[carsongross]

It's always good to think about what evidence would convince you that the other side has a point.

I lean towards the side that thinks that the central and money center banks (not faceless multinationals) are suppressing the price of gold via fractionally-reserved lending of physical gold. What would convince me that this is not the case would be a comprehensive audit of the Federal Reserve's books and gold holdings.

You?

[tdees40]

I think a dinosaur lives in the subways under Manhattan. I would be convinced otherwise only by a full audit of all subway tunnels conducted using a dinosaur scanner (which someone will need to invent).

But seriously, there are lots of things that are hard to prove wrong, but that's hardly a good reason to believe them. In your case, what motive would the Fed have? Has an employee of the Fed (or any other central bank) ever blown the whistle on this massive international conspiracy? If there's no good reason to think something, there really isn't much good reason to spend time proving it wrong.

[carsongross]

Well, the Federal Reserver produces a paper currency, the dollar, and gold has historically been a competitor of paper currencies. So it makes sense that the Fed would not want competition in currencies, and would attempt to both disparage and devalue it.

The Federal Reserve is also intimately bound up in fractionally reserved expansion of the paper currency, so it is reasonable to assume that they might use the same basic technique with gold. And that, in fact, is the historical origin of banking, in the modern, leveraged sense: gold assayers began loaning out gold on a fractionally reserved basis, allowing them to collect interest beyond their core assets. Worked great until people ran on them.

So I assert that it is less irrational to believe that there is a possibility that central banks engage in manipulation of gold prices than it is to believe that there is a dinosaur living in the subway under manhattan.

YMMV.

[tdees40]

If the Fed were lending gold on a fractional reserve basis, a huge number of people would know about it: employees of the Fed, bankers, counter-parties. Why are all of them keeping silent? Why does the Fed endear such intense (some would say insane) loyalty? How do they cover the tracks of this huge operation (both in terms of people and dollars)?

Also, to believe this you have to postulate that:

1) Employees of the Fed are personally concerned about gold destroying the dollar.

2) They are willing to do something illegal (or at least unauthorized) to protect the dollar.

3) So they came up with a complicated, elaborate plan to manipulate the price of gold down that perfectly plays into the narrative of gold bugs (note the nefarious fractional reserve lending).

It's not impossible!

[carsongross]

1) Yes.

2) People involved in the banking system, by definition, are willing to fractionally reserve something

3) Nothing particularly complicated, same fence that fractionally reserved frauds have been running for a thousand years.

_shrug_

[sopooneo]

Proving that something does exist is much more straightforward than proving it doesn't.

[DennisP]

I tend to lean toward everything being fine, but motive seems obvious. It's an extremely valuable pile of stuff being held by a custodian for many decades with no external audits. I can't think of many cases of people being okay with that situation.

[A_COMPUTER]

I am not a goldbug but I do feel like some people are breaking their backs bending over backwards coming up with reasons to preclude any sort of audit for any reason. I read the article and yeah it sounds like there are a bunch of things that a forensic auditor would wonder about. Gold has been sitting around for half a century, and when the depositor wants it, the bank delays for years and then coughs up a tenth of the gold it promised, with all the serial numbers melted off. they say it took so long because of all the paperwork but apparently can't or won't cough up paperwork about the actual reason the bars were melted down. Isn't this what serial numbers are for? Isn't this what paperwork is for? Isn't this what auditors are for?

[DennisP]

And what would make it almost the perfect crime is that if Germany thinks the gold's gone, it's arguably in their best interest to just keep quiet about it. As long as everybody think's the gold's there, Germany rolls along just fine.

[A_COMPUTER]

This is what gets me. It doesn't even need to be an ongoing conspiracy. The gold could have been spirited away during the Cold War for some critical-at-the-time purpose, with every intention to be restored, and for whatever reason it just wasn't possible. Decades later you have an institution and a government staffed entirely by people who had nothing to do with it but are left holding the bag. As you say, there is literally no incentive to expose this fact, by anybody. The gold itself hasn't left the vault since the 1960's, it can be traded on paper forever if nobody looks.

To be clear I'm not saying this is what happened, just that there doesn't have to be an ongoing conspiracy among hundreds of people and institutions for the gold to be gone and nobody wanting to say anything.

[Crito]

> "using a dinosaur scanner (which someone will need to invent)."

I'm not sure I understand you fully. What is this portion of your comment analogous to?

[nosuchthing]

I have an anti-dinosaur stone I'm willing to sell for the right price, it's very effective. Notice there are no dinosaurs around the vicinity of my stone.

[oafitupa]

And when everything fails, just pull a straw man! Right?

[ubernostrum]

It's always good to think about what you'd do if your belief was falsified. Suppose that Ron Paul himself goes through every book, every record and every nook and cranny of Fort Knox personally with an electron microscope and announces he found only evidence that the Federal Reserve is and has been above-board with respect to the United States' gold holdings.

What would you do then? Would you actually say "Well, I guess my belief was wrong and I was misled by the people who promoted it to me", or would you find a way to move the goalpost and say that you'll continue believing until some other complex and politically-hard-to-manage thing happens? And then another, and then another?

[carsongross]

I think what I would do, in that case, would be to come to the conclusion that it was not likely that the gold price was being artificially suppressed via fractional reserved lending.

So, let's get that audit going...