Could Bessent Just Sell the Gold?

According to some, yes

What is the US Government’s goal in creating a SWF based on Bessent’s comments about remonetizing Assets?

It is:

To reduce our debt (sinking fund), and weaken the usd against other nations without causing domestic inflation.

What is the US ESF Fund?

The Exchange Stabilization Fund (ESF) is an emergency reserve fund of the United States Treasury Department, normally used for foreign exchange intervention.[1] This arrangement (as opposed to having the central bank intervene directly) allows the US government to influence currency exchange rates without directly affecting domestic money supply.

Translation:

The ESF buys/sells USD to stabilize things when needed. It can create carry trades to add income to the Fed Government and reduce the US debt in this way.

The ESF can also sell gold to do this, but only if it expressly pays down US Debt with the proceeds.. it basically has never done so apparently

IF: The key for the US government is to extract Gold’s value without spooking existing treasury holders (by creating a competing gold bond) and without pissing off domestic voters. (by outright selling it out)

What can they do?

They can hedge the gold and use the proceeds to buy bonds directly or indirectly

Just. Like. Greenspan permitted the Bullion banks to do in the 1990s

The ESF can do this right now

Implicitly: a SWF fund can do the same, but bigger…

So, if Bessent seeks to monetize Gold, not revalue it, and reduce debt.. he can hedgethe Gold.

Then take the proceeds and “sterilize them” by buying FX in bond form for income… via selling forward USD and thereby reducing debt.

This is just on on our radar as Gold’s risk now. Bessent knows how to do this stuff. There is more, but this is enough for now.

Here are a few choice excerpts from the report above research:

Here’s what the US ESF can do

The ESF only has $40 Bn to operate , but……

The ESF can leverage itself but at the risk of increasing the interest burden of the Federal government. Whatever foreign assets the ESF buys will of course yield something, but in the current global economy, its assets will almost certainly yield less than its liabilities, resulting in losses for taxpayers—as long as U.S. yields are in excess of our trading partners’, this is a negative carry proposition.

The Gold Reserve Act also authorizes the Secretary to sell gold in a way “the Secretary considers most advantageous to the public interest,” providing additional potential funds for building foreign exchange reserves. However, the Secretary is statutorily required to use the proceeds from such sales “for the sole purpose of reducing the national debt.”

This requirement can be reconciled with the goal of building foreign exchange reserves by having the ESF sell dollars forward. If gold sales are used to deliver dollars into the forward contracts, it will likely satisfy the statutory requirement of reducing national debt.

Now imagine doing this in a SWF…. monetize the gold without actually selling it and then take the proceeds to reduce debt via a sterilized carry trade.

The problem? The buyer takes delivery…. but you handle that by using the proceeds to make them stupid to do so….. or you prohibit them form taking it… effectively close the gold futures window again..lol

Here’s the kicker.. one that is a stark reminder of Gold under Greenspan and Clinton

There are other means of structuring the ESF transaction as a form of debt contract to comply with the law. While this is probably statutorily permissible, selling national gold reserves to buy foreign exchange instruments could be politically costly, and changes the asset composition of the USG’s balance sheet. Still, because gold pays no interest, selling it for positive-yielding foreign debt should result in income for the U.S. Government

This is on Bessent’s radar. More as we study it up

If Bessent wants to monetize gold, to pay down debt, but he won’t re-price it higher so he can make the accounting change on his balance sheet,

and he can’t outright sell it because it’s political suicide, what can he do if anything to monetize the gold?

He can hedge it..

This sounds insane. But it’s not when you consider that the US fed and Treasury permitted bullion banks to do it in the 90s.

The risk is, of course, whoever they hedge it with takes delivery. Something to keep in mind…