China does not disclose its purchases on a regular basis. So we must do with estimates. The best of these are calculated by Koos Jansen of Bullionstar, which we print above with his courtesy. Note that Aggregate Net Imports are the fastest growing category.
The national debt now $21 trillion keeps on growing. It will never be paid off because it is growing faster than the economy. And it is obvious to everyone that this cannot continue forever, because credit cannot be expanding forever. At some point, the whole system will break down because somewhere there will be a default that cannot be covered, leading to a cascade of interrelated debt defaults. Then we shall see a crash comparable to the Great Depression of the 1930s or the more recent Great Recession, only worse.
Since 1971 when President Nixon severed the last link between the dollar and gold, the world has seen the longest period of money with no link to gold or silver. Eventually there will be a need to connect supply and demand factors for gold with other supply and demand factors in the economy. This will mean an adjustment of the price of gold in relation to the realities of other market factors. Nixon cut the link between gold and the dollar because U.S. debt--from excessive government spending--made it impossible to maintain convertibility of the dollar at $35 per ounce. Since our national debt is now $21 trillion, making the dollar again convertible for gold will require a far, far higher price for gold. Either that or we shall see gold made convertible to a different currency, if not in the U.S. then somewhere else on the planet. There have been some 3,400 fiat currencies; they all became worthless. It remains to be seen whether the U.S. will add to that list or return to a gold-backed currency.
The U.S. says it has 8,133.5 tonnes of gold, but questions have arisen over the years as to whether that is accurate. Records of audits are sparse, incomplete and show a troubled history of government accounts. Recently Koos Jansen of Bullionstar.com has completed the most extensive research ever done on the U.S. government gold holdings. Through the use of the Freedom of Information Act, he has unearthed startling information never before available. He encountered a wide range of problems that document the audits have been executed with an inadequate degree of integrity, including:
- Most physically verified and sealed vault compartments have been re-opened, for which the auditor can provide no valid explanation.
- Auditing personnel has proven to be utterly incompetent and did not follow the auditing policies and procedures.
- Repeatedly metal has been excluded from verifications.
- Many of the audit and assay documents have been destroyed.
- The US government goes to great lengths in withholding
information and spreading false information.
"The protocol was designed to open, audit, close and seal all compartments once, in order to avoid the necessity to repeat these procedures. Despite these rules, my research points out nearly all compartments have been re-opened after being audited....This is a story about misconduct, deceit, inconsistencies, and loose ends. At risk is the safety of the gold meant to underpin the world reserve currency....
"Whilst the function of the audits was to prove the existence of the gold, what they’ve achieved is to make us doubt about the existence of the gold. Up to 200 million ounces are stored in compartments that either have been subjected to dubious re-audits or have been re-opened and/or re-sealed for a vast array of other suspicious reasons....
In response to a question from Ron Paul, a member of the committee hearing testimony, Thorsen, a member of the Office of Inspector General, replied, "It should be noted that most workpapers associated with our reports issued prior to 2004 have been destroyed in accordance with our records retention policy." Thus Jansen writes: "Stunningly, the US government has destroyed most documents drafted from 1974 until 2004 associated to the audits of its 261,498,926 ounces (8,134 tonnes) of gold that serve to underpin the world reserve currency....The OIG lost 10 audit reports from 1974 through 1986...."
"Factually, seals can survive for 32 years, but by 1981 the seal on Fort Knox compartment 1 had been replaced five times. Remember we have the audit reports of 1974, 1977, 1980 and 1981; these mention nothing about perpetual re-sealing of compartments. That’s suspicious."