 This hearing will come to order without objection all members opening statements will be made a part of the record the chair notes that some Members may have additional questions for this panel Which they may wish to submit in writing without objection the hearing record will remain open for 30 days for members to submit written questions to these witnesses and to place their responses in the record I will go and start with my opening statement and proceed to anybody else who's Anxious to do the same For far too long the United States government has been less than transparent in releasing information relating to its gold holdings Not surprisingly this secrecy has been given has given rise to a number of theories about the gold at Fort Knox and other Depositories Some people speculate that the gold has been involved in gold swaps with foreign governments or bullion banks Others believe that the gold has secretly been shipped out of Fort Knox and sold and still others believe that the bars at Fort Knox Are actually gold plated tungsten Historically the Treasury and the Mint have dismissed these theories rather than addressing these concerns with substantive rebuttals No one from Congress has been allowed to view the gold at Fort Knox in nearly 40 years Recent photographs of gold holding seem to be hard to come by and the Mint and the Inspector General's audit statements contain Only the bare minimum of information Because the government has for so long refused to provide substantive information on its gold holdings It is not surprising that so much confusion abounds Both within and without the government the difference between custody and ownership Questions about the responsibility for gold for us gold hold held at the New York Fed and the issue of which division at Treasury is Ultimately responsible for the gold reserves are just some of the questions that have come up during the research for this hearing In a way It seems as though someone decided to lock up the gold put the key in a desk somewhere and walk off without telling anyone anything Only during the preparation for this hearing was my office informed that the Mint has in fact conducted assays of statistically representative samples of gold bars and we were provided with a sample assay report This type of information should be reported or at least tabulated and published so that the public knows exactly How many bars of gold exists what their finest is and whether they are encumbered in any way through loans or swaps Well various agencies concerned have been very accommodating to my staff in attempting to shed some light on this issue It should not require the introduction of legislation or a congressional hearing to gain access to this information This information should be published and available to the American people This gold belongs to the people especially since much of it was forcibly taken from them in the 1930s And the government owes it to the people to provide them with the details of these holdings We would greatly benefit from a full accurate inventory audit and assay With detailed explanations of who owns the gold and who is responsible for ownership custody and auditing while the Mint and the Inspector General trust the accuracy of the audits performed between 1975 and 1986 this still means that at least two-thirds of the gold reserves were last audited over a quarter century ago Surely a full audit every 25 years is not too much to ask I look forward to the testimony of the witnesses regarding the conditions of the gold reserves the accounting audits that are Regular performed and the inventories and assays that have been conducted on some of this gold over the years I'm also very interested to hear the comments on the gold reserve transparency act So that we may put forward a measure that provides the public with accurate and complete information on their goal I yield back my remaining time of my five minutes and yield to Mr. Clay for his five minutes Thank you, Mr. Chairman and thank you for holding this hearing entitled Investigating the gold HR 1495 the gold reserve transparency act of 2011 and the oversight of the United States gold holdings I too look forward to the witnesses testimony And I also noted that In the Treasury's Inspector General's written testimony that He wrote that the IG is required by law To perform an annual audit of the mint public enterprise funds financial statements And those statements include the balances of custodial deep storage gold reserve Help by the mint It seems as though there is already an annual audit That that both the IG and the GAO believe is already required of them However, Mr. Chairman one other suggestion is Perhaps we we as a subcommittee may consider Taking a tour of Fort Knox in the other place or places that house the gold and become and really witness for ourselves If it if it's going I don't know if that would be enough to determine if the if the gold is authentic But but I mean it may be something for the committee to consider So I look forward to the witness's testimony and again. I thank the chairman I Think the gentleman. I think the gentleman for suggestion I think it is a good idea to go and at least show our interest But I personally would feel like I would have shortcomings on looking at a bar and knowing exactly what I was looking at But there's no reason why we can't you know at least consider that as a starting point Does any other member care for an opening statement, okay, I will proceed into the into the questions First I'd like to Introduce our two witnesses Mr. Gary angle is the director of financial management insurance at the government accounting office He directs GAO's annual audit of US governments Consolidated financial statements as well as audits of key financial statements at the Department of Treasury and I want to Welcome mr. Angle as well as the Honorable Eric M. Thorson has been the inspector general the Department of the Treasury since in 2008 as Treasury IG he manages oversight of the Treasury through independent audits investigations and and review and we will go ahead and Proceed with the testimony mr. Thorson I thank you for the opportunity to appear before you this afternoon My testimony will cover the audits done by my office on the United States Mint's Schedule of custodial deep storage gold reserves here after I'll mostly refer to them simply as the gold reserves Before I discuss the details of the audits that are the topic of this hearing. I want to make one point very clear 100% of the US government's gold reserves in the custody of the Mint has been Inventory and audited Furthermore these audits found no exceptions of any consequence. I also want to assure you that the physical security Over the gold reserves is absolute I can say that without any hesitation because I have observed the gold and the security of the gold reserves myself accordingly the requirements of HR 1495 which calls for a full assay inventory an audit of gold reserves of the United States together With an analysis of the sufficiency of the measures taken for the security of such reserves is redundant of audit work already done Since 1993 my office has performed annual audits of the government's deep storage gold reserves held by the Mint In fact our fiscal year 2011 audit of the gold reserves is currently underway My testimony today will briefly describe what the Mint gold reserves include and the annual audits performed by my office since 1993 The Mint maintains its storage gold reserves in three highly secure locations Fort