The conspiracy theory: Ron Paul, the libertarian Texan congressman, has fueled a long-standing conspiracy theory that the U.S. gold reserves at Fort Knox have secretly been sold off by the government. Paul wants an audit of the gold reserves, believed to be worth approximately $317 billion, which have long resided in a well-protected vault in the Kentucky military base. "[The Federal Reserve] should prove all the gold is there," he said. "There is a reason to be suspicious." Asked whether there was any truth to claims that the gold was gone, Paul replied: "I think it is a possibility."
The reaction: "This is, of course, complete nonsense," says Bruce Bartlett at WallStreetPit. Commodities experts know, "within a small margin of error," the amount of gold in circulation around the world. If the Fort Knox gold were ever sold, the market would explode — and it might just show up in the federal budget, too.
Remember it's the "federal government we're talking about here," says Shannon Bell at Right Pundits. Who's to say what they are willing to do behind our backs? Either way, an audit is essential. "We should know exactly what we have."
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But we do, sighs Eli Lehrer at FrumForum. The real question is whether the 8,133.5 tons of gold the government will happily admit to holding in reserve is worth keeping. Our reserves are only worth about 2 percent of the GDP, after all. When the economy returns to strength, "the country may want to consider getting rid of them."