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The US is Revaluing Gold, Hopefully Not Like in 1973

  • Writer: Marcus Nikos
    Marcus Nikos
  • Feb 19
  • 2 min read

A revaluation of gold could serve as a catalyst to reduce U.S. debt without destabilizing the dollar or bond markets. Trump’s Sovereign Wealth Fund (SWF) proposal, indicates that gold monetization could serve as the bridge to economic health. Otherwise, the windfall is apt to be squandered as in 1973

What a Gold Revaluation looks like without paying down Debt…



By marking gold to a higher value— say $3,000—1 and borrowing against it at 0%, then using the proceeds to retire high-interest U.S. debt, the SWF would function as a modern sinking fund—a Hamiltonian approach to restoring fiscal stability. This mechanism reestablishes a link between gold and bonds, signaling to markets that America is betting on itself. The world is likely to follow suit.

At that price, The US would free up approximately $800 Billion in buying power to retire bonds. That would not be chump change in reducing interest payments from our current $83.6 billion (see chart down page) in interest costs annually.

Some Context

Late last month, Trump signed an executive order initiating steps toward establishing a U.S. Sovereign Wealth Fund. During the signing, Bessent remarked, “We’re going to monetize the asset side of the U.S. balance sheet.” The statement raised eyebrows. What U.S. asset could realistically be monetized to fund such a vehicle? Gold quickly emerged as the logical answer.

Bessent’s comment gained further significance for us when paired with Grant’s recent commentary. Grant (with professors Alex J. Pollock and Paul H. Kupiec) argued that a gold revaluation could fund a debt retirement program without triggering a collapse in the dollar or bond markets.

We could not agree more. Many, including ourselves, had speculated about gold repricing (e.g. asset-backed bonds, gold standard reinstatement, etc.) but lacked a clear mechanism to integrate it into the U.S. financial system without risking destabiliziation of incumbent U.S. structures—namely, the U.S. dollar as Global Reserve Currency and the existing U.S. Treasury float as a store of value. The SWF, acting as a debt retirement fund, could be that mechanism.

The Mechanics: Gold Revaluation and Debt Reduction

The proposed sequence operates as follows:

  • Gold Revaluation: The U.S. Treasury marks its gold holdings to a significantly higher market-based price aligning the value of gold reserves with modern financial realities.

  • Windfall Monetization: Using this higher valuation, the government borrows against gold at zero or near-zero interest rates. Importantly, this is not a sale of gold; it is leveraging the asset as collateral.

  • Debt Retirement: Proceeds from this borrowing fund the SWF, which operates as a sinking fund. The SWF systematically purchases U.S. Treasury bonds in the open market, retiring debt that carries interest rates of 4–5% using funds borrowed against gold at 0%.

  • Not All at Once: This would have to be done over time. An allowance could be given from the TGA to the SWF at regualr inrtervals

This process aligns gold and bonds in a manner that appeals to both traditionalists and modern financial practitioners. It restores gold as a reserve asset of substantive value while providing relief from the ballooning national debt burden.



 
 
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