Knox, Kentucky West Point, New York and Denver, Colorado While it would be inappropriate for me to discuss the details of the security arrangements in place at these facilities I can tell you that they are multi-layered and include substantial physical barriers arm guards cameras and metal detectors in all 42 compartments at these three hardened facilities hold 699,515 gold bars with a fineness or purity Ranging from point four seven to point nine nine nine nine with an average fineness of point nine zero zero six as of September 30 2010 the audited quantity of the gold reserves held by the Mint was over 245 million fine Troy ounces weighing over 9300 tons with a market value of 320 billion six hundred million dollars I Might add that each gold bar weighs about 27 pounds and has an average value of about half a million dollars in June 1975 the Treasury Secretary authorized and directed a continuing audit of US government-owned gold for which Treasury is accountable Pursuant to that order the committee for continuing audit of the US government-owned gold Performed annual audits of Treasury's gold reserves from 1975 to 1986 Placing all inventory gold that it observed and tested under an official joint seal The committee was made up of staff from Treasury the Mint and the Federal Reserve Bank of New York The annual audits by the committee ended in 1986 after 97% of the government-owned gold held by the Mint had been audited and Placed under official joint seal it should be noted that during the entire period of these audits and up to today No discrepancies of any consequence have ever been found This is an example of the seal and I put pictures of these in my testimony This is an actual seal that came off one of the compartments My office began conducting annual audits of the gold reserves in fiscal year 1993 Since 2005 these audits have supported the annual audits of the Treasury Department's consolidated financial statements Which incorporate the balances of the gold reserves held by the Mint? The financial statement audit is performed by KPMG under contract with my office KPMG has relied on our audits of the gold reserves when rendering its opinions on the Mint's and Treasury's financial statements They have assured themselves as to the independence reputation and Qualifications of my audit staff in addition they have satisfied themselves with the adequacy of the audit procedures performed The audit work performed by both my office and KPMG is done in accordance with government auditing standards established by the GAO Since 1993 when we assumed responsibility for the audit my office has continued to directly Observe the inventory and test the gold in fact my auditors signed the official joint seals such as the one I showed you Placed on those compartments inventoryed and tested in their presence at the end of fiscal year 2008 all 42 compartments had been audited by either the GAO the committee for continuing audit of US government Owned gold or my office and placed under official joint seals There has not been any movement of inventory gold since that time Furthermore in addition to observing the inventory of the gold for all of the audit periods We selected and tested a statistically valid random sample of gold bars using a 95% confidence level We found without fail that any differences between the finest reported by the Mint and the finest based on our independently obtained assay reports were immaterial and negligible for example during our fiscal year 2008 audit we sampled gold valued at 75 million dollars Based on the independent assay of those samples. We project the dollar value of the difference Based on the assay report and the Mint's inventory records to be $3,820 or five one thousandths of one percent of the gold inventory as discussed earlier by the end of fiscal year 2008 all of the gold reserves in the Mint's custody have been a hundred percent inventoryed and audited in Closing based on the work performed by my office and by my own personal observations I can assure the subcommittee and as you said sir the American people That both the quantities and the value of the US government's deep storage gold reserves held and reported by the Mint are Reliable and fully audited I Mentioned the American people because as you said sir they own this gold The reason we go through all of the procedures that I just mentioned is to give the American people the absolute Confidence that the gold reserves are as represented Fort Knox for instance. It isn't just a huge stockpile of gold It is also a symbol of the stability and financial soundness of their government To create doubt about the value or the security or even the very presence of the gold reserves Without reason contributes to the distrust in government that seems to be a growing trend today It is the obligation of every inspector general to report to the Congress and to the public areas of concern That need to be fixed But I believe it is also my obligation to report to you When something is being done right and that is the case here today and that concludes my statement I thank the gentleman and we'll proceed with to mr. Engel Thank You mr. Chairman ranking member clay and other members of the subcommittee I'm pleased to be here today to discuss HR 1495 the Gold Reserve Transparency Act of 2011 as a September 30 2010 about 95% of the reported us gold reserves were in the custody of the mint of which nearly all is deep storage gold The remaining us gold reserves were in the custody of the Federal Reserve Bank of New York in 1974 in response to congressional interest and in conjunction with the mint GAO assisted in the planning and observed the inventory of us gold reserves in the Depository at Fort Knox GAO selected and audited three of the 13 compartments at that depository As part of this audit GAO recommended that a cyclical inventory of the gold and mint custody be performed annually To ensure that the gold in all compartments would be inventoried over a specified period of years acting on this recommendation in 1975 treasury established the committee for continuing audits of United States government-owned gold Treasury OIG officials estimate that about 92% of the US gold reserves have been audited by between GAO and the committee for continuing audits as of September 30 1986 of this percent GAO is audited in 1974 represented about 13% More recently the US gold reserves have been presented in various financial reports and have therefore been subject to various audit efforts For example since issuing its audit report recover report covering the mint custodial schedule for fiscal year 1993 the Treasury OIG has annually audited the deep storage gold reserves in the custody of the mint for each of the fiscal years under audit the Treasury OIG has Issued a clean opinion on the mint custodial schedules Also, the Treasury OIG did not report any material weaknesses in internal controls over financial reporting relating to these schedules for those fiscal years HR 1495 provides for the secretary of the Treasury to conduct and complete a complete full assay Inventory and audit of the US gold reserves and an analysis of the sufficiency of the measures taken for the security of such reserves and Considering the provisions of HR 1495 it will be important to consider the cost benefit and Timing of actions needed to implement the proposed requirements HR 1495 if enacted may result in duplication of certain past and current efforts Nevertheless GAO would be capable of reviewing the results of Treasury's actions as called for in the