Revaluing Fort Knox’s gold to fund a strategic bitcoin reserve or pay down the national debt is no longer unthinkable.
Bettmann Archive
Gold is up more than 40% in the past year, from under $2,400 an ounce to over $3,400. Meanwhile, the national debt is approaching $37 trillion.
That’s helped revive an idea long dismissed as fringe: revaluing the government’s gold reserves to raise cash. It sounds far-fetched. But a new research note from the Federal Reserve suggests it may not be as out there as it seems.
On August 1, the Federal Reserve published a research note called “Official Reserve Revaluations: The International Experience.” It outlines how five countries used gains on their official gold holdings to raise funds. It does not propose the U.S. do the same, but it explains the steps involved and what to expect if it happens.
The note covers Germany, Italy, Lebanon, Curacao and Saint Martin, and South Africa. Some used revaluation proceeds to reduce debt. Others used them to cover central bank losses. The examples are limited but show how governments have tapped into hidden value without raising taxes or issuing new bonds.
The U.S. Treasury values its gold at $42.22 an ounce, a price set in 1973. It holds 261.5 million ounces, the majority of it at Fort Knox in Kentucky. At the official price, the gold is worth $11 billion. At today’s market price, it would be worth more than $750 billion. Revaluation would not require selling the gold. It would simply update its book value.
The Treasury could adjust the value of U.S. gold reserves through a few bookkeeping steps. It might retire its current $11 billion gold certificate (issued by the Treasury) and establish a higher official price for gold (which could be lower or even higher than the market price). Next, it could “transfer” the gold to the Fed at this new price, potentially gaining billions or trillions (remember, it need not revalue the gold to the current market price). The Fed would then return the gold to the Treasury for a new certificate. No gold physically moves, but the Treasury ends up with a significant amount of newly created funds.
What would happen next depends on policy decisions.
The cash infusion from the revalued gold could be used to pay down debt or finance new spending. A footnote in the Fed paper notes that recent U.S. legislation proposed by Wyoming Senator Cynthia Lummis (a Republican and crypto champion) contemplates using revaluation proceeds to create a sovereign wealth fund or a strategic bitcoin reserve. (Both the sovereign wealth fund and the bitcoin reserve are ideas that President Donald Trump has talked about.)
Sounds good, but there are potential repercussions.
Crediting the Treasury with new funds increases the money supply. That could stoke inflation. Critics have described the idea as backdoor money printing or, even, as plain old “accounting manipulation.” Others point to the 1934 gold revaluation, which led to a sharp increase in the money supply. It also sidelined the Federal Reserve, giving the Treasury effective control over monetary policy until the 1951 Fed-Treasury Accord restored the central bank’s independence.
That history may be one reason the idea hasn’t moved forward. With renewed criticism of the Federal Reserve from the Trump administration, including chiding the central bank over its decision to delay interest rate cuts, any move seen as potentially undermining Fed independence could draw political fire–and a negative reaction in the markets.
That may help explain why officials have been quick to shut the door.
Treasury Secretary Scott Bessent addressed the issue earlier this year. On the All-In podcast in March, he said the Treasury is not considering revaluation. “I can say today we’re not revaluing the gold,” he declared. (The All-In podcast, hosted by investors Chamath Palihapitiya, Jason Calacanis, David Sacks and David Friedberg, is popular in business and investing circles–and among those who have Trump’s ear. Sacks, in fact, holds the title of chair of the President’s Council of Advisors on Science and Technology.)
Bessent’s March disavowal of any thought of revaluation may still be the case. But the Federal Reserve publishing a note on how a revaluation has worked for others means the Overton window–that is, the realm of ideas that get seriously discussed–might have cracked open.