With tremendous volatility in the gold and silver markets, today King World News interviewed KWN Resident Expert Jim Rickards, who is Senior Managing Director at both Omnis Inc. (National Security) and Tangent Capital (Merchant Bank). One of the questions KWN receives is where is the US gold? Does the US still possess it? Well, here are some snippets from a Jim Rickards interview that directly addresses these questions.

When asked about who actually owns the US gold Rickards responded, “Yeah it’s a great question Eric and it’s one that I find there is quite a bit of confusion on. When you say the gold community, all of the people who believe that gold is sound money, that we need some kind of gold standard, that absent that governments have a tendency to inflate, I think that’s a very united community and they are having a lot of vindication lately because of the action in the gold price and the distress in the paper money markets.”

Jim Rickards continues:

“Having said that, within the gold community there is a lot of division on some of these subjects so I’ll just try to take your questions one at a time. The first issue is who owns the US gold? It’s owned by the United States Treasury. Now there is an interesting history there which is that prior to 1913, in other words prior to the creation of the Federal Reserve, the United States had some gold, but most of the gold was in the hands of private banks.

The currency of the United States was in effect issued by the banks at one point and they backed it up with their own gold. Then there were US government notes that were in circulation from the US Treasury and they were backed by gold. Basically paper money was backed by gold and it could come either from the United States government or going further back in US history from private banks.

So the banks owned a lot of that gold. When they formed the Federal Reserve, in effect all of the banks had to contribute to the capital of the bank in order to get their stock. So if you were the old National Citibank of New York or JP Morgan & Company, you got stock in the Federal Reserve Bank of New York and you had to contribute in order to get that stock. So some of those contributions were in the form of gold and so that’s how the Federal Reserve Banks got their gold and I use the word Banks plural.

We had a single Federal Reserve system, but it’s broken into a number of regional banks. There is a Boston Fed, a New York Fed, a Philadelphia Fed etc. and they all had their own gold to some extent, which was given to them by the member banks who owned them from their various regions. Of course most of that gold was concentrated in New York. That’s where the largest banks were, although there was a fair amount in Boston as well. So that was the situation from 1913 to 1933....

When asked what changed after 1933 Rickards replied, “Well what changed of course was the Great Depression and FDR, and in 1933 FDR seized all of the private gold in the country and devalued the dollar relative to gold. Part of what happened there is the Treasury ordered the Federal Reserve Banks to hand over their gold. So they (the US government) not only took gold from US citizens, but they took gold from the Federal Reserve Banks.

Now they had to give the Federal Reserve Banks some sort of paper asset to shore up their balance sheets because they were counting the gold as capital. So the Treasury gave them these specially created gold certificates. I think what confuses a lot of people when they look at the balance sheet of the Federal Reserve, they show an asset consisting of these gold certificates, but if you look on the liability side, you’ll see there is a corresponding liability to the United States Treasury for the gold. So when you subtract the asset from the liability, there is no net gold in the Federal Reserve system.

When you look at the Treasury’s balance sheet, that’s when you see the gold, it is part of the reserve position of the Unites States of America. The gold storage is mostly split 50/50 between Fort Knox and West Point. What I find interesting about that is Fort Knox and West Point, of course, are both military installations. A lot of people know West Point as the military academy and think of it as a four year college, but it’s a military fort under military command and the vault there is as heavily guarded if not more heavily guarded than the vault at Fort Knox. So if you go by the saying, ‘possession is nine-tenths of the law’, I would say that the army controls (possesses) the gold.

So it’s not the Fed, although there is some paper gold on the Fed balance sheet. Legally it is the Treasury, but in terms of custody, it’s the United States Army. So that’s where the gold is.”

This is one of the most extraordinary interviews Jim Rickards has ever given. He goes into great detail about how much gold the US possesses, where it is located and what the future holds for US citizens and gold holders around the world. What actions will governments around the world take regarding gold?

The KWN audio interview with Jim Rickards is available now and you can listen to it by http://www.kingworldnews.com/kingworldnews/Broadcast/Broadcast.html">CLICKING HERE.

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