bill Should it be enacted? GAO's review would include visits to the facilities where the gold reserves are held to selectively observe the Inventorying and the auditing of the gold we would also examine various documentation Supporting the required assay inventory and audit HR 1495 also provides for GAO to transmit to the Congress not later than nine months after enactment of the act a Reportive GAO's findings from such review and the results of Treasury's efforts according to Treasury officials Because of the enormous quantity of gold that would need to be inventoryed in assayed It is unclear whether Treasury can complete such actions within the six-month period provided for an HR 1495 If Treasury's efforts are not completed within this period there would be limitations on the scope of GAO's work if GAO were still be required to report out within the nine-month period GAO stands ready to work with the subcommittee on developing changes to the provisions of HR 1495 That would most efficiently utilize the results of past and current gold reserve assay inventory and audit efforts Mr. Chairman and ranking member clay this concludes my prepared remarks I would be pleased to answer any questions that you may have I think the gentleman I'll start off with yielding five minutes to myself for questions. I Want to ask both of you this question and has to do with what's happening in New York because that's been a little more difficult to understand There's a lot of uncertainty surrounding who has responsibility of the gold reserves held at the New York Fed You did mention it in your testimony But conversations with the man in the office of the inspector general the main Treasury and New York Fed Have all resulted in one or other of these entities saying to check with the other So we never got a full answer The OIG has stated that it does not does receive financial statements from the you New York Fed Attesting to the gold held in storage there for purposes of their financial statement audits However, there seems to be no definite Answer as to who has the responsibility for the New York Fed gold and no one seems to know the last time It was a set assayed or inventory a common rejoinder has been it's just a small part of the gold reserves It's only 5% But you know when you look at the total amount of gold we have 5% is pretty significant Because it's more than 13 million ounces of gold and at $1500 an ounce. We're talking about 20 billion dollars It seems to be floating around out there and we just really can't pin it down And I know we are used to talking in trillions, but this just seems like poor governance What could either of you Comment on the New York Fed held gold whether it has been assayed or inventory and whether it deserves to be thoroughly examined As the legislation calls for My understanding is that the gold reserves in the Federal Reserve Bank of New York have not been assayed That's just based upon my reading of reports not from work. The GAO has done But it's also my understanding from reading a Treasury OIG report from back in 1987 that the pretty much 99.9 percent of the gold reserves that Were in the Federal Reserve Bank of New York at that time and I think that the amounts of financial ounces when I looked has not really changed To what it is now Had been being lauded over periods of time by the Federal Reserve examiners and that those inventories had been observed by members of the Committee for the continuing audits that we spoke of earlier now they they because it had not been assayed and Because it's not under the control of that committee. They have not considered that as audited But there has apparently been inventories of it There's been observations of that inventory now the last report that I saw that said that again was from back in 1986 I don't know what's been done since then Thank you You're correct if we don't audit that it is done by a third-party confirmation which is an accepted practice under audit, but it is It is the Treasury's gold It's 5% of it is there and it's really at this point. It's immaterial to the statement and the total numbers It's immaterial and as an auditing term I mean it it is not included in in what we Listed in the statements, but it's a relevant amount of gold obviously Since this has held at the New York Fed and the New York Fed is obviously very much involved in international arrangements during the financial crisis Essentially every single transaction and to the tune of trillions of dollars that they transact it involved foreign central banks and over the last decade or two central banks have been very much involved in in gold swaps and loaning gold and selling gold and To date of course, we have no evidence that you know our government's ever been involved But it seems to me like if it was ever one place where they might have gotten involved since the New York Fed is involved in international transactions would you probably don't have the answer and whether or not they did or did not but Could it be conceivable that they could have done it without your knowledge? I don't believe so no and As far as the any encumbrances other than the gold certificates that are held by the Fed We did ask that question before coming here And what I was told was as far as encumbrances, and this was a quote not one Troy ounce is encumbered Okay, I Yield back and now I yield five minutes to Mr. Clay Again, thank you, Mr. Chairman for conducting the hearing and let me thank both witnesses for your for your testimony today According to the US Mint, which is the custodian of nearly 95% of America's gold reserves The time required to move way a say and restore the bars of gold Average as six minutes per bar with a team of 19 people The mint points out that extrapolating that to 700,000 bars as as the legislation requires would require nearly 1.3 million man hours of incremental labor Therefore to complete the inventory of just the gold bullion bars within six months as This proposal specifies would require approximately 1,280 individuals And we know that since this is a domestic issue That mr. Chairman your leadership would require an offset so we would have to find The money to do this since this is a domestic issue and we have to pay for all of those things Would either the witnesses view this bill as a prudent use of taxpayer funds and Start with you mr. Thorson The numbers that you quote Are probably just on my unscientific Judgment having been there are probably pretty accurate. It is a remarkably small area It's really surprisingly so when you're actually standing there with the compartments You're going to be able to use very few people in that in that area, which means the I mean I think you gave a figure about 1200 people. That's almost laughable when you actually see the space So that means it's going to take a great deal longer than What you would normally think and and if you could put 1200 people together have a move the bars It's going to take a very long time. I Obviously as I said in my statement, I don't see the benefit at any cost really. It's what we do It's what we do every year I as I said it is you it almost loses its effect to stand there and actually see it all Because there is so much of it. It is there Thank you for that respond mr. Engel Is this a good use of taxpayers money if this bill becomes law? well, I think is as I said in our testimony that we would be willing to work with the subcommittee on possibly building off of the Assays the inventories and audits that have already been done to address if there are