Essentially, Fort Knox is the name of a military complex located in Kentucky, USA. The roots of the base go back so far, even to the American Civil War. The field on which the complex was built was captured by both the Union and Confederation sides. And played a crucial role in the war. When the war ended with a Union victory, they decided to use the field as a military base. From this day on, schools, an airport, military camps, and training sites were built on the site. After decades of development, the complex now has a population of 7,700, and it has kept its critical role and importance to this day.
Fort Knox Bullion Depository
Definitely the most important and popular building in the whole complex is the Bullion Depository. Which became so iconic that people started to use the name Fort Knox to refer to this building. The structure itself holds a massive 4580 metric tons of gold. That weight is equal to the weight of one thousand adult elephants. That means Fort Knox holds over half of the gold reserves of the federal government. Which makes 344 billion dollars in today’s prices. The US Mint Police is responsible for this building’s safety.
The structure has been built as a fort, as we can understand from its name, and has a brutalist architecture. What makes it a fort is the enormous amount of security. There are not many photos of the structure because of this. The outside is covered with razor wires, and the inside is observed by dozens of security cameras and armed guards. And those are nothing compared to real security. It is the safe that is inside the fort. All the precious gold is kept behind the 53-centimeter-thick walls and 18-ton-weight vault. Because the building is so safe, the practice of “as safe as Fort Knox” has been used to this day to mention something that is so safe.
Fort Knox is not only keeping tons of gold but other valuable items too. Such as the original USA Constitution, the Proclamation of Independence, the Gutenberg Bible, etc. But the main reason to build the fort is to keep the precious gold out of shore cities. The government thought that keeping gold reserves on the shores of the country would make them an open target for a potential invasion. So, the value we gave to the gold is centuries old, and the institution to protect it is as old as the gold itself.
Legacy of Fort Knox
In modern days, the financial system has become so complicated that physical gold is no longer used in international transactions. I already explained how that works and told a story about the ancient roots of this practice. With the evolution of derivative markets, gold-backed assets became more popular than physical gold. Even after all of this, we still imagine a piece of gold bar when we are asked to imagine “gold.” That’s the reason why we want to feel the physical form of gold and be sure about its safety. Even if we’re not going to see it ever. The reason for this phenomenon could be our sense of wealth and its link with gold.
When we mention the USA, conspiracy theories kick in. Structure’s mystery and closed door to the public are the main reasons for conspiracies. Over the years, people have accused the government of stealing all the gold inside Fort Knox. People thought they were keeping the public out of the vault just because there was no gold at all. Suspicions spread so fast that many people started to believe this story. In time, the government opened the vault a total of three times. In 1974, dozens of representatives and press officials entered the vault for the first time. And they inspected the gold bullions to see if they were real on the live stream. After this event, most of the conspiracy theories have been wiped out.
Modern Financial Systems
Would you like to think of an imaginary scenario and find out what would happen as a result? Let’s say the US government took all the gold. Don’t forget, we’re talking about billions of dollars worth of gold here, and everybody thinks the gold is still lying in there. Would there be a difference in the gold-backed asset market? So, when you buy a gold certificate, it gives you a guarantee to own some amount of gold. Simply put, the value of the piece of paper that you hold in your hand is linked to the value of physical gold. There has been no problem since here. But when you want to cash back your promised gold, in our imaginary scenario, you wouldn’t get any gold. Because there is none. Unless you want to sell the paper you have, you can easily find someone to buy it.
This story gives you an example to better understand modern financial systems. Who knows, maybe there is no real gold in Fort Knox and the other vaults of the central banks. And maybe there never were. What do you think?
