" Fears over Treasury losing control of gold left in its vaults"

Relax tho', my fellow Americans. This is the British Treasury. The U.S. Treasury has certainly not done something stupid like this.

"As Gordon Brown prepares for a grilling in the Commons over his fire-sale auction of Britain's gold at the bottom of the market, concern is mounting that the Treasury may have lost control over the small amount still left in its vaults.

Peter Hambro, head of Britain's largest pure gold mining company, said he believed the Bank of England may have leased out its bullion to earn extra yield.

"The real risk is that the Treasury has lent out the remainder of the gold. It is very important to know whether the bank's gold lending is on a secured basis," he said. The concern is that counter-parties could default in a crisis such as the LTCM-Ashanti affair in 1998.

"The whole point of gold is that it's not somebody else's paper currency. It's the stuff that keeps you alive when everything else goes wrong," he said.

Central banks around the world have routinely lent out gold over the years to bullion banks such as Goldman Sachs and JP Morgan. The IMF last year questioned if they had lent out more gold than publicly revealed, a situation that would leave the market a large overhang of "short" positions. The Treasury said last night that it would look into any possible gold loans.

With gold now trading at $690 an ounce, Mr Brown's decision to break ranks with the US, Japan, France, and Germany by selling off 395 tonnes of gold has cost taxpayers more than £2bn.
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In a move that astonished dealers, Mr Brown insisted on selling the gold in open auctions. The first sale drove the price down to $254, the low-point of an 18-year slide. There were 17 auctions between July 1999 and March 2002 yielding an average of $274.9 an ounce.

Ross Norman, director of TheBullionDesk.com, said the reason for the sales was to support the fledgling euro. The proceeds were switched into 40pc euros, 40pc dollars, and 20pc yen. "His motives were political, but it was carried out in an incredibly foolish way, just as the market was turning up."

Here's a short list of "takeaways" from this article:

(1) No one really knows if the Bank of England owns any gold at all any longer.

(2) Gordon Brown sold gold "in the open market" because the Treasury was trying to drive gold prices down further -- perhaps simply to "support the fledgling euro", and perhaps not.

(3) Gold prices have gone up strongly since then, indicating that Central Banks the world over have been either unable or unwilling to sell gold in the past couple years.

(4) Groups like GATA have a long history of documenting and accusing the U.S. of just this the same "shorting of the Treasury" that England is now inquiring into.

(5) The U.S. is clearly unable to support the Dollar any longer.

And I suppose that it undoubtedly bears repeating:

(6) "The whole point of gold is that it's not somebody else's paper currency. It's the stuff that keeps you alive when everything else goes wrong"