concerns that there may be You know things within these vaults that are no longer there. I agree that there's they've been through an audit process Auditors have checked these seals, but if you know if the subcommittee wanted to have something done there I would think we'd be talking more on a versus a full Assay and things that maybe some sort of sampling if you wanted to just get a feel that nothing has happened over the year Since those vaults were sealed But outside of that it seems quite a bit redundant and what's what's already been done All right, I think both witnesses for their responses and mr. Chairman. I yield back I think the gentleman you'll find minister mr. Jones from North Carolina Mr. Chairman, thank you very much and mr. Engel is nice to see you. I have a Had a very pleasant Business relationship with mr. Thorston on a number of issues and I thank you for always being there to be helpful and I Think the reason that I wanted to be here to listen to the witnesses and and certainly my colleagues and both sides is that as a member of Congress one of my biggest concerns is Not so much the goal whether it's there or not there, but is the Americans distrust of all of us in Congress quite frankly and I was reading my staff got for me this and I'll read it has nothing to do with this hearing But it will lead to something in the moment the Federal Reserve Bank of New York is refusing To tell US government investigators how much money is sent to Iraq During the first years of the American invasion as the top Iraqi officials suggested that missing and possibly stolen funds from that Year is more than 18 billion dollars And there's Stuart Boyne a wonderful inspector general that's Always exposed all the lost American money going to the New York Fed and they won't meet with him And I think that's the reason that maybe this bill has been introduced and and maybe not for other reasons as well but if the American people could just regain a little bit of confidence in Washington Whether it be an agency or the Congress itself. It would really I think Help the environment of America and I was wondering I was thinking when mr. Clay was suggesting and mr Paul the chairman kind of agreed Does it make any sense for there to be a congressional? delegation of Five people three people six people That every so often when you do the audit I think you said once a year or I might have missed that in the testimony you have to correct me But is it already in The guidelines or the stature that there would be a couple of representatives from the Senate and House that Would be able to accompany the inspectors when they go to all the auditors not inspectors all at us To me this is about there's so much if if I could change one thing in America and If I can control one thing be the internet There's more misinformation on the internet than there is accurate information and all there has to do is some Person who's challenged don't be careful about this that puts on the internet that you cannot find the goal at Fort Knox Then all of a sudden thousands of million people millions of people are seeing that they're not hearing what you're saying So I just wonder if it makes any sense if it's in your Regulations or if it needs to be in the stature that there would be a a team of two senators or two representatives That would have the option of accompanying your inspectors to one of the sites Actually that that has happened under a situation very similar to this one in 1974 In September of 1974. Mr. I believe is Russelo Congressman took a delegation to include I believe there's one senator and Huddleston and they went down and with I assume permission probably would have come from either secretary of the treasure the White House and And did tour the goal and there were pictures taken and and there are there are video clips of that And I think that's exactly what you're you're describing and it was done in 1974 Obviously, I don't think either one of us have any Authority to say anything about such a visit But it's certainly something that the the committee can make a request of because there is a precedent for having it having done it Well, I appreciate you sharing that and I'll close in just one second But I think in the world we live in today that this so distrusts That it would be I think for at least in during this deep recessions recession that we're in that if that could be accomplished That it would help I think with the public's trust Not so much that they should meet leave members of Congress, but I think that if this was an announced Group meeting and members and then it gets some publicity and maybe there could be a news conference after I don't know I think I think there's validity in there and while we're having this hearing today And I just wanted to share those thoughts with the panel and you mr. Chairman and my colleagues I yield back I thank the gentleman. I now recognize mr. Luka Maher from Missouri Thank You mr. Chairman In your testimony, I didn't hear any any comments about The gold that we use to mint coins is that held separately or is that not included in this this report or Am I missing something? The the the federal is okay, is the federal It is all premised, but it imported on the truth financial And with the goal that we're talking about today have basically two types of overbidden stock gold And yes, there is that I'm not sure if I want to say it was a fine three ounces The total is working so cold and that's the kind that's used for many coins Medallions things like that. Okay, so that is that audited as well. I assume. Yes That's all that is part of that's part of the mince financial statements. It's not part of the custodial But it's part of the mince financial statements. Okay, so how do you how do you replenish that stock then? Are you just using existing stock or do you get new gold shipments in that you use up? Or how do you how do you continue to be able to mint new gold coins? I'm not involved with it, but my understanding is that they replenish that by purchasing Stock, you know purchasing outside just on the open market somewhere Yeah, okay Okay It's kind of interesting I I was listening to the discussion here of my colleagues with regards to the congressional review of the actual gold and I think It might not be a good It might be a good idea to do that if a standpoint of also looking at the protection and procedures the all of the stuff That goes into it the standpoint of again Some reassurance that there's adequate procedures in place for protection of it So it's kind of interesting to listen to that debate along the same lines with regards to the amount of Goal that we have According to testimony and in the documents that I've been reading here We're carrying it on our books at forty one dollars forty two forty two dollars and twenty two cents I believe is that what is that correct? That's the statutory value that it's okay, and you value the wall ago at about three hundred and twenty billion is that right? At market at market at the current value today. That was September 30 of last year and yesterday We pulled it up would be fifteen hundred and fifty two dollars an ounce and three hundred and Roughly, let's see. We don't have the Roughly three hundred and forty billion. Okay, the mr. Chairman will go ask the question with regards to Using and swapping it out with regards to other things it is not used as collateral for anything either right now is other than the gold certificates There's no I'm not aware of anything other in any other way Financial