The Fort Knox Conundrum: Chinese say they received bogus bars of gold traced to U.S.
By Pat Shannan
Could over 1 million bars of gold, much of which is still held in Fort Knox, Ky., be counterfeit? An October 2009 discovery that suggests this may be true has been suppressed by the mainstream media but has been circulating among the “big money” brokers and financial kingpins. It is just now being revealed to the public.
Gold is regularly exchanged between countries to pay debts and to settle the so-called balance of trade. It is often also used as a hedge against a falling currency. Gold is regularly traded and stored in vaults under the strict supervision of a special organization based in London, known as the London Bullion Market Association (LBMA). That’s why news of counterfeit gold bars was a surprise to many experts.
In October 2009, China reportedly received a large shipment of gold, containing some 6,000 bars, weighing 400 ounces each. When it was received, the Chinese government asked that tests be performed to guarantee the purity and weight of the gold bars. In this test, four small holes were drilled into the bars, and the metal was analyzed. Officials were shocked to find the bars were bogus. They contained cores of tungsten, with only an outer coating of real gold. What’s more, these gold bars, containing serial numbers for tracking, originated in the United States and had reportedly been stored in Fort Knox for years.
According to gold expert Theo Gray, there are very few metals that are as dense as gold. With only two exceptions, they all cost as much or more than gold. The standard gold bar for bank-to-bank trade, known as a “London good delivery bar,” weighs 400 troy ounces (more than 33 pounds), yet is no bigger than a paperback novel. To put it in perspective, a bar of steel the same size weighs only 13.5 pounds.
This was the problem that the Ethiopians had in early 2008 when they tried to dump millions of dollars in fake gold into South African banks. What were supposed to be bars of solid gold turned out to be nothing more than gold-plated steel. The South Africans quickly figured this out and sent the shipment back—apparently discovering the hoax with only minimal investigation.
The first exception to the weight of gold is depleted uranium (DU). This material is dirt cheap if you’re a government, but is hard for individuals to get. It’s also radioactive, which makes the handling of it impractical.
Interestingly enough, before DU was widely used as a U.S. weapons component to make shells more able to penetrate hardened targets, tungsten was used for that purpose.
But tungsten is vastly cheaper than gold—maybe $30 dollars a pound, compared to $1,200 an ounce for gold right now. It has exactly the same density as gold, to three decimal places. Therefore, it has to be drilled to detect the fraud. The only differences are that it’s the wrong color, and that it’s much harder than gold. Pure gold is soft and can be dented with a fingernail.
At first, many gold experts speculated that the fake gold must have originated in China, which is considered the world’s best knock-off producers. However, the Chinese government investigated and issued a statement pointing a finger squarely at the United States.
The Chinese claim that in 1995 — during the Clinton administration (Robert Rubin, Alan Greenspan and Lawrence Summers) — between 1.3 million and 1.5 million 400-ounce tungsten blanks were manufactured by a sophisticated refiner in the United States, amounting to more than 16,000 metric tons. Some 640,000 of these tungsten blanks were then gold plated and shipped to Fort Knox, according to the Chinese, where they are said to remain to this day. The Chinese contend that the remaining collection of these 400-ounce fakes was eventually gold-plated and then “sold” into international markets.
The global market is literally “stuffed full of 400 ounce salted bars,” said one unnamed expert. “It’s enough to destroy the world markets.”
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