The Treasury writes a report on its accounting practices

This would be a more appropriate description of the recent reports on the Treasury’s “gold audit”.

The ‘audit’ appears to have been mostly an accounting review. It largely covers reliability of financial reporting, and compliance with applicable laws and regulations and is titled “Audit of the Department of the Treasury’s Schedule of United States Gold Reserves Held by Federal Reserve Banks as of September 30, 2012”

As Turk put it in a recent interview with King World News, “I don’t want to use the term audit because it debases the meaning of what an audit really is.  Even the Treasury itself just called it a ‘report.’… They just did a report of some paper at the Treasury’s office. “

Turk is understandably annoyed by some very misleading accounts of the ‘audit’, most notably an LA Times article “Audit confirms US gold safe at New York Fed.”

This story does a good job of giving the reader the impression that the audit covered the US’s physical gold reserves. It even states “As part of the audit, the Treasury tested a sample of the government’s 34,021 gold bars in the New York Fed’s vault five stories below Manhattan’s financial district, according to the inspector general’s office. Auditors drilled tiny holes into the bars to remove samples that were tested for fineness in a process called assaying.”

The Treasury’s official report has no mention of assaying. The only possible hint at physical testing in the report is this line… “An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Schedule.“ …thats it.

It is important to note what the ‘audit’ does NOT cover…

  • Physical quality or amount of gold held at the Fed
  • Foreign gold reserves held at Federal Reserve Banks
  • US reserves held in other locations, such as Fort Knox
  • Ownership of the gold via leases or swaps

If you would like to have a look for yourself, the report can be found here. It’s a very manageable 14 pages with large font. Enjoy ; )

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