statements. There's nothing or in the department. Why there's nothing disclosed about so it's just sitting here right now, right? Yes, it's a reserve. It's a reserve. Okay, right it is and and I'd back up his statement as far as we're not aware of anything that okay What what would happen there's some discussion about going back to the gold standard? I don't if we ever will it's a good idea a bad idea But if we would what what how would that change your operation? I can't speak to that gold standard and how it would change on the on the gold standard Yeah, if we went back to the gold standard how it would change the operation of what you do but we have to Have some more would be some transactions going on with regards to how you take care of it Would it be that we have to raise and lower the amounts that we have all the time or things like that or how? We do how we do that I'd have to take as far as any discussion regarding returning to the gold standard That's what you're really getting into much more a policy issue are we're both of us. We're auditors. We will okay We will certainly be able to look at any process or procedure or plan if that ever happened But as far as Commenting on and on that as a policy as to whether it's a good idea a bad idea. That's really out of out of our realm Very good. Okay. Thank you. Mr. Chairman. Appreciate the opportunity. I Think the gentleman and we will go on and have a second round of questions if you care to It seems that a portion of the mint and the US gold reserves were audited an assay between 93 and 2008 as you acknowledge the mint estimated as much as one third of the gold reserves were examined during this period The other two-thirds however have not been in the authority according to my understanding or assay since somewhere between 75 and 86 Do you think it would be worthwhile at least to inventory and assay this portion of the mint held gold? by I forget which date it was I believe by 1986 we It basically covered and by 1986 97% of the government owned gold held by the men had been audited and placed under joint seal So once once you've done that And that seal remains unbroken, then I'm not I'm not sure what other benefit there would be to Going back into it at that point, but by 86 you had 97% was was on it but it just seems like it's Quite a bit different the way you describe audits compared to I think a general understanding of audits. They don't audit Small portions over 20 and 30 years and an audit I thought was supposed to be odd it is quickly as possible to I think this is a little different because What you've got as opposed for instance if I'm if I'm auditing Inventory of a company Product goes out product comes in it's replaced etc etc in this case There is no movement those doors aren't opened There is nothing there that can happen because once those once those doors are sealed and and I've given you a couple of show-and-tell here examples It's very obvious if those seals are ever broken and it's not like in a new as I mentioned in a normal audit where Product is moved out and I replace it and I move on that's not what happens here There is no movement those doors are not opened and if they are and a seal is broken Then those people who who did it is replaced the seal is put in place So I guess it's hard to imagine what benefit there would be if in fact the seals that cover those doors are unbroken Well, it just seems like it doesn't conform to My idea of what an audit is all about but let me go on to another Question dealing with the audits There's been a lot of speculation as to the condition of the gold reserves and as I mentioned in my opening statements It was not until legislation was introduced a hearing scheduled That information surrounding assays and inventories conducted by the Mint and the office of the inspector general was forthcoming And your offices have been very accommodating in the process, but it seemed seems to me that all this All this information about the activities of the Mint and the IG have been engaged with respect to the gold reserves and a result of these activities should be gathered together in in one place And made of readily available like was mentioned on the internet Maybe we could have it available to the public that is what my bill proposes assay and inventory the gold evaluate Whether it's encumbered in any transaction by the Treasury have the Treasury issue report the GAO is Independently he verifies that report as Congress's investigative arm could could you comment on the reporting? Element of the legislation as well as the GAO's independent review Could you also comment on the extent to which the information already available could be published? Can we get the information a little easier instead of dragging it out if if for no other reason for reassurance because the Questions have been building over the years and and when you say well when was it fully audited in my understanding a Full audit of the gold most people give me the date in 1953 So what about the facilitating of information to give the American people the absolute reassurance that they're asking for? Well, I guess it would depend on on what you what you want We publish all of the audit reports on on our website. They're public You all asked for assay reports, which we certainly provided we keep them for a while There's really no secret about it. There was one thing I guess on the press release for this hearing that kind of Got my attention when you see we were less than forthcoming. I believe was the term I don't understand that sir to be honest with you We don't publish our work papers on the internet I don't think any auditor does that but for the period which we have them We keep them in the normal course of events But this is an example of a public audit report on the gold. It's out there and The assay reports. I believe your staff asked for we provided them The work papers like I said, we don't normally do that, but I don't think any auditor in America does that so Whatever it is that we can do reasonably and under the proper, you know rules of auditing We're happy to do because I agree Transparencies are business. I mean, that's why why we do what we do Questions we're happy to listen to them What we were looking for was to we thought we'd see a list of the bars or the assay details I mean there were gross numbers, but not a list of the bars and the precise assay results Clearly the results of them are published I mean I think in my statement, which is there's nothing hidden or it all in this statement I mentioned the range of From the assay reports. I think it was point Six to point nine nine nine something like that. I mean those that's what the assay tells you and then we gave you an average So those numbers are out there. I'm I'm not sure I understand why there's some confusion about that Well, I think it was incomplete and that there weren't total numbers I think we had a much smaller number and a single report anyway We might be able to work that out or figure it out But it's still you know some confusion there my five minutes is up and I yield To mr. Luke and Maurer For his five minutes Thank You mr. Chairman just to have a couple follow-up questions What is the annual cost to store and protect our US holdings? Do you have an idea the which I'm sorry the annual cost to protect and hold these holdings? What it would costed to? Follow through on this bill. No or the are I what right now? We have we have a goal setting in Fort Knox and Denver and we don't really I mean because we do audit We're doing many