	Gold Reserves of the United States

The holdings of gold reserves of the United States are presented in various  financial reports, including the United States Mint’s (Mint) Schedule of  Custodial Deep Storage Gold and Silver Reserves (Mint’s Custodial  Schedule), the Mint’s financial statements, and Treasury’s departmentwide  financial statements. As of September 30, 2010, most, or approximately 95  percent, of the reported gold reserves of the United States were in the  custody of the Mint. The gold reserves in the custody of the Mint are  comprised of deep storage and working stock gold. Deep storage gold,  which consists primarily of gold bars, represented nearly all of the gold  reserves in the custody of the Mint and was maintained in three locations:  the United States Bullion Depository at Fort Knox, Kentucky; the Mint at  Denver, Colorado; and the Mint at West Point, New York. Working stock— which consists of bars, blanks, unsold coins, and condemned coins— represented about 1 percent of the reported gold reserves in the custody  of the Mint and can be used as the raw material for minting coins. The  remaining reported holdings of gold reserves of the United States were in  the custody of the Federal Reserve Bank of New York. Past and Current Audit Efforts Regarding Gold Reserves of the United States

In 1974, in response to congressional interest and in conjunction with the  Mint, GAO assisted in the planning and observed the inventory of gold  reserves of the United States maintained by the United States Bullion  Depository at Fort Knox. GAO selected 3 of the 13 compartments at this  depository to be audited. The audit procedures included observing and  participating in a physical inventory of the entire contents of the three  compartments. GAO did not report any differences between the gold  stored in these compartments and the Fort Knox depository’s records. In  addition, GAO’s procedures included observing the assaying of a sample of  gold bars. The results of the assays indicated that the recorded finenesses  were within the tolerances the Mint established. In connection with this audit, GAO recommended that the Secretary of the  Treasury request the Director of the Mint to annually perform a cyclical  inventory of its gold holdings to ensure that the gold holdings in all  compartments would be inventoried over a specified period of years. Acting on this recommendation, Treasury established the Committee for  Continuing Audits of United States Government-owned Gold (Committee  for Continuing Audits) in 1975 to oversee and provide guidelines and  general direction for continuing audits. The objectives of the continuing  audits were to verify the accuracy of the inventory of gold and the  adequacy of related accounting records and internal controls in  accordance with Treasury audit policies. Independent Public Accountants’ Audits Covering Gold Reserves in the Custody of the Federal Reserve Bank of New York and the Mint

The gold reserves of the United States on Treasury’s departmentwide  financial statements consist of the gold reserves in the custody of the Mint  and those in the custody of the Federal Reserve Bank of New York. Requirements of H.R. 1495

H.R. 1495 provides for the Secretary of the Treasury to conduct and  complete a full assay, inventory, and audit of gold reserves of the United  States and an analysis of the sufficiency of the measures taken for the  security of such reserves. In considering the provisions of H.R. 1495, it will  be important to consider the cost, benefit, and timing of actions needed to  implement the proposed requirements. H.R. 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. Nevertheless, GAO would be capable of carrying out the required review  of the results of the Secretary of the Treasury’s actions called for by the  bill, should it be enacted. GAO’s review would include visits to the  facilities at which the gold reserves of the United States are held to  selectively observe the inventorying and auditing of the gold reserves and  examinations of various documentation supporting the required assay,  inventory, and audit. H.R. 1495 also provides for GAO to prepare and transmit to the Congress,  not later than 9 months after enactment of the act, a report of GAO’s  findings from such review together with the results of the assay, inventory,  audit, and analysis conducted by the Secretary of the Treasury.
Why GAO Did This Study

This testimony discusses H.R. 1495, the Gold Reserve Transparency Act of 2011. This proposed legislation, which was recently referred to the Subcommittee on Domestic Monetary Policy and Technology, House Committee on Financial Services, provides for an audit of the gold reserves of the United States. Specifically, the bill calls for the Secretary of the Treasury to conduct and complete, not later than 6 months after passage of the act, a full assay, inventory, and audit of gold reserves of the United States at the place or places where such reserves are kept, together with an analysis of the sufficiency of the measures taken for the security of such reserves. The bill also calls for the Government Accountability Office (GAO) to review the results of such assay, inventory, audit, and analysis and, not later than 9 months after passage of the act, prepare and transmit to the Congress a report of GAO's findings together with the results of the work performed by the Secretary of the Treasury. This testimony focuses on (1) the reported holdings of gold reserves of the United States as of September 30, 2010; (2) past and current audit efforts regarding gold reserves of the United States, including those of the Department of the Treasury's (Treasury) Office of Inspector General (OIG); and (3) the requirements of H.R. 1495.

What GAO Found

The holdings of gold reserves of the United States are presented in various financial reports, including the United States Mint's (Mint) Schedule of Custodial Deep Storage Gold and Silver Reserves (Mint's Custodial Schedule), the Mint's financial statements, and Treasury's departmentwide financial statements. As of September 30, 2010, most, or approximately 95 percent, of the reported gold reserves of the United States were in the custody of the Mint. The gold reserves in the custody of the Mint are comprised of deep storage and working stock gold. Deep storage gold, which consists primarily of gold bars, represented nearly all of the gold reserves in the custody of the Mint and was maintained in three locations: the United States Bullion Depository at Fort Knox, Kentucky; the Mint at Denver, Colorado; and the Mint at West Point, New York. Working stock--which consists of bars, blanks, unsold coins, and condemned coins--represented about 1 percent of the reported gold reserves in the custody of the Mint and can be used as the raw material for minting coins. The remaining reported holdings of gold reserves of the United States 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 gold reserves of the United States maintained by the United States Bullion Depository at Fort Knox. GAO selected 3 of the 13 compartments at this depository to be audited. The audit procedures included observing and participating in a physical inventory of the entire contents of the three compartments. GAO did not report any differences between the gold stored in these compartments and the Fort Knox depository's records. In addition, GAO's procedures included observing the assaying of a sample of gold bars. The results of the assays indicated that the recorded finenesses were within the tolerances the Mint established. In connection with this audit, GAO recommended that the Secretary of the Treasury request the Director of the Mint to annually perform a cyclical inventory of its gold holdings to ensure that the gold holdings in all compartments would be inventoried over a specified period of years. Acting on this recommendation, Treasury established the Committee for Continuing Audits of United States Government-owned Gold (Committee for Continuing Audits) in 1975 to oversee and provide guidelines and general direction for continuing audits.5 The objectives of the continuing audits were to verify the accuracy of the inventory of gold and the adequacy of related accounting records and internal controls in accordance with Treasury audit policies. H.R. 1495 provides for the Secretary of the Treasury to conduct and complete a full assay, inventory, and audit of gold reserves of the United States and an analysis of the sufficiency of the measures taken for the security of such reserves. In considering the provisions of H.R. 1495, it will be important to consider the cost, benefit, and timing of actions needed to implement the proposed requirements. H.R. 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. Nevertheless, GAO would be capable of carrying out the required review of the results of the Secretary of the Treasury's actions called for by the bill, should it be enacted. GAO's review would include visits to the facilities at which the gold reserves of the United States are held to selectively observe the inventorying and auditing of the gold reserves and xaminations of various documentation supporting the required assay, inventory, and audit.