Will Trump Revalue US Treasury’s 8,100 Tonnes of Gold?
Gold prices have soared to unprecedented levels in recent years amidst geopolitical upheaval, with investors flocking towards this ‘safe haven’ asset and central bank purchases surging. However, the precious metal market might soon undergo its most significant transformation in over fifty years as reports suggest Donald Trump is contemplating a revaluation of the United States’ 8,100 tonnes of gold bullion.
Unlike most countries that value their gold holdings at market prices, the US has fixed the valuation of its gold at a mere $42.22 an ounce since 1973, following President Richard Nixon’s decision to take the dollar off the gold standard. Currently, gold is trading at an impressive $3,027.47 per ounce, having risen by nearly 40% over the past year.
US Treasury Secretary Scott Bessent hinted earlier this month that the President is planning to ‘monetise the asset side of the US balance sheet.’ Experts have proposed that revaluating the country’s gold reserves could help alleviate the $36 trillion national debt. Although Bessent dismissed this concept, prominent voices in the finance sector believe that revaluation could have monumental implications for financial markets.
Ned Naylor-Leyland, a gold and silver fund manager with Jupiter Asset Management, noted that a revaluation remains a possible scenario with substantial implications for global financial systems. He remarked, “For one thing, it would return gold to what we believe is its rightful position in the global financial system – that of the principal reserve financial asset. It might also compel investors to re-evaluate their perception of risk-free assets.”
Should the US choose to mark its gold reserves to current market prices, their value would leap to approximately $800 billion, compared to the current estimate of around $11 billion, according to Jupiter AM analysis.
Naylor-Leyland further commented, “We are not political experts and recognise the need to tread carefully around predictions about what President Trump might or might not do. Nevertheless, as gold investors, this is one of the most interesting periods that we can remember.”
Gold recently hit a new all-time high of $3,057.31 per ounce, and many analysts anticipate prices will continue rising. Last month, Goldman Sachs projected gold may surge to $3,300 by 2025, with a base case scenario of $3,100.
According to Lina Thomas, an analyst at Goldman Sachs, “The increased forecast is underpinned by higher-than-expected demand for gold from central banks, which have been increasing their reserves of the commodity since the freezing of Russian central bank assets in 2022, following Russia’s invasion of Ukraine.”
She continued, “As well as stronger central bank demand, Goldman Sachs Research anticipates a boost to the gold price from increased purchases of gold ETFs as declining interest rates make gold a more attractive investment. Continued uncertainty — whether it’s about tariffs, geopolitical risk, or fears about high government borrowing — could also push speculators to increase their long positions in gold.”
As gold prices continue their upward trajectory during these uncertain times, the potential revaluation of the US Treasury’s gold reserves remains a topic of significant interest and speculation.
Gold’s escalating value and the associated discussions around the US gold reserves underscore an intriguing chapter in the global economic narrative. Investors and financial analysts alike are keenly watching how these developments unfold and what it might mean for the economy and their investments moving forward.