audits at the same time and that sort of thing I don't think we've really ever broken down what it costs to do this particular at least what it costs my office to do this Okay, I'm asking what what it costs. What is the cost to I guess the government or the mint or whoever pays the bill to protect the gold? Oh, the security. Oh security. Yeah, I think that that would probably be something that the Mint would be able to to tell you what that what that costs neither of us I think would know that but okay, they would probably know what what it costs for them to maintain the You know the the facilities and the the depositories and things That's not in your nice in your report. I mean you don't go back and Check the cost for the procedures and of maintaining the We're auditing the inventory of the gold not the not the I mean that would be a separate job and it's something if if Your committee or somebody asked us to do we could certainly a look at that But as you can see that's a that's really a different issue than then how much gold is present at the locations Well, I would think protecting the gold would be pretty important to be able to count the gold I mean if you don't have it protected you can't count what's not there if somebody takes it I will I'm missing so on there I have I have never and I'm former Air Force and been involved with everything from nuclear weapons I've never seen security like I saw and that's great. I'm wonderful in that but my question is was it cost us That's my question. Okay, move on The IMF has the fourth largest gold reserves in the world and my understanding is that the members who belong to the IMF have contributed goal to it and I guess my question is Does it is the goal that we contributed is it is it is IMF hold it or do we maintain it here and just pledge it to the IMF or Do you know? State the last part, please sir. Okay All of the members all the people who are members of the IMF have contributed gold to their reserve The United States is a member of the IMF right Did we when we pledged this goal? Did we take it and physically move it to the IMF or did we just have it pledged there? There are no I'm sorry. I understand when you said there are no Encumbrances on the good. There's nothing. There's no reason to move it. We have been assured there as I okay So voted there is not one Troy ounce that is encumbered there. Okay, so we've moved the goal to the IMF The gold the the encumbrances of that I'm aware of the only ones are to gold certificates held by the Fed and if they were to To go to the physical Side of it what you're talking about is if they were to redeem those gold certificates, they'd be paid in currency They wouldn't be paid in gold the gold is collateral that isn't it wouldn't be redeemed that way Okay, according my resources here that says there's 261 million ounces that's reported as US Treasury owned gold It's part of the IMF reserve And so we don't hold it ourselves the IMF holds it in their reserves wherever that's at. Do we count it as ours? Not I know if we don't count it as ours and we count as the IMF counts It is theirs, and we don't just serve an account. It's kind of have a savings account with another bank Do you know So it's not our goal in anymore is IMF's or is it part is it ours as well? There is I think what what you're talking about is the three purposes the gold can be used for and the third one is what you're Discussing of which we're not aware of any use in that category at all Which is it I believe it says the third one is consistent with obligations of the government and IMF on orderly exchange agreements and a stable system of exchange rates, etc Made the president with the approval of president that may deal in gold We're not aware of any case of where that is occurring You're saying we've never done this It's what you're saying that we've never done this I'm not we've never transferred I'm not aware of any time we've done that and at least Certainly not that it affects the amount or the type of gold in the reserves. No I Think you were talking about physically moving them back and forth that has not happened that in recent history. I mean Going back all the way to at least we cover the 70s and more so no I don't believe it has Okay, well perhaps after off after this the the hearing today We can get together and find out answer the question because I'm kind of concerned now that we don't know We've lost 261 million ounces either we gave it to and have now on account with the IMF We know we still have in our position We still have our possession and we're not we don't know where it's at and it is encumbered one or the other There there is I can say there has been no physical removal of any of the gold during that time if there is I think what you're asking is is there any Obligation or some that would it would cause that in other words who owns that gold is really what you're saying and To our understanding that has not occurred and we can we can certainly get you a more definitive answer And all my information right be correct, but I it's Information it's I would think would be would be correct. So it tells me that We would like a little more research to do here. Thank you very much I guess my answer to be real clear was that we do not believe that has occurred Okay. Thank you. Thank you, Mr. Chairman Thank you. I want to follow up on that because You may have given the answer, but I still don't think it's very clear Is it possible that the gold is counted twice? once in the IMF and also on our balance sheet of the 261 is is the month is the gold at the IMF part of the 261 ounces that we claim that we own I Don't think it's possible that it could be counted You don't count it twice of that as it that would affect the statement. Is that is that what you're asking? Well, we have pledged gold We have pledged gold to the IMF every country has to put so much gold in the IMF So is it sitting over here in the IMF and and we no longer own it, right? I mean, we do not audit obviously we do not audit the IMF. So I can't make yeah, but we're trying to figure out The accounting procedures on whether when you go and audit the gold Maybe you don't know that you audit and check and gold and look at these bars But they really have been pledged to the IMF. Is that a possibility? No No, I don't believe it. No, well, I'm not going to comment on IMF or what they're doing because we don't audit the IMF But the statements that I've made regarding the gold reserves of the mint our mint our Treasury Department meant That's pretty absolute and and we know where it is We know how much it is and we know that it is there and none of it has been removed to And nor do we believe there are any Incumbrances against it other than what I mentioned by gold certificates of the Fed Now we have the certificates the Fed holds certificates. They're going called gold certificates. The Treasury holds the material and gold does the does This Treasury what if a law was passed and we instructed Treasury to sell, you know, 20 billion dollars worth of gold, right? Can we do that or is there Do we have to get permission from the I maybe the encumbrance is to the to the Federal Reserve? Maybe they're in charge and not Treasury can what can we do with that gold and who really owns it? I think you you're trying to back into the same question there Which I think if you wanted to to do that that would be a question that would go to the Secretary of the Treasury with Consultation, I'm sure by the president who could do that I don't think they're gonna have