MENU

Why the Trump-Musk Tour of Fort Knox Matters

By Walter Donway

March 29, 2025

SUBSCRIBE TO SAVVY STREET (It's Free)

 
The feature image was generated by the author using AI.
 

We may be living in a real-life James Bond thriller. The president of the United States and the world’s richest man are making an almost unprecedented trip to Fort Knox to see if all that gold is really still there—and, if so, how much. Two of the world’s mega banks, including J. P. Morgan, seemingly with Jamie Dimon personally leading, are rushing thousands of gold bars of their gold, stored in London, to New York in unidentified passenger planes. The world’s villains—China, Russia, and Iran—are now accumulating some three-fourths of the world’s annually mined gold to create a new currency to wrest economic hegemony from the U.S. dollar. In the process, Beijing and Moscow, not New York and London, now drive daily gold price changes.

Today, the world economic landscape is flying all the red flags of past crises that have driven a rush for gold. It is far-fetched to argue that recent interconnected events in the global gold arena are unrelated.

As the sole universally recognized medium of exchange and standard of value, gold (along with its sidekick, silver) has in a sense anchored human civilizations for millennia. Gold cannot be printed or otherwise created out of thin air by governments and other counterfeiters, making it the preferred store of wealth in times of economic uncertainty. This means, of course, that in most centuries, eras, and countries, when governments have piled up excessive debt (mostly to fight wars), expanded (inflated) their money supply, or threatened the chaos of dictatorship and war, individuals and institutions have hoarded gold and hugged it closer, seeking from the tumult a safe haven for their savings, their wealth, their earnings.

Boy, does it work! During the 19th century, the United States maintained a fully convertible gold standard (as did the Founding Fathers). At the century’s close, prices of goods and services in gold were lower than at the beginning because the gold supply—the money supply—grew at a snail’s pace while technology and other inventions, liberated from government controls, poured forth goods and services. This natural deflation increased the purchasing power of money (then, gold), so a gold dollar bought more at the end of the century than at its beginning.

Since the United States fully abandoned the gold standard in 1971, the purchasing power of a paper dollar has lost approximately 87% of its value. These are official figures; other sources argue that the dollar has lost over 96% of its value since 1913, when the Federal Reserve was established.

Today, the world economic landscape is flying all the red flags of past crises that have driven a rush for gold: the logic of welfare-state-and-other government spending for electoral politics, the consequent record deficits, the enabling by Federal inflation of the money supply, and what we now dub “escalating geopolitical tensions”—war in Eastern Europe and the Middle East.

That makes it seem far-fetched to argue that recent interconnected events in the global gold arena are unrelated. As they used to say in Chicago: Once, it’s happenstance; twice, it’s coincidence; three times, it’s enemy action.

 

Gold Prices

Gold prices in 2024 reached record highs on 40 separate days and 12 times thus far in 2025,. This, of course, is in nominal terms—U.S. dollars. Certainly, demand has come from central banks as well as investors. Faced with COVID-19 lockdowns, the Federal Reserve panicked and turned to its usual nostrum, inflating. Implementing four rounds of “quantitative easing,” it more than doubled the U.S. money supply in less than two years. This unprecedented creation of fiat money expansion (i.e., inflating) quickly led to soaring consumer price levels—a 40-year high of 9%. But where did that doubling of the money supply play out, as economic logic would dictate, in a doubling of prices? During the same years, the three leading U.S. stock indices—the Dow Jones, the S&P 500, and Nasdaq—taken together nearly doubled. The massive injection of fiat dollars into the economy heightened concerns of America’s international creditors (at the end of 2024, Japan, China, and the U.K. in that order) about being paid back in devalued dollars or having to deal with an actual U.S. currency devaluation. It prompted both institutional and retail investors to run to gold as a store of value.

 

The BRICS-Plus

The BRICS-Plus countries have been heaping up their gold reserves. This strategy aligns with continuing discussions about creating a new reserve currency backed by a basket of their currencies (in turn backed by gold).

The BRICS-Plus countries—Brazil, Russia, India, China, South Africa, and others—have been heaping up their gold reserves. Collectively, they now hold more than 20% of the world’s gold reserves, with Russia and China leading the accumulation. After years during which U.S. and British purchases drove the gold price, purchases during 2024 by the Chinese government, Chinese businesses, and the Chinese population—actively encouraged by the communist government—drove daily fluctuations in the world gold price. This strategy aligns with continuing discussions among BRICS nations about creating a new reserve currency backed by a basket of their currencies (in turn backed by gold). The declared intent is to reduce world reliance on the U.S. dollar and enhance financial sovereignty. The real agenda is to dethrone the dollar as the world’s reserve currency, clip America’s wings in international finance, and pull the teeth from threats of U.S. and NATO “sanctions” involving access to international banking and other financial systems.

