Fort Knox, the fortress of US’ gold reserves, symbolises economic might and democratic ideals. Now, with Trump and Elon Musk joining hands to audit its holdings, question arises—has the vault’s legendary wealth quietly diminished over decades? by Gopal Misra
The strong vaults at Fort Knox not only keep the gold reserves of the US, but they also have the original copies of its independence, Magna Carta and other documents representing the American dream of the free democratic world.
The position of the US as the symbol of democracy and a land of immense opportunities, has been suffering decline following the decisions of the then US President Richard Nixon since 1971. He had supported the genocide of Bengali Muslims by a repressive Pakistani army equipped with American weapons. Further, apart from diluting the American commitment to democracy and civil liberties, Nixon had shocked the world by unilaterally cancelling the direct convertibility of the US dollar to gold. Thus, he diluted the spirit of the original text of the American constitution housed in the vaults of Fort Knox, he also allowed the American currency to be used without being supported by the gold reserves.
Nixon’s action was accompanied by a series of economic measures such as wage and price freezes, surcharges on imports. It, thus, ended the sovereign guarantee of his country to its paper currency. The present US President Donald Trump appears to be repeating these policies, which are remembered even today as the ‘Nixon Shock’. It had led to stagflation worldwide.
Nixon’s actions were part of a series of economic measures, including wage and price freezes and surcharges on imports, which effectively undermined the sovereign guarantee of the country’s paper currency. Today, President Donald Trump seems to be echoing some of Nixon’s policies, which are still remembered as the ‘Nixon Shock.’ It had led to stagflation worldwide. The difference, perhaps, is that Nixon had delinked the dollar from the gold reserves at the Fort Knox, but President Trump is keen to ascertain whether his country has retained the gold reserves or it has either been siphoned off by the cronies or powers that be during the successive American administrations in recent years. It is believed that the Fort Knox vaults, established in a 46-acre area, are well-fortified, and considered one of the biggest bullion deposits in the world.
Even after being delinked with the gold reserves, the investors, across the continents, believed that Washington would honor its commitment to repay the bonds at their maturity. The issue had cropped up during Joe Biden’s administration, when instead of paying back the investors, he had quietly managed to reschedule their repayment.
These vaults located in north-central Kentucky, according to the official sources, have gold deposits estimated to be 147.3 million ounces. With the gold prices in the US markets are around 3000 USD per ounce, the current value of this reserve could be in trillions. The book value, however, according to the US Mint, is being calculated at the rate of 42.22 USD per ounce.
The gold holdings had reached 649.6 million ounces in 1941, but in later years, it depleted. It is estimated that even the present reserves, perhaps, are just half of the gold holdings of the US treasury today. Trump and his associate and the billionaire, Elon Musk, however, suspect a substantial portion of the 147.3 million ounces of gold, might have also been pilfered. Trump has recently been quoted that the auditing of this reserve is necessary to confirm whether the quantity of the gold is being there. In spite of the statement of Scott Bessent, Treasury Secretary, that every year the gold reserve is being audited and it is present and accounted for, Elon Musk, according to Trump, would soon be visiting the gold reserves. It means, the Trump Administration is not sure about its existence.
New Economic Policy
Apart from delinking the dollar with the gold reserves, Nixon had told his countrymen during his countrywide telecast on 15 August, 1971, that he was imposing higher tariffs on imports. He had camouflaged these steps under the garb of a new economic policy. Trump, however, is keen to reduce his country’s financial burden by ending conflicts in Eastern Europe and West Asia and also asking the NATO members to share the cost. Similarly, he is also seeking equalization of the current balance of trade to reduce the growing deficit in the balance of trade.
The US had a trade deficit of nearly one trillion USD in 2022. Since 1976, the US trade deficit has been mounting, especially with China, oil-rich countries of the gulf in West Asia and European countries. Interestingly, the US trade with the three countries, Canada, Mexico and China account for 15, 14 and 13 percent respectively.
Just 20 days before Trump’s inauguration on January 20 this year, the US trade deficit had widened to 98.4 billion USD in December 2024. India has a much smaller trade surplus with the US with just 50 billion USD annually.
Trump may also be facing opposition within the country following sacking of a large number of federal employees and also reducing financial commitment to the poor regions of Africa, Asia and Americas.
Investigations at Fort Knox
There is a general apprehension that the ongoing investigations in gold reserves at Fort Knox, if found substantially less than being claimed, despite the delinking of dollar with the precious metal, would lead to the end of confidence in the US economy. Earlier, presidents like Barack Obama and Joe Biden had been keeping the armament industry functional by waging new conflicts across the continents to keep the dollar’s image intact. Instead of addressing the basic issue of restoring manufacturing, they had opted for the choice of making China as the manufacturing hub for manufacturing consumer goods using the state-of-the art technologies being made available to the Asian giant having a huge population of well-trained engineers and technologists.
It has led to a piquant situation that Beijing, used cheap labor having no social security or human rights, to lure the American corporate to set up units. It enabled them to access new technologies and have now started their own research for new products. On the other hand, the manufacturing hubs in the US like Detroit, remembered for its fine automobiles, or the industrial units at New York have closed down. The employable youths are being compensated by the unemployment allowances; and even allowed liberal access to drugs like marijuana. Further, even for routine work like the maintenance of buildings, roads and other civic amenities, the cheap labor from India and Central America were brought in. They included a large number of illegal migrants.
The Trump Administration’s decision to send them back to their respective home countries might further give a setback to the US economy. It might further eclipse America’s legitimacy as a superpower. The confidence in the invincibility of the dollar as one of the most sought after currencies in the world economy would finally eclipse. In other words, the Chinese currency, Yuan, might be replacing the dollar as the most acceptable currency in global trade replacing the formidable American dollar.
The Chinese dictator, Mao Zedong, who had successfully befooled Nixon and his National Security Adviser, Henry Kissinger, to accept one China policy, i.e. conceding the Chinese sovereignty on Taiwan, and also by assisting the US to dismantle the USSR, might be smiling in his grave. His country has already become an economic super power, and it is poised to reassert the Dragon’s power in Eurasia. With the American dollar losing much of its shine, Beijing will be enjoying the fact that the Americans have only proved themselves just paper tigers or tigers without teeth.
It is not known whether President Trump and his team had prepared a structured action plan before indulging in the mass scale retrenchments of the federal employees or taking up the trade issues with a macro approach. Being a real estate developer, he should have engaged an architect before dismantling the old order reeking with rampant corruption. The apprehension is that with the depletion, if not the total disappearance of the gold reserves at Fort Knox, the US economy might be facing one of the weakest moments of its legitimacy as an economic powerhouse. It may be interesting to know that the signed original constitution of the United States, declaration of Independence, Articles of Confederation, Lincoln’s Second Inauguration Address, exemplified copy of Magna Carta and a Gutenberg Bible have also been kept in this highly secured warehouse.