to get permission from the IMF to do that because there is no Encumbrance on that gold other than the gold certificates held by the Fed Well, but that isn't it isn't in cumbersome that would change the balance sheet of the Fed because they count that So I don't know whether That would you know? The Fed is pretty secret, you know, and Congress doesn't have much to say about what's going on over there And they they do a lot of hiding So I'm not so sure it would be the answer could be that simple And that's I understand you're asking the question I I have tried my best to reassure you that that isn't the case but on the other hand remember if somebody did try and redeem those gold Certificates, let's say they were pledged to somebody and they brought them forward and they wanted to redeem them They would be paid in currency at the statutory rate not they would not be paid in gold The gold is collateral. It is not the method of payment So they would receive whatever the value is of those certificates The gold would remain in the custody of the United States and would no longer be Collateral for those certificates that were redeemed But I could maybe add something on that that as it relates to the gold certificates The gold certificates do not represent that the Federal Reserve has ownership on that gold There's a liability that's actually recorded in the financial statements for about 11 billion dollars that represents the gold What we owe the Federal Reserve for those gold certificates now if we were to go to sell Some of that gold my understanding is that Treasury would have to retire those gold certificates, and then I think it's what mr. Thorson saying we would there would be a reduction in the cash balance that the Federal that Treasury has over at the Federal Reserve for the amount of Whatever at that $42 and 22 cent per, you know, whatever amount of the gold certificates you were redeeming But there is there is an actual liability That's recorded currently and has been for years on the government's financial statements for the amount that they owe the Federal Reserve For those gold certificates And that's what I meant by the fact that it would if they were redeemed obviously because it is a liability if they presented those There is an obligation to to pay those but it would not be paid in gold bars I want to go back to asking for suggesting that we have more thorough reports In our request from from you on these reports We did get one assay report was given as an example There were 86 bars involved and you showed the details on what you found But of course there's a lot more why why can't we get this a list of each compartment? How many bars what percentage whether it's 0.999 or 0.90 and have the entire Gold reserves that we have audit in that manner. So we see this one report, but we're asking Since there's a claim that all this has been audited and checked Couldn't that be all into one report? Since we only got one assay report the I think what you're describing is really what the Mint does as far as you remember the the mint Inventories and assays we audit and and there's a difference there What you're asking for I believe really you need to direct that to the mint and they can Probably satisfy you as to what kind of records you're really looking for there The mint should have the mint should have Records by bar What the finest is of each of those bars? I would think they would have records as to what's been assayed of those bars as part of the Inventorying and audit process, but I think they're the ones that would have that that type of detail, right? Okay, I see mr. Schweikert has come in. Are you ready to pursue and ask a question at this time? Okay Okay, well I'll go back to mr. Luke and our if he is follows up. I just have one one follow-up here with regards to the last question or line of questioning We were at the more think about the more concerned. I am because we need to know If the goal that the u.s. Has contributed to IMF We need to know if it is still counted as a u.s. Gold Reserve In other words if it is then it is an encumbered Amount of gold that we have sitting there and should be reported to such if it's not It should be reported Like a savings account for an individual on their financial statement and should be reported then on our on our financial statement of our government As an asset setting in the IMF But I think what you say clearly if it was encumbered or belong to IMF or anyone else That would need to be reflected on the statement because we are representing. This is the Treasury's gold and Therefore that would not be an accurate statement if it were encumbered We have been assured that none of that is encumbered and therefore that is the total amount And and so I I guess there are a number of theories that you could put forth as to how well as other as other does of our our gold You should know whether that gold if it's sitting in the IMF is reported on our balance sheet somewhere for the government well and gold held by the IMF is it would not be We'd like to say we don't audit IMF so I'm not gonna try and Yes, what's going on there? But if it were if what we do represent is the Treasury's gold the u.s. Gold reserves which we know where they are and they're not held by they're not held by IMF or who will control IMF Who owns what's in the IMF then? Who does yeah who owns the gold that's the United States government's goal who owns that then if it's sitting in the IMF Do we not own that if I'm I want to make sure I give you an accurate answer so I'm gonna I'm gonna defer until I can get you the proper answer and That is absolutely accurate because I Can't give you an answer on that off the top of my head. Okay. Well, if we go on seven we're supposed to have 17% of Of the IMF and if we own 17% of the 90 million ounces That's a whole lot of money and we need no words that right so I certainly appreciate your willingness to work with us to find out number one is Is it count among our reserves and we're not aware of it and therefore not not there And if it's not where's it appear on our balance sheet as a as an asset to the United States government No, you ask a good question and that's why I said I don't want to give you an answer off the top of my head I want a real I want to work with you find out make sure where it's at and I will get you one appreciate I yield back. Thank you, Mr. Chairman Thank you gentlemen welcome Thank you for this hearing Chairman and I I would like to ask both of the Witnesses whether you believe this is a good use of your resources and funds Especially if it's true as you testified that it is duplicative of what you already have to do with respect to gold reserves And I'm mentioning basically bill 1495 and in this the GAO wrote and I quote bill 1495 if enacted may result in duplication of certain past and current efforts especially with regard to Inventorying and auditing the gold reserves of the United States in quote and the Treasury's IG wrote and I quote I believe that the inventory and audit requirements proposed in the gold reserve transparency act of 2011 HR 1495 to be redundant of the work that my office and the Mint have currently performed in quote and Basically, why should Congress pass legislation that both the IG and the GAO believe is not needed? That's my question good to see you both Mr. Thorson, would you begin first and then mr. Angle in our statement? We did say we believe it redundant because the things that are called for in the act are things we believe We are already doing And that is a