At the BRICS summit held in Kazan, Russia, member countries, along with representatives from 36 nations who want to join, convened to discuss how to diminish the dominance of the U.S. dollar in global trade. The summit highlighted the group’s projected economic growth of 3.8% for 2024/25, surpassing global averages. Proposals included a BRICS grain exchange to stabilize food prices and a cross-border payment system to facilitate trade in local currencies. Brazilian President Lula da Silva called for alternative payment methods, with a New Development Bank as a viable option to traditional financial entities like the IMF. Russian President Vladimir Putin suggested creating a BRICS investment platform to boost mutual investments and support the Global South. BRICS bloc expansion to Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates, among others, reflects urgency of those nations to increase financial sovereignty—that is, reduce dependence on the U.S. dollar.

 

J. P. Morgan

No sitting president has visited Fort Knox since Franklin D. Roosevelt’s era. Persistent rumors and skepticism challenge the existence and quantity of gold stored there.

J. P. Morgan and a few other leading New York banks have resorted to shipping thousands of their gold bars from London to New York hidden on unidentified passenger planes. These huge transfers by Morgan bring home $4 billion of its gold bullion just ahead of potential tariffs on imports from Europe. If tariffs are enacted, banks (and everyone else in America) would face increased costs on all gold imported. Expectations of such expenses already have led to a rare price divergence between gold in European and U.S. markets, with U.S. prices reflecting the anticipated cost implications of the impending tariffs. (The logistical challenges of moving vast quantities of gold also highlight the complexities of global bullion markets.)

 

Fort Knox

Fort Knox is in the news with “high-profile” figures, chiefly President Trump and Elon Musk, expressing intentions to go in person to verify the U.S. gold reserves. Fort Knox is officially reported to hold some 147.3 million ounces of gold, accounting for about half of the U.S. Treasury’s total gold reserves. Notably, no sitting president has visited Fort Knox since Franklin D. Roosevelt’s era. Persistent rumors and skepticism, particularly in conservative circles, challenge the existence and quantity of gold stored there. The planned VIP visits are billed as addressing these concerns and enhancing transparency regarding the nation’s gold holdings. Trump, February 25, 2025: “We’re actually going to Fort Knox to see if the gold is there. Because maybe somebody stole the gold. Tons of gold.” Musk was low-key: “It would be cool to do a live video walkthrough of Fort Knox!”

 

A Reevaluation of Gold’s Global Role?

In combination, the events have ignited rumors about a possible shift back to a gold-backed currency system, probably not of the 19th century but the post-WWII Bretton Woods era gold-exchange standard. No, there is no official move by the United States to reinstate the gold standard. At this juncture that would nuke the international financial system. Nevertheless, the scope, volatility, and urgency of diverse “developments” and active initiatives now unfolding on the international gold scene suggest—let us say—a “reevaluation of gold’s role in the global monetary system.”

That euphemism—for it is one—glosses over the stark reality of issues in the historical role of gold. For instance? Nations preparing for war, offensive or defensive, historically have virtually always built up “war chests” of gold. During World War I and World War II, the United Kingdom depleted its long-accumulated national gold reserve to finance military expenditures. By 1947, the United States had accumulated 70% of the world’s gold reserves, while the United Kingdom had gone from the world’s largest creditor to its largest debtor, having sold off most of its gold (and dollar reserves) to pay for the wars. Precedents like this that litter centuries of history raise questions about the deeper drivers of soaring gold prices and accumulation of huge gold reserves by China, Russia, and Iran.

There is no official move by the United States to reinstate the gold standard, but Trump has suggested that it would be beneficial for the economy. No other recent president has raised that idea.

Again, not least, these developments and events have launched rumors—as well as plenty of think-tank discussion—about a possible shift back to America’s gold-backed currency. At this time, it sounds like “just talk”: Trump has expressed positive sentiments about the gold standard. He suggested that returning to a gold-backed currency would be beneficial for the economy. It is safe to say, no other recent president has raised that idea.

But others have. In 2023, the “Gold Standard Restoration Act” (H.R.2435) was introduced in Congress, aiming to define the U.S. dollar in terms of a fixed weight of gold. President Trump has not endorsed this bill—nor dismissed it. It is cooling its heels in the House Financial Services Committee. But given the “Hollywood Hills-dry” landscape of gold that we have discussed, a couple of sentences from the president could ignite the conflagration.

 

 

(Visited 169 times, 1 visits today)