I hate to be a simpleton, but here's my question. The Nixon playbook calls for Trump to revalue gold (which I suspect will happen). But re-valuation of Treasury gold is simply an accounting gimmick as I understand it. Thus, and assuming that Trump/Bessent/the Treasury revalues gold at the then-market price, what will be the practical effect on gold's price? Will this simply put a floor on the price of gold at the newly-revalued market price, or will this cause further upward appreciation of gold?
Alternatively, if the revaluation is appreciably higher than the market price, what might happen?
2- peopel get excited because they want to feel like their asset of choice is getting its just recognition.. BUT
its a big deal anyway for 2 reasons.
1) when you carry it on your governmental books at the higher price, you are less constrained in buying it, as it reflects better on your balance sheet. So.. picture Europe. They raise golds price on their balance sheet.. their central banks immediately are making money again, and.... they can buy more without it hurting them.
2) once you raise the price on your books ( and dont use the proceeds to lower debt.. you just spend it like 1973) its a one and done thing. youve emptied the piggy bank and it will give you a short term relief of debt with a long term problem. EG we revalued in 1971.. OPEC embargo in 1973.. and that money was already spent like a teenager on vacation
ALSO: there are bearish risks to revaluation too.. BUT there are by far the most bullish ones
I hate to be a simpleton, but here's my question. The Nixon playbook calls for Trump to revalue gold (which I suspect will happen). But re-valuation of Treasury gold is simply an accounting gimmick as I understand it. Thus, and assuming that Trump/Bessent/the Treasury revalues gold at the then-market price, what will be the practical effect on gold's price? Will this simply put a floor on the price of gold at the newly-revalued market price, or will this cause further upward appreciation of gold?
Alternatively, if the revaluation is appreciably higher than the market price, what might happen?
1- its an accounting gimmick. Yes
2- peopel get excited because they want to feel like their asset of choice is getting its just recognition.. BUT
its a big deal anyway for 2 reasons.
1) when you carry it on your governmental books at the higher price, you are less constrained in buying it, as it reflects better on your balance sheet. So.. picture Europe. They raise golds price on their balance sheet.. their central banks immediately are making money again, and.... they can buy more without it hurting them.
2) once you raise the price on your books ( and dont use the proceeds to lower debt.. you just spend it like 1973) its a one and done thing. youve emptied the piggy bank and it will give you a short term relief of debt with a long term problem. EG we revalued in 1971.. OPEC embargo in 1973.. and that money was already spent like a teenager on vacation
ALSO: there are bearish risks to revaluation too.. BUT there are by far the most bullish ones
So interesting with both historical and present knowledge...
Cheers