@Metal-Brain saidThe Fed holds Gold Certicates held by Treasury. Treasury can request the Fed to return those Certificates and reissue new ones at whatever value they think appropriate. This has nothing to do with market value/the spot price etc. By revaluing Gold at a higher price allows the Fed to give Treasury the difference in value which could pay down the national debt by enough so that debt can be reduced from its current level of around 120% of gdp to a much more manageable level say of around 70% of gdp. Because none of this money is released into the economy, some say it will not be inflationary. However what this does for the Fed is unclear. How does the increased value of their Gold Certificate holdings influence how they manage their balance sheet and ultimately things like interest rates, which may prove to be very inflationary.
How do you revalue gold to 20K? First establish it is possible.
Anyhow its above my pay grade, but there seems a lot of chatter around this prospect.
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@kmax87 saidAs you probaly know the treasury can't fix the price of Gold...
Treasury could then raise enough capital to retire enough T Bills and reduce overall debt to around 70% of GDP, which is very manageable for the US economy.
Where's the downside?
If they would inflate the $ to achieve that (by setting the $-price to it, resp. setting a fixed vaule {buying for less seelling at hig}) you would probably be VERY unhappy.
@kmax87 said"This has nothing to do with market value/the spot price etc."
The Fed holds Gold Certicates held by Treasury. Treasury can request the Fed to return those Certificates and reissue new ones at whatever value they think appropriate. This has nothing to do with market value/the spot price etc. By revaluing Gold at a higher price allows the Fed to give Treasury the difference in value which could pay down the national debt by enough so that ...[text shortened]... flationary.
Anyhow its above my pay grade, but there seems a lot of chatter around this prospect.
That is the problem. It will reduce demand which will reduce the price on the open market. It would be like stretching a rubber band and it breaks and snaps you in the face.
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@kmax87 saidI could have 200 gold coins in my gold box right now. Worth $690K, they would be worth 3,460,000 overnight. A LOT of people would be millionaires overnight. How would this figure in to our economy, as you speak only to US debt and TBills?
Treasury could then raise enough capital to retire enough T Bills and reduce overall debt to around 70% of GDP, which is very manageable for the US economy.
Where's the downside?
Paul Martin above says it best. A line on a spread sheet. You could say maybe, like Wildgrass often suggests (if losers get to keep the money that they would have paid their tuitions with, they would SPEND it and make the economy roar!) that when all the new millionaires get up that morning, they will all go out and spend their millions.**
Something missing here, Kmax
**. When all the stores, car dealers, yacht salesmen see them coming, they will raise their prices to the sky!!!
@Ponderable saidhttps://www.federalreserve.gov/econres/notes/feds-notes/official-reserve-revaluations-the-international-experience-20250801.html
As you probaly know the treasury can't fix the price of Gold...
If they would inflate the $ to achieve that (by setting the $-price to it, resp. setting a fixed vaule {buying for less seelling at hig}) you would probably be VERY unhappy.
This from the introduction to the article on the Fed website, the rationale sparking much of the current speculation:-
August 01, 2025
Official Reserve Revaluations: The International Experience
Colin Weiss*
" With public debt at high levels, some governments have begun to explore financing additional expenditures without raising taxes while also not increasing public debt outstanding. One possibility is using proceeds from valuation gains on gold reserves, as has been floated in the U.S. and Belgium recently.1 For the U.S., this would involve revaluing the government's 261.5 million troy ounces in gold reserves—the largest gold reserves globally— from a statutory price of $42.22 per troy ounce to current market prices, which stand around $3300 per troy ounce.2"
The article continues spelling out 3 distinct scenarios
Its not clear who does the revaluation. But it is clear that the Gold is an asset held by Treasury
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@AverageJoe1 saidI don't think this changes the market value of Gold (edit: if the revaluation is way above market value) but is more an accounting strategy between Treasury and the Fed. I don't think anyone outside of this closed loop gets a look in.
I could have 200 gold coins in my gold box right now. Worth $690K, they would be worth 3,460,000 overnight. A LOT of people would be millionaires overnight. How would this figure in to our economy, as you speak only to US debt and TBills?
Paul Martin above says it best. A line on a spread sheet. You could say maybe, like Wildgrass often suggests (if losers get to ...[text shortened]... the stores, car dealers, yacht salesmen see them coming, they will raise their prices to the sky!!!
@kmax87 saidIf this accounting trick between the treasury and the Fed does not affect the open market price of gold , how is this different from simply declaring the debt to have been paid off with imaginary bitcoins?
I don't think this changes the market value of Gold (edit: if the revaluation is way above market value) but is more an accounting strategy between Treasury and the Fed. I don't think anyone outside of this closed loop gets a look in.
@AverageJoe1 saidThe price will rise not the value, so the 3.4 M will have the same value as the 690K today. BUt think about people without Gold, a sndaich will be 100$ and probably their eraning won't rise at the same speed.
I could have 200 gold coins in my gold box right now. Worth $690K, they would be worth 3,460,000 overnight. A LOT of people would be millionaires overnight. How would this figure in to our economy, as you speak only to US debt and TBills?
Paul Martin above says it best. A line on a spread sheet. You could say maybe, like Wildgrass often suggests (if losers get to ...[text shortened]... the stores, car dealers, yacht salesmen see them coming, they will raise their prices to the sky!!!
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@kmax87 saidGold is an asset.
https://www.federalreserve.gov/econres/notes/feds-notes/official-reserve-revaluations-the-international-experience-20250801.html
This from the introduction to the article on the Fed website, the rationale sparking much of the current speculation:-
August 01, 2025
Official Reserve Revaluations: The International Experience
Colin Weiss*
" With public debt at hi ...[text shortened]...
Its not clear who does the revaluation. But it is clear that the Gold is an asset held by Treasury
And there is a merket price. If the Treasury wold just claim the value, it would directly devalue the $. Since NObody wold bzuy Gold from the terasury at that price (and the treasuyr would not ay that price) so it is just a senseless experiment.
China, Russia, India all have a lot of Gld and to raise the Gold price to the suggested level the terasury would need to buy all that Gold, and if they began in earnest to buy lots of Gold, they would need to lend the money, and people would charge interest,...
And if it is "just a trick" to increase the state budget's abilkty to lend more then it will fall back as a further wekaning of the $, which might sound like a good idea in terms of expeort, but will of course write a BIG inflation on the US poulation. And most probably in interest payments to international creditors (if there will be any, when they see tricks being played against them)
