A similar situation happened at a place where I worked. We had a large amount of general maintenance equipment that was inventoried on a monthly basis.
Including in the inventory were six chainsaws that were rarely used. To keep them in good condition they were kept in plastic cases. And, as you can probably guess, the people taking the inventory counted the chainsaws in the cases.
And naturally when somebody finally opened the cases, three of them were empty.
The 1953 audit of the gold at Ft. Knox is well known. Unfortunately, searching for information about that audit delivers thousands of references to Ron Paul, and CT blogs. So far I haven’t found any reliable information about that audit, except for claims that it was improperly conducted, without reliable citations. At least 50% of these references note the CT about gold plated tungsten, and logically conclude:dubious: that all of the gold bars in Ft. Knox must be gold plated tungsten because someone in China found some gold bars that were actually gold plated tungsten.
It is also clear that the gold in Ft. Knox is audited annually. The audit reports are available from the Treasury Dept. The audits consist of KPMG certifying that the Treasury has provided them a some numbers, and that those are actually numbers (as opposed to the square root of orange maybe:rolleyes:). There are also claims that the annual activities by Treasury include physical examination and testing of some of the gold each year. One US representative claims to have examined the gold in the 70s, including picking up a gold bar. No evidence that he bit it though.
My Most Gracious Liege, Czarcasm, Autocrat of the Sarcastic Empire, has noted that the gold is contained in various forms. Most of the gold bars are described as .999% pure gold, while others have a slightly lower gold content. The ongoing testing is supposed to be categorizing the gold bars according to purity. I would assume the bars are marked in some way indicating their purity, or physically segregated in some way, and all audits have been based on those classifications. I haven’t seen a precise description of the gold kept in coins (actual coins, as opposed to coin bars), but there seems to be enough information on the type of coins and their gold content that the amount could be calculated.
It will be very difficult to verify any information, because Ft. Knox is maintained as a very secure area, and access is very limited. Exceptions to access restrictions have been very limited. Occasionally politicians have been allowed in to verify the existence of the gold, but most requests of that nature are denied.
This is a very interesting subject that raises many questions: How did a president who couldn’t walk remove all of the gold from Ft. Knox? How were the original gold bars replaced with gold plated tungsten bars? Why are they pretending to keep gold bars in plastic chain saw cases? Did Ron Paul take a bath recently? Why did Goldfinger go to all that trouble to irradiate the gold if it was already missing?
But none of that is the topic of this thread. This thread is about the question:
***Could the gold in Ft. Knox be audited without moving the bars? ***
More than one response from people claiming knowledge of auditing procedures has indicated that a reliable result could not be obtained using conventional auditing techniques. However, as noted early in the thread, there may be possible means of analyzing the volume, weight, and/or purity of the gold using methods that do not require physically moving the gold. Since the gold is not of consistent purity, simply weighing the fort, and filling it with water to determine the volume of alleged gold, will not give us an accurate figure.
However, Computer Aided Tomography could give us a reasonably accurate volume for the gold. Including detection of hollow bars. Sound waves have been suggested, as well. I’m still looking for confirmation that gold purity could be determined by spectoscopy of gamma neutron induced radiation. Given sufficient resources, CAT could be used to examine the gold at the atomic lattice level to determine the purity. If sampling techniques were acceptable, and they seem to be for auditing purposes, the CAT method would suffice.
Based on the above, I would conclude, in the absence of contradictory information, that the gold in Ft. Knox could be audited without moving the bars. If others have suggestions for other methods, please present them. If you know of a reason why CAT, spectroscopy, sound waves, or sampling techniques were insufficient, please let us know.
I have no problem with small hi-jacks of this thread to examine the CT, but of course, you should have no problem with the likely tone of my responses.
Fun facts and cultural reference to Ft. Knox, as well as any verifiable information concerning the 1953 audit or the ongoing Treasury audits would be welcome.
Replacing gold bars, eh?
Sure it could. An audit would be easy. You just pull into the parking lot at Fort Knox and say “one fort containing the national gold reserve - check” and then you take the rest of the afternoon off.
Of course, some might suggest that your audit lacked a certain depth and left open the possibility of fraud. Which I suppose is true.
