Who Owns the Gold?

With the people’s gold stolen and locked up in Fort Knox, what became of the money Americans used?

By George Ford Smith, Mises Institute

“Economics, in its most elegant form, is the study of cause and effect.”—John Rogers, Voting in Context: A Brief Economic History of American Politics

In 1933, people thought the world was ending and urged government to do whatever it could to relieve the pain of the Depression. In compliance thereof, FDR issued Executive Order 6102 on April 5, 1933 “forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States.”

Note the word, “hoarding”—a word with a negative tinge, suggesting the person hoarding is deliberately restricting supply for personal advantage. (See “The Virtue of Hoarding”). For many it summons the image of an anti-social miser. No one wanted to be branded a miser, especially by a president as beloved as FDR. Hoarders of gold, which was synonymous with owners of gold, were allegedly causing harm, therefore, hoarding had to stop.

What harm did hoarding cause? It was preventing government inflation of the money supply. Inflation would cause prices to rise, which the government thought was a good thing, especially in the current deflationary environment.

FDR commanded Americans to deliver their gold “to a Federal Reserve Bank or a branch or agency thereof or to any member bank of the Federal Reserve System” on or before May 1, 1933. Not exactly a long lead time, but this was an emergency. Civilization’s money since King Croesus of Lydia (modern Turkey) ordered gold coins struck around 550 BC was suddenly no longer doing its job.

Fed Amendments

Since 1917, when the US plunged into the Great War “over there,” government and the Fed were doing everything they could to take gold, and therefore, gold redemption, out of the public’s hands. As Benjamin Anderson reports (p. 87), an amendment to The Federal Reserve Act in 1917 required member banks,

…to carry all of their legal reserves as deposits with the Federal Reserve banks, their own gold and lawful money held in their own vaults no longer counting as legal reserves. This made it possible for the member banks to turn over all their gold to the Federal Reserve banks, receiving in return either deposit credits or Federal Reserve notes . . . (emphasis mine)

The amendment had two purposes: (1) concentrate gold and gold certificates in Federal Reserve Banks; and, (2) encourage non-member banks to join the Federal Reserve System. About the latter, Anderson says the response was “gratifying.”

By keeping gold in Federal Reserve Banks and distant from everyday transactions, Americans were getting a taste of the fiat system headed their way.

A Revised Charter

Both the First and Second Banks of the United States were chartered for 20 years, and when the time came for renewal Congress voted to end them. The Fed originally had a 20-year-limit on its existence as well, but in its case it had a track record:

Since the System began operations, economic growth had been rapid. Interest rates had been stable. Financial crises had been contained. Recessions had been short. Recoveries had been rapid. Gold reserves had risen. The Federal Reserve Note . . . had become one of the world’s leading currencies. Banks in the United States had become increasingly profitable and internationally prominent. The world economy, in contrast, had experienced a decade of doldrums following the First World War.

Not mentioned in this sterling account was the “forgotten” depression of 1921, in which unemployment exceeded that of the Great Depression and “wholesale prices plunged by 36.8 percent, consumer prices by 10.8 percent and farm prices by 41.3 percent.” Unlike the government-Fed remedies of the Great Depression, this one was cured quickly by a laissez-faire approach.

Fed love prevailed, however, and knowing its charter would expire in seven years, Congress on February 25, 1927 passed the McFadden Act, one clause of which modified the Fed’s 20-year limit to allow it to exist until and unless Congress dissolved it. The Fed had been rechartered “into perpetuity.”

With government and the Fed under fire for its failures during the first years of the Depression, this one change may have kept it alive during a Democrat administration that began in 1933, one year before the Fed would have been up for renewal by original statute.

Fiat Money Frees the Printing Press

With the people’s gold stolen and locked up in Fort Knox, what became of the money Americans used?

In a 2002 speech, Fed chairman and former gold advocate Alan Greenspan told his audience,

. . . in the two decades following the abandonment of the gold standard in 1933, the consumer price index in the United States nearly doubled. And, in the four decades after that, prices quintupled. Monetary policy, unleashed from the constraint of domestic gold convertibility, had allowed a persistent over-issuance of money.

Decades earlier, in a famous 1966 article, Greenspan concluded with these words, slamming government for spending wealth it was stealing from future generations:

Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.

Today, the fiat Federal Reserve note is worth about three percent of its value in 1913, while gold—if you own some you might want to hang onto it—has maintained its value.

With gold in the news and DOGE prying into government agencies, the bullion depository at Fort Knox—considered the world’s largest gold reserve—was certain to be checked out. The coins surrendered by Americans are now bars—big heavy chunks of gold of little or no use for everyday commerce.

So if Trump and company visit Fort Knox and find that “America’s” gold is still there, will Musk face the cameras and say, “This is your gold” to the public as he did recently in an X post? And if he does, will he or Trump propose returning it to the American people?

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author.

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions. All positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. Assume any and all numbers in this piece are wrong and make sure you check them yourself. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I’m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it’s that important.