Unlocked: The US is Revaluing Gold, Hopefully Not Like in 1973— ZeroHedge Edit

A Revaluation Thesis: Revalue, (Re)monetize, and Retire

The US is Revaluing Gold and (Maybe) Strengthening the Dollar

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.

The intersection of gold, debt, and sovereign finance is not a new phenomenon. Alexander Hamilton recognized its importance over two centuries ago. Today, that same concept is resurfacing, with a potential gold revaluation serving as a vehicle to retire U.S. debt while preserving the independent stability of both the dollar and the bond market. The catalyst? Trump’s SWF proposal, coupled with remarks from Scott Bessent, suggests that a modern iteration of Hamilton’s sinking fund is potentially on the horizon.

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.

Source: Arcadia Economics

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.

The 3 Rs of Finance: A Hamiltonian Parallel

Alexander Hamilton’s sinking fund aimed to retire Revolutionary War debt, restore creditworthiness, and establish U.S. financial independence. The revaluation–(re)monetization–retirement process outlined above echoes the goals of Hamilton’s playbook. It better values gold as the anchor asset supporting long-term fiscal discipline. This process achieves that objective by neither cutting ties with that anchor (i.e., selling the gold) nor by elevating it excessively (i.e., returning to the gold standard).²

The Debt Spiral and Why This Matters Now

The U.S. faces a debt trajectory that is increasingly unsustainable. Interest costs alone threaten to outpace discretionary spending within a decade. They already are the second highest monthly expense. Current fiscal dynamics rely on continued debt issuance, raising the specter of a crowding-out effect in credit markets—or, worse, a loss of confidence in U.S. creditworthiness.

Source: ZH, | Red markups GoldFix

Against this backdrop, gold revaluation offers a rare noninflationary path to debt reduction. It does not require printing new money, monetizing debt via USD debasement (e.g. YCC) or raising taxes; instead, it unlocks the latent value of existing reserves without selling those reserves. The approach signals fiscal responsibility while restoring gold as a stabilizing force. The US would also force would-be detractors to note US economic greatness is in part its ability to embrace and actually lead secular changes without disruption.

Market Stability: The Missing Puzzle Piece

Previous gold reset theories have stumbled on a critical concern: how to avoid destabilizing the dollar and bond markets during a revaluation. An abrupt gold revaluation without proper context could trigger panic, eroding confidence in fiat currencies. Here, the SWF mechanism serves as the stabilizing bridge.

As a special-purpose vehicle, the SWF channels gold revaluation proceeds (timeframes and details notwithstanding as enforced by the USTreasury and Fed) directly into debt retirement. This maintains bond market liquidity while signaling the Treasury’s intent to reduce long-term liabilities. The result is a positive feedback loop: rising gold prices bolster reserves, stronger reserves reduce debt, and lower debt enhances confidence in the dollar.³

Keeping The Trust: Why Gold Resonates

Gold retains a unique position in global finance as a bearer of trust. Unlike fiat currencies, gold’s value is not contingent on government promises. This attribute gains prominence as geopolitical tensions escalate and U.S. fiscal policy ventures into uncharted territory. Central banks, particularly in emerging markets like China and Russia, have accelerated gold accumulation since 2022, reflecting diminishing confidence in the dollar-centric system.

By revaluing gold, the U.S. would reassert gold’s place within its financial structure, signaling alignment (and leadership) with global trends rather than resistance. Crucially, this would be achieved without betraying U.S. Treasuries as stores of value or undermining the U.S. dollar as GRC. Paradoxically, U.S. Treasuries would then represent the best of both worlds: the stability of gold and the power of America’s economy.

Such a move could bolster international confidence in U.S. fiscal stability while reaffirming gold as a tier-one reserve asset—an outcome formalized under Basel III banking regulations—and help the United States maintain its economic leadership and attract further investment.

Dealing with Concerns

Skeptics may raise questions. Would a gold revaluation trigger speculative excess? Could it signal desperation, thereby undermining dollar credibility? Might foreign creditors interpret it as a covert default?

Cassandra by Evelyn De Morgan (1898, London)

These risks are real and will be addressed shortly. Most media today is more interested in raising concerns than hearing solutions. Communication is therefore paramount to quell those concerns. Framing the revaluation as a proactive measure to strengthen reserves and stabilize debt markets can mitigate speculative fears. Emphasizing gold’s role as collateral—not as currency—preserves USD and other fiat flexibility. ⁴

Importantly, the U.S. would be leading this shift, not reacting to a crisis. As the old trading risk-management axiom goes: “Do it when you can, not when you have to.”

