Thorson: Gold doubts fuels distrust in government

June 27, 2011 | By David Perera

The government indeed possesses all the gold it says it has, federal officials told a skeptical Rep. Ron Paul (R-Texas) during a June 23 hearing of House Financial Services subcommittee on domestic monetary policy and technology.

To create doubt about the value or security--or even the very presence of gold reserves--"without reason contributed to the distrust in government that seems to be a going trend today," said Eric Thorson, Treasury Department inspector general, during the hearing.

Paul, the subcommittee chairman, opened the hearing by stating that "some people" speculate that the gold held at Ft. Knox, Ky. and other federal depositories has been secretly sold, or replaced with gold-plated tungsten, or has been "involved in gold swaps with foreign governments or bullion banks."

Paul is the sponsor of a bill (H.R. 1495) that would require the government to conduct an inventory audit and assay of its gold holdings.

The two witnesses at the hearing, Thorson, and Gary Engle, Government Accountability Office director of financial management and assurance, said the bill would duplicate existing efforts, since the federal government has a tight control over its gold holdings.

"100 percent of the US. government's gold reserves in the custody of the Mint has been inventoried and audited. Furthermore, these audits found no exception of any consequence," Thorson said.

Thorson said the U.S. Mint has estimated that implementing the bill would cost more than $60 million, an amount that Paul disputed, saying he's heard an estimate from Treasury of $15 million. The Congressional Budget Office has not made an estimate.

"To suggest that I might be participating in the not being careful with the taxpayers' money--I happen to be the most conservative member of Congress...when it comes to spending," Paul said.

Even were the number actually $60 million, that amount of cost wouldn't be a problem, Paul added. "The Mint could easily take care of this. They make 400--you know, when you have a monopoly, you tend to be able to make some money, and last year they made $400 million," he said.

For more:
- go to the hearing webpage (prepared statements and webcast available)
- go to the THOMAS page for the bill
- see the original 1948 preview of "Treasure of the Sierra Madre" (embedded video)