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U.S. Rep. Ron Paul , R-Tex., plans to introduce a new bill next year that will allow for an audit of US gold reserves, he told Kitco News in an exclusive interview.

Paul dropped the news in the interview, indicating that the bill still does not have an official name yet but will be unveiled at the start of the new U.S. Congress.

If there was no question about the gold being there, you think they would be anxious to prove gold is there, he said of the Federal Reserve.

This is not the first time the congressman has made his pitch. In the early 1980s when I was on the gold commission, I asked them to recommend to the Congress that they audit the gold reserves — we had 17 members of the commission and 15 voted not to the audit, said Paul. I think there was only one decent audit done 50 years ago, he said.

Though Paul did not say whether there is any truth to claims that there is no gold in Fort Knox or the New York Federal Reserve, he said, I think it is a possibility.

If we ever get around to deciding we should use gold in relationship to our currency we ought to know how much is there, said Paul. Our Federal Reserve admits to nothing and they should prove all the gold is there. There is a reason to be suspicious and even if you are not suspicious why wouldn’t you have an audit? he said.

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The gold audit follows his crusade last year looking to audit the Federal Reserve, which he says is the chief culprit behind the economic crisis.

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I don’t think the Federal Reserve should exist — it would be best for congress to exert their responsibilities and that is find out what they are doing’ said Paul. "It is an ominous amount of power they have to create money out of thin air and being the reserve currency of the world and be able to finance runaway spending whether it is for welfare or warfare; it seems so strange that we have been so complacent not to even look at the books. If we knew exactly what they were doing, who they were taking care of, there would be a growing momentum to reassess the whole system, he told Kitco News.

Before the creation of the Federal Reserve however, the US saw 16 recessions from 1850 to 1910; they averaged 22 months long. During this time, the U.S. was in recession 60 out of 91 months. Many would argue that the severity of these recessions led to the creation of the Federal Reserve System.

I think they would be exaggerating what happened before 1913, Paul responds. We had some panics they were usually short and there were no long depressions, he said. The Fed creates the bubbles and they are much worse since 1913, if you think of the size of the government and the valuation of the dollar, we are down to about a 2 cent dollar from the 1913 dollar.

Paul said everyone accuses him of wanting the gold standard but he said he doesn’t accept that. I accept the idea of a gold coin standard and I think we can do much better than what we had," he said. "There was a lot that they did pre-Fed that was not exactly right but we never had a disastrous loss of purchasing power long-term, we didn’t have a great depression, we didn’t have the 1970s with stagflation and we wouldn’t have what we have right now.

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August 31, 2010

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