Musk claimed that his DOGE team was ready to “check” the gold bars to make sure none were missing. For the record, the U.S. Treasury holds 8,133.5 metric tons of gold in the U.S. reserve. A little less than half of that gold is stored at Fort Knox.
The rest is mostly stored in a secure vault at West Point, New York. The exact location of that vault is secret. A small amount is stored at the Denver Mint for coin minting purposes.
Legally, the U.S. Treasury owns the gold stockpile, but in reality, the U.S. military is responsible for its safekeeping, as almost all of the gold is stored at two military bases – Fort Knox and West Point.
In the popular imagination, all the gold is in Fort Knox. They were headed there to prove once and for all that the gold was actually there. Musk planned to live-stream the entire visit using his Starlink satellite system.
Trump had threatened vaguely in his statements that if the gold was missing, there would be disastrous consequences for those who removed it.
The plot was set… The drama seemed irresistible.
At the same time, it was hoped that both Trump and Musk were in reasonably good physical condition and were lifting some free weights. Gold is heavy!
In fact, it is one of the densest materials on the periodic table, leaving behind radioactive elements like uranium and some of the trace elements that are only present in minute amounts at the atomic level. A typical 400-ounce bar weighs 27.4 pounds in the English system. It takes a lot of strength to hold a bar of gold in the air.
Conspiracy Theory and Goldfinger
Let’s answer this by starting with the obvious point that the gold is all there. There have been rumors of lost and stolen gold almost since the day the gold depository was built. Some have claimed that European bankers stole the gold in the 1930s. Others have said that the Rockefeller family looted the gold.
The 1964 James Bond film, Goldfinger, is based on a plot to steal the gold. This speculation is a good rumor-mongering, but in reality, the gold is all there and has been recorded.
The last public audit was conducted in 1974, but annual audits are conducted by the U.S. Treasury Department (although the results are not made public). Treasury Secretary Scott Bessent recently said, “I can tell the American people… all the gold is there.” If the gold is there (and it is), then why not go ahead with the visit? It would be excellent public display in any case and would reassure a skeptical American public.
Monetary Monopoly and Ignorance
There are two reasons why the visit did not proceed and why you will not hear more about it. The first is that the US government and the Federal Reserve (Fed) do not want to draw attention to the role of gold as a monetary asset.
The Fed (along with commercial banks) has a monopoly on printing money. The government has done everything possible to diminish and deny the role of gold as money, starting with Roosevelt’s confiscation of gold from US citizens in 1933 and continuing with Nixon’s closing of the gold window to foreign trading partners in 1971.
At this point, we have three generations of students since 1971 who know almost nothing about gold. Gold is not taught in economics classes. Gold is not discussed in financial circles or Fed policy circles. Younger students don’t even know… that the U.S. was ever on a gold standard or that gold once circulated freely as a form of money (usually in ¼ ounce or 8 gram coins). The government has erased all memory of gold as money.
Why bring it back to life with a high-profile visit to Fort Knox? Better to just ignore gold if you want to maintain a monopoly on money. Of course, gold is a monetary asset.
As noted, the U.S. has 8,133 metric tons (tons). Germany has 3,351 tons. Italy has 2,452 tons. France has 2,437 tons. Russia has 2,333 tons. And China reports having 2,292 tons, though they are not transparent and probably have much more.
Among multilateral institutions, the European Central Bank has 506 tons and the IMF has 2,814 tons. If all members of the eurozone, including the ECB, combined their gold reserves, they would have 10,770 tons. All of these reserves should be put into the context of 36,118 tons, which is the total amount of official gold reserves of every country in the world.
Why have such large gold reserves been held for a century or more in some cases and are growing continuously if gold is not money? The question is self-explanatory. Gold is a form of money.
It is simply a case of the major countries not wanting to acknowledge it because they want to maintain their monopoly on monetary policy or they are still holding it and are not wanting to increase the price, at least until they have completed their redemption programs. One of the classic quotes of the Marx Brothers was: “Whom will you believe… me or your own eyes?”
When it comes to gold, I believe my own eyes. The official gold reserves of 36,118 metric tons tell me all I need to know.
Leasing Gold
There’s an even more insidious reason why Trump and Musk skipped their Fort Knox visit. Even if we take into account the fact that the gold is actually at Fort Knox.
The deeper question is whether this gold is leased? Leasing gold is a well-established practice, but it’s not well understood by non-experts. Even stock and bond experts know little about leasing gold. Basically, it’s a way for a gold holder to earn a return.
Gold doesn’t pay dividends or interest like stocks and bonds do. But you can lease it to a third party and earn about 2% per year in lease payments. The party leasing the gold doesn’t back up a truck and take it away.
The gold remains in the original vault. A gold lease is a purely paper transaction. The gold lessor receives the lease payment. The lessee receives what is called a right of repledge.
This means that the lessee can lease the same gold to another party. And that party can lease it to a fourth party, and so on.
With repledge in place, one metric ton of gold could support 100 metric tons of “paper gold” transactions. At each step in the transaction chain, one party acts as if it owns the gold for its own purposes, i.e. further leases or sales of “unallocated” gold.
Everyone has exposure to prices and can make money if the price of gold rises or lose money if the price of gold falls. The same principle applies to gold futures, gold options, gold swaps, gold ETFs, and a whole world of gold derivative trading.
100:1 Leverage
The point is that the world of paper gold is leveraged about 100:1 relative to the physical world of gold, starting with the physical gold in Fort Knox.
The risk is obvious: It is no different from any mass cash withdrawal in terms of, say, bank deposits. If a group of paper gold investors suddenly demands physical delivery, the counterparties have to buy gold on the spot market, since the leased gold is not in their physical possession.
The gold market is liquid, but not liquid enough to support delivery if there was demand for more physical than a small portion of the paper gold market. A full-scale gold panic could quickly ensue.
The spot price of gold would hit $25,000 an ounce before any investor could shout “buy!” I’m guessing someone (probably Scott Bessent) sat down and patiently explained the reality of paper gold to Trump and Musk.
Once you understand how the market actually works, you quickly step back from putting on a show at Fort Knox.
For the paper gold market makers at the investment banks, the less said about gold the better. They have to keep playing the game. And that’s why Trump and Musk won’t be showing up at Fort Knox anytime soon. For the rest of us, the solution to this problem is simple – buy gold.
