The first thing I thought of as a reason for the low value is what would happen if it came onto the market. If in some incredible scenario, the US government decided to clear its vaults and offer 9,000 tons of gold for sale, that would have on hell of an effect on the gold price generally. So maybe that's part of the thinking.
But this isn't a sophisticated or knowledgeable approach. There has to be some other reason. And it's not like the value is being touted as a price that you could turn up in Kentucky or Manhattan and offer to pay before carrying off your gold bars in a taxi.
So, if it's not market forces, I think the next candidate is the law. The government itself gives the gold mountain a value. And this is how it looks in the United States Code - specifically Title 31 ( Money and Finance), Subtitle IV (Money), Chapter 51 (Coins and Currency), Subchapter II (General authority). Go here to Section 5117(a-b), and this is what you get:
"(a) All right, title, and interest, and every claim of the Board of Governors of the Federal Reserve System, a Federal reserve bank, and a Federal reserve agent, in and to gold is transferred to and vests in the United States Government to be held in the Treasury. Payment for the transferred gold is made by crediting equivalent amounts in dollars in accounts established in the Treasury under the 15th paragraph of section 16 of the Federal Reserve Act (12 U.S.C. 467). Gold not in the possession of the Government shall be held in custody for the Government and delivered on the order of the Secretary of the Treasury. The Board of Governors, Federal reserve banks, and Federal reserve agents shall give instructions and take action necessary to ensure that the gold is so held and delivered.
(b) The Secretary shall issue gold certificates against gold transferred under subsection (a) of this section. The Secretary may issue gold certificates against other gold held in the Treasury. The Secretary may prescribe the form and denominations of the certificates. The amount of outstanding certificates may be not more than the value (for the purpose of issuing those certificates, of 42 and two-ninths dollars a fine troy ounce) of the gold held against gold certificates. The Secretary shall hold gold in the Treasury equal to the required dollar amount as security for gold certificates issued after January 29, 1934."
What does this mean? This means that $42.2222 is the par value of gold, by law. The Treasury has to give this figure, whether it wants to or not. No matter how much it undervalues the stash. As Section 5010 makes clear:
"The standard value of gold is set at $42.2222 per fine troy ounce, as mandated by Public Law 93-110."
In fact, this has been the value of government gold since October 18 1973 when the dollar was devalued against gold from $38 per fine ounce. And that followed an earlier devaluation, in May 1972, when the $38 figure superseded the previous $35 per troy ounce. Printing money was the name of the game.
Since then, the figure has stayed the same. On October 29, 1974 - which some are delighted to note was the the 45th anniversary of the stock market crash that intimidate the great depression of the 1930s - the United States began the final steps to abandon the convertibility of currency into gold, making any further adjustments seemingly pointless. And since only Congress can officially change the gold value of the dollar, that's not going to happen too soon.
So, all in all, $42.2222 is a meaningless figure. It's of no real interest to anyone but the guys at the Treasury's agency which write the reports for Mr Coker to read.