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Posted on 04/16/2026 12:30:29 PM PDT by delta7
Mike Maharrey’s latest Money Metals Midweek Memo zeroed in on two big themes with major implications for sound money investors.
First, much of the gold supposedly backing America’s financial credibility may be lower-quality metal that does not meet modern international standards.
Second, the silver market could be heading into even tighter supply conditions as a new disruption tied to China threatens copper production and, by extension, silver output.
The result was an episode that tied together history, monetary policy, and today’s metals markets in a way that made the stakes feel immediate.
Maharrey’s central argument was simple.
Physical metal still matters, and the flaws in the fiat system become easier to see when you look closely at what the United States actually holds in reserve and what is happening in global silver supply chains.
Most of Fort Knox Gold May Be “Non-Standard” Maharrey opened with a colorful analogy, comparing the difference between beer league hockey and the NHL to the difference between lower-purity gold and true investment-grade metal. Gold may be gold, but not all gold is created equal when it comes to reserve quality.
He explained that 24-karat gold is essentially pure, generally .990 fine or higher in the United States. By contrast, 22-karat gold is 91.6% pure, and 14-karat gold is only 58.3% gold.
That matters because while lower-purity gold may work well in jewelry, reserve gold intended for international settlements is expected to meet much stricter standards.
According to Maharrey, that is where the United States has a problem.
Officially, U.S. gold reserves total 8,133.5 metric tons, or about 261.5 million troy ounces, the largest national gold stockpile in the world. About 147.3 million ounces are reportedly stored at Fort Knox, with the rest held at the Denver Mint, the West Point Bullion Depository in New York, and the Federal Reserve vault in New York City.
But much of that metal, especially at Fort Knox, reportedly consists of non-standard bars that would not qualify for use in modern international settlements.
Maharrey noted that the London Bullion Market Association (LBMA) requires a minimum fineness of .995 for acceptable good-delivery bars, with the global market increasingly favoring .999 fine gold.
Based on documents released during a 2011 House Committee on Financial Services hearing, Maharrey said only about 17% of the gold bars at Fort Knox meet that modern standard. He cited a breakdown showing that 64% of the bars fall between .899 and .901 fineness, 2% fall between .9011 and .9154, 17% fall between .9155 and .917, and only the final 17% are .995 or higher.
That would put the average fineness of U.S. gold reserves at .9167, or 91.67% pure. In other words, much of America’s reserve gold is closer to 22-karat gold than the high-purity bullion expected in today’s global market. Maharrey’s point was not that the gold is fake, but that much of it may be illiquid or impractical in an international settlement context without refining.
The Fort Knox Audit Problem The bigger issue, Maharrey argued, is that Americans still do not really know what is in Fort Knox with any confidence. He stressed that U.S. gold holdings have not been properly audited since at least the 1970s.
He dismissed the famous 1974 Fort Knox event as a media spectacle, not a real audit. During that exercise, the Treasury opened only 1 of the depository’s 15 vault compartments for politicians and reporters. Maharrey pointed out that none of the bars shown were matched to serial numbers, assayed for purity, or verified against a full inventory.
He also criticized subsequent Treasury reviews for failing to meet normal accounting standards. In his telling, there is no complete public record of comprehensive assaying, weighing, or transactional history. That last point is critical because even if the gold is physically present, the public still would not know whether some of it has been leased, loaned, or otherwise encumbered.
Maharrey mentioned legislation introduced by Senator Mike Lee, along with a House companion bill from Representative Thomas Massie, that would require a full audit of U.S. gold reserves and an accounting of any transactions involving that gold. The measure would also require non-standard bars to be refined so they meet modern international standards.
Why the U.S. Holds Lower-Purity Gold Maharrey traced the problem back to President Franklin D. Roosevelt and Executive Order 6102, signed on April 5, 1933. That order effectively made most private gold ownership illegal and pushed gold out of private hands and into government control.
Americans who turned in their gold were paid $20.67 per ounce. But Maharrey noted that Roosevelt then revalued gold to $35 per ounce six months later, effectively devaluing the dollar by about 40%.
In his view, this was a pivotal step in allowing the government to expand the money supply beyond what the old gold standard had permitted.
Much of the gold taken in during that period came in the form of circulating U.S. gold coins, which were typically 90% pure. Once private ownership and redemption were curtailed, the government melted those coins into bars.
According to Maharrey, that is why so much of the gold now associated with Fort Knox is lower-purity “coin gold” rather than high-grade bullion.
That history matters because it shows how America’s reserve gold became a relic of the old monetary order. Maharrey argued that the metal composition inside Fort Knox reflects the transition from a gold-backed system, where gold flowed in and out of the banking system, to a fiat system where dollars can be created without hard restraint.
China’s Sulfuric Acid Move Could Hit Silver Supply In the second half of the episode, Maharrey turned to silver and flagged a development he believes could worsen an already tight market. Chinese officials have reportedly indicated they will stop exporting sulfuric acid beginning in May, and the restriction could last through the rest of 2026.
That matters because sulfuric acid is a key input in copper mining. If copper production slows because miners cannot get enough sulfuric acid or face sharply higher costs, silver output could suffer as well. Maharrey emphasized that about 70% of the annual silver mine supply comes as a byproduct of copper production.
He connected the sulfuric acid issue to broader geopolitical disruption involving Iran and shipping constraints through the Strait of Hormuz.
The Middle East produces about one-third of the world’s sulfur, and Maharrey said the resulting squeeze has already sent sulfuric acid prices surging.
