Fort Knox Audit… But What About the Fed?

After more than 3 decades, Republican Representative Ron Paul may finally get his wish, and more. Paul has been calling for a full and complete audit of the Federal Reserve Bank since his days on the Gold Commission in the 1980’s. In a recent interview, he renewed his call for an audit to reveal in detail how the central bank conducts its monetary policies. His calls have gained traction among high-profile figures, including Elon Musk, who has recently advocated for greater transparency in government institutions. While Musk has criticized the Federal Reserve’s opacity, there is no official indication that he is seeking a leadership role within the central bank.

The Federal Reserve is the largest gold custodian in the world and is considered somewhat of a cornerstone of international finance. It holds around 6331 tonnes, a significant portion of the world’s monetary gold, and is primarily a custodian for the U.S. government, foreign governments, central banks, and international organisations. It reports to the Federal Reserve Board and indirectly to the Treasury, with vague updates on U.S. holdings while withholding foreign data. Unlike Fort Knox which store the bulk of U.S. owned gold, the FRBNY’s role is distinct - it safeguards around 418 tonnes of U.S. Treasury gold (roughly 5% of total U.S. reserves) alongside a potential 12,000 tonnes of foreign holdings.

Audits of this gold and questions of its rehypothecation have been a hot topic for years, particularly since there is near zero clarity around the FRBNY’s auditing history.

From 1975-1986, the U.S. Treasury’s ‘Continuing Audits of United States Government-Owned Gold’ program was overseen by representatives from the Treasury, Mint, and FRBNY and aimed to verify U.S. gold reserves. While the program audited 97% of gold from Fort Knox, Denver Mint and West Point held gold, there was different treatment for the Federal Reserve gold.

During World War II and the post-war period, large amounts of foreign gold were deposited at the Federal Reserve Bank of New York (FRBNY) for safekeeping. Some analysts speculate that this gold may have been leased or used in financial manoeuvres to stabilize markets or support U.S. allies—particularly before 1971, when the U.S. dollar remained backed by gold. However, due to a lack of official transparency, these claims remain unverified. A 1981 audit report hinted at this possibility by noting the FRBNY’s gold wasn’t jointly sealed, allowing potential movement—perhaps via an underground corridor to nearby private vaults like Chase Manhattan Plaza. Post-1971, after the gold standard ended, hypothecation rumours have persisted. Ron Paul and others have questioned whether U.S. gold was encumbered in secret deals with bullion banks or foreign entities.

Reports from 1981 and 1985 reveal that while the Federal Reserve’s Board of Governors periodically checked the FRBNY’s vaults, the audits deviated from the Mint’s usually rigorous standards. No assay samples were taken to verify purity, and the gold wasn’t placed under the committee’s control post-audit, leading the 1985 report to label it “unaudited.” This lax approach persisted for decades, with no comprehensive audit of FRBNY gold until its first notable audit in 2012 which was prompted by massive public and political pressure, driven mostly by Ron Paul.

The Treasury’s Inspector General conducted the audit by testing a sample of the 34,201 U.S.-owned gold bars stored at the FRBNY. The 2013 report confirmed a higher-than-expected level of purity, but the audit faced significant criticism. Key concerns included the limited number of bars tested, the absence of independent auditors, and the exclusion of foreign-held gold from the review. Critics argued that the lack of transparency and the Fed’s unwillingness to release detailed findings suggested the audit was conducted primarily for optics rather than genuine accountability. The Treasury withheld detailed findings, promising a full report by year’s end, but transparency remained limited, which gave the impression the audit was purely for optics.

To date, the FRBNY’s gold auditing practices remain opaque. The Federal Reserve reports the book value of U.S. Treasury gold ($42.22 per troy ounce, far below the market value of US$2,900 as of early 2025) in weekly and monthly statements, but only in financial tallies, not physical verifications. Foreign gold, listed as ‘Earmarked’ in Federal Reserve statistics, is audited at the discretion of account holders, who can inspect their holdings but rarely conduct full counts due to logistics. The Fed’s refusal to release detailed records, evidenced by its 2024 rejection of a Freedom of Information Act request for foreign gold data, most certainly keeps suspicions raised. Critics of the Fed’s practices argue that without regular and independent audits or assays of all gold, claims of integrity are contestable.

Ron Paul, who is also keen for the Pentagon to be audited, is looking for more than a purely financial audit of the Fed. He wants a review that provides transparency of the Fed’s action, and to lay bare their inner workings. In 2024, Representative Thomas Massie and Senator Mike Lee introduced legislation in both the House and Senate aimed at abolishing the Federal Reserve system entirely—arguing that the institution lacked accountability and transparency. The bills, which had over 20 co-sponsors, failed to advance beyond the committee stage, largely due to opposition from both major parties and concerns over the potential economic ramifications of dismantling the Fed. Ron Paul commented that once people knew the full scope of the Federal Reserve’s actions, Americans will want to get rid of it.

With its true status obscured by decades of incomplete and too many unanswered questions, both the U.S. and foreign gold holdings at the FRBNY remain in question until a true and transparent audit occurs. With current practices lacking any clarity, it is hoped that the disclosure and accountability being promoted by DOGE will bleed over to The Federal Reserve.