There has been some talk recently about whether the US should sell the gold it has in Fort Knox, as a way of offsetting the budget deficit.
There are reasons to suspect that the gold in Fort Knox may not be there. GATA has shown evidence of a very active program of the government leasing gold to so-called “bullion banks,” as a way of generating a return on an otherwise stagnant asset. However, in spite of that, let’s assume for the moment that the gold either is there, or can be readily recovered.
Governments and central banks have a history of holding gold, for good reasons. In World War II, a number of countries that the US government did business with would not accept dollars in payment, nor would the US accept their currencies. Many war supplies could only be purchased with gold; it was a major medium of exchange during a period of shortages and substantial uncertainty. In that sense, it is a strategic asset.