proper audit an assay we do assay to a Statistical sampling we don't assay every bar of gold, but we do it to a 95 percent confidence level, so I'm not sure what it is that You would want us to do that. We aren't really already doing Mr. Angle The one area that we we talked about a little bit earlier that That maybe if you wanted to have something looked at is the Gold reserves that are over the Federal Reserve Bank of New York now there has been some audit work that was done years ago by the Examiners of the the Federal Reserve and apparently the Committee for Continuing Audits that had served some of that but That's not been labeled as audited per se as I understood it by the Committee for Continuing audits So if if you did want to have something done, I guess you could have some work done over on the the Federal Reserve Bank of New York In terms of some of the other it would be very Redundant of what's been already done Can can each of you comment on what you believe would be the cost to taxpayers of implementing HR 1495 Since we are being very Cautious about our deficit at this point and I think both of us would agree I think the mint has worked up some numbers that are somewhere above 60 million dollars or more It would be in that range, but I think that's a question more directly. They should probably direct to the mint Mr. Thorpe angle to have a comment now we we do not know we haven't heard from the mint what the amounts are It's our understanding. They were working up what they would estimate it would cost I think they were also Because in addition to the cost of actually doing the inventorying and moving all the bars When you say it You're taking a drill you're taking a part of the bar to be tested and that's basically destroyed Whatever that piece is so there will be some loss of the gold from the bars Through the same process if you do that for every single bar that's out there So there would be a loss from that process as well. Well, I have no further questions. So I yield back to the chairman. Thank you I'd like to address the subject of the cost because our first estimate Okay, I Will yield five minutes to mr. Schweiker from Arizona You're kind mr. Chairman and forgive me if this has already been discussed curious Educator freshman on the different places that u.s. Gold Assets are held IMF. You were just saying was the New York Fed the Treasury any other places Not that I can see No, so those three would cover it Any of that pledge to loan facilities that would be World Bank or anything else we we also touch No and the to go back to the IMF for a little bit like I said I'm I would like to find a direct answer for that one as well Okay, and and my understanding if from listening a moment ago, mr. Chairman Was that it's been how long since was it the was it the New York Fed? Which actually would Handle a lot of international transactions. So therefore they would not only hold our some gold reserves for the u.s. But Another number of other member nations As I understand it, I believe they do hold gold through other nations in their Just to the fun of it any guess what's there Any guess on the number of participating countries No Okay, that would be something the Federal Reserve would obviously be able answer, but I don't know Okay, so if if we have functionally three places to that you're telling me we already have some audit history You know Treasury You know we have audit history on gold supply Yes, no the gold reserves. Yeah, and We're still a little fuzzy was it on IMF I'm I'm like I said, I'm still a little concerned about that particular question. So but no, I mean this that's it and But in a previous question this moment ago, didn't we just tell the good lady from New York? That our gentle woman from New York and still working on these terms It was how much to do the audit To do the audit I Would the mince figure the mince figure to do the one that this bill would call for I was in the neighborhood of 60 million but I that was you need to that is a mint number and you need to ask them that and and just to be clear the Ratio of money held by mint and held by Fed is 95 and five percent five percent is at the Fed So just for whatever but as far as the cost of this bill to to perform that I think I Believe your staffs already made an inquiry to the men of that But that's really we we can certainly you know audit that as it plays out and that kind of thing But it's it's their number. Okay. It just it seems stunningly high and it's always fun when you're having to audit the audits You know we're we feel like we're in some of this very unusual circle It'd be fun to find out how much of that is just counting and how much of it is doing assay work So and mr. Chairman, I know you wanted to inquire more on that point. So I yield back my time I Thank the gentleman. I do have a few more short questions for you Do you have any idea what the current audits cost you do partial audits each each year? What kind of expenses that involved no as I mentioned we We use people on different audits at the same time and that kind of thing So we've not really broken down per audit what this costs. Okay, where do you get the 60 million? It was a we asked the same questions that you did as far as what would it be from the men when we We were wondering what their statement might be and that was a there was a rough number that we were told that Off the top of their head it would be in somewhere in that vicinity, of course. We had one Treasury's Statement that claimed that it would be 15 million dollars. So we'd like to if you can enlighten us more maybe in writing about Really whether it's 60 million or 15. That's a that's a big difference and to suggest that I Might be participating in not being careful with the taxpayers money. I happen to be the most Conservative member of Congress on when it comes to spending but you know We don't even need to appropriate money for this that the the mint could easily take care of this They made 400, you know when you have a monopoly you tend to be able to make some money in last year They made 400 million dollars. So even if the high number were correct We don't have a problem there and this is one of the few Legitimate functions of government is to check our ownership and be fiscally responsible to find out, you know Just what we own and whether it's really there. So I think the total amount is Not in comparison to other things. It's not very much also back to this request that we get more details on the on the On the thing and you said deferred to the maybe I should ask that mint that and of course The men is in transition now and we couldn't get anybody over here from the men But I believe it was it was your staff that told my staff that you got the reports and not And not the meant that you that you get the detailed reports on all these audits the the assay reports we do get the assay report sure and I and I think we We provided you some of those the inventory of the bars like you described You know as each one of that's that's definitely up to the meant to As they said we audit the work that they do and the records that they keep so that would be that would of course under them If you if you have an assay, but you don't know how many bars or are you don't know whether it applies Which applies to which it seems like you have to have both, you know together and matched up But anyway, I believe we'll follow up on that and ask for some some more details, but If the gentleman from Arizona has no more question, I will go ahead and During the committee