Talks are going on for Revaluation of Gold Reserves held by the USA. What it means for Gold Prices?

15^th February 2025

Talks are going on for Revaluation of Gold Reserves held by the USA. What it means for Gold prices?

Dear Fellow Investors,

Namaste! Talks are going on for revaluation of Gold Reserves held by the USA. The USA has 8133 Tons of Gold. It is valued at USD 42 per ounce at the price of 1973 in the books. It means the Gold is valued at USD 9.80 Billions. At the current price of USD 2900 per troy ounce the Gold is valued at USD 700 Billions approx. One tons is equal to 29166 troy ounce.

So, immediately the USA can have USD 700 billions for the use. If they sell the GOLD they can have USD 700 Billions and they can invest in some other government bond and can earn a good interest. Today their gold is not earning anything. This is possible theoretically but politically this is a suicide. Trump will not do this. 

By revaluing the Gold – the Government can have more borrowing power by USD 700 more compared to just USD 9.80 billions. This is good but the Economy has USD 29 Trillion debt and just USD 700 billions will not be able to make much difference. So, this option is also not that good. 

Another aspect is if the GOLD is revalued at USD 2900 per ounce and if the GOLD prices goes down – the value of gold will become negative and it will start to show losses. Say gold is valued at USD 2900 and the prices goes down to USD 2500 – then there will be losses by USD 400 per ounce. So, this option is risky. 

What is the practical scenario?

In normal circumstances this is a good suggestion and it can give a very healthy look to the BALANCE SHEET of the USA. But considering the size of the USA debt the gold value is close to 2.25% only. Current fed rate is 4.25%. So, the gold monetisation can’t pay even one year’s interest. So, revaluations may make a sense but it’s not enough to solve the USA balance sheet problems. 

In case, they sell – which is not possible in reality – the gold prices can come down sharply in the world market as the supply is 8133 tons. 

In case they just revalue – gold prices world over can get a benchmark and it may help the gold prices to stabilise around that levels for some time. 

Some people are talking about revaluating gold at more prices than the current prices. Say they revalue at USD 5000 per ounce. It means they will get closed to USD 1.4 trillions. This is not possible as the gold prices can’t be increased at WILL. If at all you want to show the book entry – the lenders know the exact gold the USA has and the market price. So, this suggestion is also not practical. Moreover, by valuing more than the market price – USD prices will go down further and faster. It means devaluation of USD. Which TRUMP will not do. 

What it means for GOLD investors?

It means nothing in practically. Looking at the economic problems of the USA – gold revaluations can earn just half year’s interest. It may have an emotional effect in the short term. But in the long run – the USA has to earn the money from businesses and it they fail to rejuvenate the economy – nothing much will be possible. 

So, if you are holding GOLD – hold as per your goal. 

What NEXT?

This is a developing story. We may write more posts on this subject – depending on the USA’s developments on the GOLD revaluations. 

Have a happy weekend.

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Learn a Lesson. Live with Passion & Invest with Reason.

Hitesh Parikh.