Budget and Spending

Unresolved Issues Concerning the Disposal of Stockpile Silver

RCED-83-7, Feb 18, 1983

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Comments by the Department of Defense (DOD) and the Federal Emergency Management Agency (FEMA) on an earlier GAO report have raised new issues concerning the disposal of stockpile silver. GAO evaluated the DOD and FEMA positions to determine whether they warranted revising any of the conclusions and recommendations of the earlier report and identified new issues that must be addressed and resolved in reevaluating the need for the stockpile silver.

The Department of Defense Appropriation Act of 1982 suspended the weekly auctions of silver stockpiles pending a redetermination that the silver intended for disposal is excess to stockpile requirements and congressional approval of any proposed disposal method. However, GAO believes that other unresolved disposal issues remain, including: (1) the lack of consideration of defense-related monetary uses of silver; (2) inadequacies in the decisionmaking database relating to legislatively mandated supply factors; (3) the lack of consideration of the estimated cost of alternative sources of silver and the impact of proposed disposal methods on foreign relations; and (4) the viability of various alternative disposal methods, such as bullion coins and convertible bonds backed by silver.

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Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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Recommendations for Executive Action

Recommendation: The Secretary of the Interior should require the Interagency Silver Commodity Committee in its report to Congress to make clear the demand factors considered in redetermining the need for the stockpile silver and provide justification for excluding any of the defense-related monetary uses required by the fiscal year 1982 Defense Appropriations Act.

Agency Affected: Department of the Interior

Status: Closed - Implemented

Comments: Interior has never released the study on the need for stockpile silver. It now appears that the report has been permanently shelved. As of October 1985, there were no proposals for a massive disposal of stockpile silver. If such a proposal resurfaces, GAO may wish to challenge it on the basis of a failure to adequately respond to this recommendation.

Recommendation: The Secretary of the Interior should require the Interagency Silver Commodity Committee in its report to Congress to appropriately qualify those legislatively mandated supply factors that are based on incomplete data.

Agency Affected: Department of the Interior

Status: Closed - Implemented

Comments: Interior has never released the study on the need for stockpile silver. In now appears that the report has been permanently shelved. As of October 1985, there were no proposals for a massive disposal of stockpile silver. If such a proposal resurfaces, GAO may wish to challenge it on the basis of a failure to adequately respond to this recommendation.

Recommendation: The Secretary of the Interior should require the Interagency Silver Commodity Committee in its report to Congress to consider, as required by law: (1) the estimated cost of silver from recycling, domestic stocks, and foreign suppliers during a national emergency; and (2) the impact that any proposed disposal method may have on relations between the United States and its major foreign suppliers.

Agency Affected: Department of the Interior

Status: Closed - Implemented

Comments: Interior has never released the study on the need for stockpile silver. In now appears that the report has been permanently shelved. As of October 1985, there were no proposals for a massive disposal of stockpile silver. If such a proposal resurfaces, GAO may wish to challenge it on the basis of a failure to adequately respond to this recommendation.

Recommendation: The Secretary of the Interior should require the Interagency Silver Commodity Committee in its report to Congress to provide a benefit-cost analysis of the various alternatives to disposing of the stockpile silver, including bullion coins and convertible bonds backed by silver, in support of a recommended disposal method.

Agency Affected: Department of the Interior

Status: Closed - Implemented

Comments: Interior has never released the study on stockpile silver. It now appears that the report has been permanently shelved. As of October 1985, there were no proposals for a massive disposal of stockpile silver. If such a proposal resurfaces, GAO may will to challenge it on the basis of a failure to adequatley respond to this recommendation.