I’m skeptical that revaluing gold would change much in the finances of the US government, or any other government for that matter, but I’m curious to hear what SDA readers think.
Here’s my take: despite a legislative quirk that pegs the dollar price of gold at a ridiculously low level, I’m quite certain that the creditors to Uncle Sam have already pegged it implicitly at it’s true dollar price. It’s as if your farm was valued at $2 million and you owed $1 million, but your balance sheet hadn’t been updated in years. It’s quite likely that your creditors would have already recalculated that balance sheet for you, or they would not have lent you the money in the first place. Readjust your balance sheet and you will find that you still owe $1 million.
US gold re-marking would have implications for both the Treasury & Fed balance sheets.
- US Treasury: assets would rise by the value of the gold re-marking & liabilities would rise by the size of gold certificates issued to the Fed.
- Federal Reserve: assets would rise by value of gold certificates & liabilities would rise by a crediting of cash in the Treasury cash balance (Exhibit 4). And here is the punchline: the Fed balance sheet impact would look like QE though no open market purchases would be required & Fed liability growth would initially be in TGA.
In other words, the best of all words: a QE-like operation, one which see the Fed quietly funnel almost $700 billion in cash to the Treasury… but without actually doing a thing!
Some have speculated the revaluation would equate the total US holdings of AU to the total of US debt.
That figure calcs out to approx $42K per ounce (American). That’s $60K Canadian. Nice PayDay!
Hope y’all bought gold at the Covid lows
At the rate at which the government’s debt is rising, by time the dollar price of gold hits $42K per ounce, you’d probably need $200K per ounce to cover it all.
Plenty. 🙂 To no ones surprise, Jim Rickard who is one of the experts in the space sys Canada sold all of its gold already. How broke is this shithole? As broke as you’d expect.
It’s truly a disaster that has already played out. Especially considering the reserves that still exist in this country, yet every ounce leaves, that isn’t consumed by private investors and purchasers.
That’s said, if this truly plays out, there will be unintended consequences.
Namely, inflation, perhaps hyperinflation.
Suddenly, many people who have bought gold over time, become instant millionaires.
If it seems too good to be true, well, you know the rest.
You become an instant millionaire until the government introduces a “solidarity tax” i.e. confiscation. The only way out is to escape before that happens. The chance of that happening in Canada has gone from c. nil twenty-five years to 50%.
so much faith in gold.
until its all seized. open invittion to exchange it for digital currency.
because thats all that exists.
gold just has a vey limited orbit.
nations may use it to measure. chemists, metallurgists and pharmacies have use and alwys will that is well monotored. but the loosely goosey ingots all tucked away from gen public.
it gets to the point *no one will take it* what then?
oh, and the global digital currency worked; nipped that last hyperinflation and killed its sources.
Seized? How? Because you told them?
Gold doesn’t emit a signal, at least not radiological.
So, can’t go door to door either without tearing apart completely.
There will always be value in Aurum. BC bugs like to dismiss it, but I’ve yet to see a BC that you can actually hold in your hand. Yet, there remains the fact, that if the ol Internet is “unplugged/censored/controlled” by Big Brother, your BC is gone forever.
hows this, the wonderful gubbamint puts bounty on the stuff, giving out digital tokens to anyone helps them find some of it via some sort of treachery.
its the tried and true, plant you OWN people in the mix as we see happened jan 6.
lots of ways to gradually get ahold of pretty much all of it until heirloom jewelery is the only gold keepsake things people still hold. aaaaah, but even that end is a success because that stuff aint being used as currency because see above.
Apparently Canada owns $67.5 billion (USD) in foreign currencies.
Canada also holds over $325 billion in US treasuries.
Any artificial or pegged price or value for any product or service is economically destructive. It moves capital and labour to production that is unwanted.
The cure? More of the poison, of course.
Canadians lap it up like drug addicts – by the barrel.
To me it’s all irrelevant unless there is an audit of what gold there actually is in all the various holdings, including Fort Knox, and all paper held for or against those assets such as loaning out the gold.
If US gov’t assets were valued relative to the market price for gold.. that would provide an immediate and compelling reason to stop gold production in the country.
And one for the country with the world’s largest recoverable reserves (Russia) to open as many mines as possible because that would undermine the US 🙂
Good comment, murph.
People need to understand that the 3 largest gold exporters in the world are South Africa, Russia, and China.
The Golden Rule is “Who has the Most Gold Rules”. Do we want those 3 to make the rules?
If the alleged tonnage of Gold at fort Knox and New York were revalued at the spot price, is wouldn’t be enough to cover one years worth of interest on the federal debt. When you are bankrupt you are bankrupt. Inflation or default is the only way out.
All that glitters is not gold
According to my math all the gold in America will cover about 1/50th of its currency. So what would revaluing it actually do? Prove how worthless the US dollar is becoming?