So the issue which we’ve been discussing is how strenuously does your audit have to be in order to be credible. Do you have to look at each pallet of gold or do you have to look at each individual bar? Is a visual inspection enough or do you have to handle the gold? Do you have to measure each bar to ensure it has the proper size and weight that it’s listed as? Do you have to do a chemical test on each bar to ensure it has the proper gold content?
There’s no right or wrong answer to these questions. It just depends on how trusting or suspicious you are.
An auditor like KPMG does not finish an audit by “certifying that the Treasury has provided them a some numbers, and that those are actually numbers.” While that could be the result of a compilation engagement, this would not met the professional standards under which they’re required to operate in an audit (or a review for that matter). It might meet the standards under an engagement for agreed-upon procedures, but the letter of opinion for the engagement would describe the requirements and procedures involved.
While it is conceivable that an auditor could meet their professional duties without moving the gold, I would be very surprised if they could. I would expect they’d refuse to issue an opinion based on a limitation of the scope of the engagement.
My language could imply unfairly that questions about the audit were due to poor practises by KMPG. Several articles offered competing opinions about the reliability of the audit process. Those that seemed most reputable indicated that KPMG conformed to accepted practice for government audits, but there was no indication that they ever performed any physical inventory, and instead relied on numbers provided by Treasury.
Here is one the Front page | U.S. Department of the Treasury. You may be able to interpret the KPMG notes to tell us what kind of procedures they employed.
The detailed auditor’s report starts on page 56 of the PDF. It doesn’t go into detail on the specific procedures used (none of them do, really), but the balance sheet does include balances of gold (see pages 34 and 47), and the audit specifically covers the balance sheet and associated statements.
A better example of the procedures that might have been followed is illustrated on pages 59-60 in reference to PPE (Property Plant & Equipment). The audit uncovered (among other things) that assets listed as “held in stock” were actually in use, and that some values listed in assets had only been ordered and not yet received. Apparently, some assets were not listed because they hadn’t been assigned an ID number for the accounting system.
It does not specifically mention Ford Knox or auditing the gold deposits, but a lot of the auditor’s letter focuses on internal controls. Internal controls include things like making sure the guards haven’t stolen the gold. If a review of internal controls showed that controls were both consistently followed and well-designed, that might be used to mitigate the relative risk of gold being stolen, which might then reduce the need for a physical count. But, one of the best ways to verify internal controls over physical assets is to verify the inventory counts those controls produce (as was done for the fixed assets I mentioned earlier).
Page 41 references Custodial Gold and Silver Reserves, and has numbers for Gold Deep Storage. These refer to the Ft. Knox gold according to articles. The gold is apparently valued at $42.2222 per Fine Troy Ounce, so I don’t think the numbers will match the published value of the gold in Ft. Knox. I don’t know what portion of the totals represents Ft. Knox either.
Thanks for the info. Any ideas how to tell how much gold there is without moving the bars?
So part of the plot of “Making Money” by Terry Pratchett happened in real life. (I’m not surprised, since a much cooler thing, the water-using computer system, is also real.:)) I only wonder ** how often** things like these happened - and how often properly done audits caught them vs. how many banks still have X number of gold bars/ coins in their vault that has been quietly replaced…
Instead of scanning for gold, I wonder if it is possible to scan for tungsten and/or lead? If it is, a gold-plated tungsten bar should stand out like a sore thumb.
Tungsten is paramagnetic, which is similar to the attraction of iron to magnets, but a much weaker effect. Gold is diamagnetic, and would create an opposing magnetic force in the presence of a strong magnetic field. That should be a simple thing to test for.
The presence of tungsten should be detectable from the weakness of the diamagnetic effect. The diamagnetic effect would also reveal hollow bars. The coin metal bars might show different effects based on the alloy.
There should be a way to determine the if a stack of gold bars is producing the proper diamagnetic strength in the presence of a controlled magnetc field. Depending on the stacking method, the volume of the stack could be determined with moving the bars, so this would certainly be a method telling if large percentages of the gold was replaced with another substance.
Personally, if I had to steal gold bars, and replace them with substitues, I’d go with the hollowed out bars instead of tungsten, if no one was touching the bars. But that is only our restriction. Also, if I was using tungsten plated bars, I’d have only a minimal amount of gold on the surface, and simply scratching the bars would reveal that.