, we do plan to conduct this audit annually," the inspector general's office said in e-mailed responses to questions. "However, since the gold is now under Official Joint Seal, we would not anticipate weighing, counting, and assaying unless the seal shows signs of tampering."
Results of the audit were released in January. The audit also examined internal controls, security, and operations at the New York Fed.
"Our audit disclosed no material weaknesses and no instances of reportable noncompliance with laws and regulations," the Treasury’s audit report said.
The New York Fed holds 99.98 percent of the U.S.-owned gold bars and coins in the custody of the Federal Reserve. The rest of the gold is on display at Fed banks in cities such as Richmond, Kansas City, and San Francisco.
As of Sept. 30, when the market price of gold was $1,776 an ounce, the Fed banks held $23.9 billion in U.S. gold. (Gold has since declined in value, and on Monday the precious metal was hovering around $1,610 an ounce.)
The vast majority of the country’s gold reserves is held elsewhere, in Fort Knox, West Point, and Denver.
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