In Chile, the world’s top copper producer, prices have reportedly jumped 44% in the past month. Chile also buys about 1 million tons of sulfuric acid from China each year.
Silver Deficits Keep Building Maharrey argued that this new supply threat is landing at exactly the wrong time. Silver demand is already forecast to outstrip supply for a sixth straight year in 2026, driven in part by a projected 20% increase in physical investment demand.
Using preliminary Silver Institute data, he said the market ran a deficit of about 95 million ounces last year, marking the fifth consecutive annual shortfall. Over five years, cumulative deficits are on track to exceed 800 million ounces, roughly equal to an entire year of global mining output.
He also pointed to falling inventories across major silver hubs. London Bullion Market Association vault holdings are down about 40% over the last five years, COMEX registered inventories in the United States are down nearly 70%, and Shanghai inventories have fallen to their lowest level in a decade.
That does not mean the world is out of silver, but it does mean above-ground supplies are being drawn down. Maharrey’s argument was that tighter physical availability eventually forces higher prices as the market tries to draw metal out of private hands.
Why the Episode Matters At its core, this episode argued that physical precious metals still expose the weaknesses of fiat money. America may claim the largest gold reserves in the world, but much of that gold may be lower-quality, under-audited, and not ready for modern international use. At the same time, silver faces another possible supply shock in a market already defined by repeated deficits and shrinking inventories.
That combination made Maharrey’s message especially clear. You can print dollars, but you cannot print gold or silver. And when the financial system grows more fragile, that difference starts to matter very quickly.
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Goldfinger:” Who said anything about stealing the gold?”
Bond: “I beg your pardon. Your plan is brilliant.”
Given all of the Sulphur taken out of crude oil to produce ULSDiesel, how could making H2SO4 in the US be that difficult?
It looks like the US will have to melt down all the old gold bars and make new better gold bars.
We will find out just how much gold at Fort Knox and elsewhere is actually tungsten.
not difficult, but building infrastructure to do that takes time.
I can’t believe Trump has given up on his promise made in Feb. 2025 to visit Ft. Knox personally to see the gold there. And why is the Press not calling him on that promise?
We will get plenty of sulfur from refining Venezuelan oil.
Stupid article.
Gold is super easy to refine, so the worst case scenario is that much of the gold in US reserves is worth 90% of what it would be worth if it was .999 pure.
Meanwhile, there is nowhere near enough gold in ANY nation’s treasury to “back” that nation’s paper currency, so any inadequacy of US gold reserves has zero to do with purity.
Exactly. No one is selling US gold reserves. And our dollar is not pegged to gold. The dollar is more pegged to B2s and F35s and missile subs.
Not really sure what the issue is here. I guess there are still people who think we are “as good as gold.” Look around…no one cares.
I worked for an audit in ‘77 said to be ~10% of the holdings. Bar count by melt number was audited, and random assays were done.
They also did similar audits in ‘76 (I was too young that year) and ‘78, ‘79, maybe beyond (I was off to college for those years).
So the assertion that there were no audits past the ‘74 one is false.
Oh my! A country with $100 trillion I debt and $5 trillion in annual tax revenue worries the goldbugs less than a purity rounding error?
Just another fake scandal to distract from the real scandals.
As for France's gold, they saw how much trouble Germany had getting their gold. Either Germany's gold was waaaaay in the back of the vault behind the Federal Reserve's Christmas decorations or the Fed was playing fractional reserve games with the gold instead of holding the gold bars as individually owned and untouchable items.
If you deposit a twenty dollar bill in a bank, you don't expect the bank to give you the same bill when you withdraw it. In fact, they will likely lend it out. But if you put Grandma's wedding ring in your safe deposit box, you would be very angry if you tried to get it back and you found out they had pried open the box and lent it out.
I believe the Fed's bankers' instinct took over and they started to allow the gold bars to be borrowed and sold short without ever physically leaving the vault. Thus a German gold bar was borrowed by an investor and sold to someone else. The new owner then had the same claim on it as the Germans. Not a problem for fungible items like dollars or shares of stock. It's a problem with individually identified items like a gold bar or Grandma's wedding ring. It works well for the Fed collecting bigger fees than they could for simple vault rent. But let the original owner demand delivery and the feces hits the fan.
The French avoided that issue by selling without delivery so the first name tag on the bars could just be changed: house of cards preserved.
A less suspicious option is that the Fed just hates to lose their rental fees and risked offending the Germans with a multi-year delivery as a warning to everyone else. You can check out, but you can never leave... with your gold.
Gold has never backed the dollar. It’s the output produced that backs the dollar.
Gold has never backed the dollar. It’s the output produced that backs the dollar.
AI:
China is the largest producer in the world, particularly in manufacturing, accounting for approximately 29% of global manufacturing output.
> We will find out just how much gold at Fort Knox and elsewhere is actually tungsten. <
As I’m sure you know, tungsten has a density very close to gold. Awhile back I was reading about a Chinese company that was openly selling gold-plated tungsten bars.
It was for “novelty purposes” their ad said.
Yeah, right.
there is nowhere near enough gold in ANY nation’s treasury to “back” that nation’s paper currency,
This is why China’s goal ( stated in their white papers) is a 40 percent zGold backed currency. BRICS has also stated a 40 percent Gold backing for international settlements.
“So the assertion that there were no audits past the ‘74 one is false.”
Delta7 is just a shill for an ex-con scammer. Not only here but on other sites.
He just got out of FR jail for continued promotion of that scammer after multiple warnings and deletions.
https://freerepublic.com/focus/news/4371234/posts?page=28#28
Why do I imagine higher-quality bars quietly swapped out for lower quality?
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