It’s been a great time to be a goldbug. Whether investors are bullish on the precious metal as a financial asset because they’re skeptical of fiat currency, worried about a broader economic collapse, or have other motivations, the spot price of gold has climbed more than 40% in the past 12 months, doubling the S&P 500’s gain during that span. No one officially holds more of the yellow metal than the U.S. government, however, and a simple accounting change could result in a roughly $750 billion windfall on the country’s balance sheet.
According to the government’s financial statements, the U.S. owns about 261.6 million troy ounces, or almost 8,200 metric tons, of gold. Those reserves are currently valued at a set rate of $42.22 an ounce, or around where the metal’s price sat in the early 1970s, producing a book value of $11 billion. At gold’s current spot price of about $2,920 per ounce, however, the market value of those holdings is nearly $765 billion.
There’s debate about whether that bookkeeping change would have any true impact. Nonetheless, as Gillian Tett wrote in the Financial Times last week, speculation about such a move has picked up as new Treasury Secretary Scott Bessent tries to implement President Donald Trump’s economic vision for America without spooking markets.
“We’re going to monetize the asset side of the U.S. balance sheet for the American people,” Bessent said last Monday, when Trump signed an executive order calling for the creation of a sovereign wealth fund. “We’re going to put the assets to work, and I think it’s going to be very exciting.”
The Treasury Department did not respond to a request for comment, but the definition of monetization means changing something into money, or at least expressing the asset in terms of a currency. So, what would an additional $750 billion do for the U.S government? Not much, said Jay Hatfield, the CEO of Infrastructure Capital Advisors, which manages ETFs and several hedge funds.
For the mark-to-market change to have any impact, he said, the U.S. would presumably need to sell off some of its gold reserves for cash. It would be hard for the Treasury to do that without tanking the market for the precious metal.
“It’s going to be like Armageddon if they try to dump any significant amount of gold,” Hatfield said.
Rob Haworth, a senior investment strategist and commodities researcher at U.S. Bank Wealth Management, agrees such a sale would be difficult. Central bank buying, particularly by China, has helped drive gold’s surge since 2022. Massive sales by the U.S. would likely have the opposite effect.
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Still, talk of monetizing America’s gold reserves speaks to a difficult needle Bessent is trying to thread: addressing the country’s burgeoning deficit while funding Trump’s fiscal ambitions. House Republicans are reportedly considering a tax and spending bill that would add $6.5 trillion to the federal debt, causing the growth of the country’s fiscal hole to double, according to the Committee for a Responsible Federal Budget. The government’s interest payments already exceed spending on Medicare and defense.
According to David Teeters, a professor at IESE Business School, a $750 billion mark-to-market gain would deleverage the government’s balance sheet. In other words, the country’s borrowing as a percentage of its total assets would decrease, potentially giving Bessent some wiggle room.
However, the Treasury secretary is also juggling contradictory goals as the Trump administration calls for a weaker dollar but simultaneously looks to bolster the greenback’s status as the world’s reserve currency. Tariffs, meanwhile, should not help on either front.
“Something has to give,” Teeters, a former managing director in capital markets groups at both BNP Paribas and Barclays, wrote in a recent blog post.
A race among nations to devalue their currencies doesn’t seem very appealing.
“One alternative is a coordinated reset of the global monetary system that deleverages the system by devaluing all currencies against a neutral reserve asset,” Teeters said. “Alternatives include either gold, which has served this function for millennia, or millennials’ newfound preference for crypto: Bitcoin. Both are likely to benefit in 2025.”
The former sounds like good news for goldbugs.
This story was originally featured on Fortune.com
