Even if the Fed "lost" some of the gold (which would be a hilarious story), does it really matter? There has to be some liability clause in whatever agreement put the gold in the Fed's hands to begin with- if they lose track of Germany's property (or claim to have, or whatever), they're obligated to pay Germany back for it. Revealing that would be a gigantic embarrassment, sure, but primarily only concerning the American financial system's competence in running vaults. The U.S. budget could handle the payout in dollars, and Germany could take their payment and use it to buy another pile of gold if they like. Contrary to the ideas of the article author, ownership isn't a physical process, so all the speculation as to where some particular collection of element 79 resides should be irrelevant to the economic situation.

1200 tons of gold is worth around 44 Billion, a trivial amount of money as far the US government is worth. So the idea that it would be stolen by the government is ludicrous.

You can't just try to buy 1200 tons of gold and expect to get the current "exchange rate" for all of it. You will be paying massively more as you buy out the cheapest offers.

NASDAQ claims a gold market volume of barely 5 tons at this time. Good luck buying 1200 tons at a decent price.

Edit: Whoops. I meant to reply to your parent.

$44 billion current US dollars worth of gold can back 10 to 100 times that amount of "money" (depending on how far you stretch the definition of money) in a fractional reserve banking system. It's no trivial amount.

That's already built into our understanding of what "$44b" is. If not, then all values should be inflated by 10x, which would keep the $44b at the same ratio of the total pie - which is to say nothing.

No, in fact it is not. To help you understand why, if the US were to switch back to a gold-backed currency and somehow do it relatively seamlessly, it would need to find enough gold to back a money supply of about $7 trillion dollars (or $20+ trillion, depending...). All the gold in the world is currently "worth" less than $7 trillion dollars, and the US would be lucky to land 15% of that, or about 25,000 tonnes. In this scenario, that 1,200 tonnes would be worth $336 billion, and probably a lot more because "seamlessly" is a huge assumption.

That's completely irrelevant. The issue at hand is whether the US is able to pony up 1200 tons of gold, not whether they can back their whole currency base with gold at current exchange rate.

It's relevant to the hypothetical state stealing enormous quantities of gold from other states. They wouldn't do it to give all the citizens fancy necklaces and dental implants. The reason would be to shore up their currency. The economics of gold changes under that hypothetical scenario, and it's the current market price of gold that is completely irrelevant.

Replace "gold" in your statement by any other physical asset (silver, shells, rubies, ...) and you realize that this doesn't make much sense. If the world were to switch to a water-based currency and all other uses for gold would disappear 1200 tons of gold would be worthless

Of course, but it's highly nontrivial for the individual humans who are responsible for it.