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.
About the author