Addressing Real Risks

Beyond narrative framing, two tangible risks deserve attention—specifically governing how the idea is executed:

1. What will the new gold price be?

2. What will be done with the proceeds?

Answering these questions properly addresses all the remaining risks under the umbrella of Market Risk

What Will the New Gold Price Be?

Market reactions to events of this magnitude generally signal wholesale acceptance or rejection of a given action. A free market’s pricing barometer will discount the potential for future government actions in this regard. Bottom line: Markets call bluffs if expectations are unrealistic.

As with any company that revalues a balance-sheet asset (e.g., gold) to a new carrying price, the market’s reaction to the revaluation will serve as the litmus test. If the revaluation is set too high, markets might hammer U.S. bonds as being manipulated, adding massive volatility in both directions to gold’s public price. Pricing gold excessively high (see also: the Trillion Dollar Coin) would imply panic and suggest that the government is not serious about fiscal reform.

Conversely, if the revaluation is set too low, the funds raised will be largely ineffectual in achieving the ultimate goal of deficit reduction—as the saying goes, “What is this, a revaluation for ants?”

Set just right, however, and gold, the U.S. dollar, and U.S. Treasuries could all benefit. Such an event would signal the government’s return to fiscal sanity through the adoption of gold standards—without compromising the independence of the U.S. dollar or U.S. Treasuries. After all, gold is the progenitor of all money, with fiat as its struggling child: a good parent helps its child in need without seeking to undermine that child's autonomy.

What Will Be Done with the Money?

One of the first—if not the very first—questions a stock analyst asks when informed that a company will receive a windfall of working capital (a secondary stock offering being the classic example) is: “What will they do with the money?”

All responses to that question fall into three unranked categories: retire the debt, grow the company, or pay shareholders. Almost every conceivable answer fits into one of these buckets, each of which has a place in properly run enterprises. Since we are operating under the assumption of retiring debt via the SWF the other two categories can be summarized as follows:

• Grow the Company: Proposals might include acquiring TikTok or even Greenland. We reject the former outright, while the latter involves accretive geopolitics about which we remain uncertain.

• Pay Shareholders: This might involve supporting the U.S. dollar through foreign exchange purchases—again, a strategy we dismiss. U.S. shareholders are performing adequately, and the U.S. has already been employing such ad hoc FX tactics to secure time for genuine economic growth. Revaluing gold is not necessary to continue that approach. This moment is, rather, the quintessential refinancing opportunity that reinstates FX plays as a viable option if needed later

The Lessons of 1973

Repricing gold without retiring debt is a license to drive gold’s price eventually much higher and damage USD credibility further. In 1973, gold was revalued from $35 to $42.22 without retiring debt. That money merely was spent otherwise⁵. Back then, the use of funds served as a market signal for more irresponsible spending, worsening inflation, ending in higher gold prices.

Using the progenitor analogy again: a good parent assists a child in-need by serving as a financial backstop during times of duress while earmarking those funds to instill proper habits to avoid recurrence of the problem

⁶(Bitcoin’s status is footnoted here.)

Global Precedent: The Swiss and Oil States

The U.S. is not alone in exploring asset-backed stability mechanisms. Oil-rich nations leverage natural resources to support sovereign wealth funds. China is in the process of rebasing against gold as well. The proposed gold revaluation SWF hybrid aligns the U.S. with this global best practice while accommodating its unique reserve currency status.

Political Realities: Trump and Fiscal Optics

Trump’s political brand thrives on defying convention. A gold-backed debt reduction initiative fits his narrative of restoring American strength. The SWF—potentially branded as a “Debt Freedom Fund” or “Hamilton Fund”—could resonate across political lines. Fiscal conservatives would applaud the debt reduction; populists would cheer the restoration of gold; pragmatists would appreciate the market stability. Neo-Keynesians would breathe a sigh of relief.

Conclusion: The Way Forward

Revaluing gold and monetizing it via a Sovereign Wealth Fund functioning as a debt retirement vehicle offers a path to debt reduction without sacrificing market stability. It bridges historical precedent with modern monetary policy: gold is reasserted as an anchor asset, bonds are preserved as a core funding tool, and the dollar retains its primacy—albeit with enhanced credibility.

This approach is not merely an exercise in financial engineering. It represents a return to foundational principles: sound money, fiscal discipline, and national self-reliance. Alexander Hamilton would recognize it. So should we.

Details aside, this is the way.

Sources:

• Alexander Hamilton's Postal Sinking Fund

• Treasury Secretary Bessent: "We're Going To Monetize The Asset Side Of The US Balance Sheet"

• Robert Hamilton, An Inquiry Concerning the Rise and Progress, the Redemption and Present State, and the Management of the National Debt of Great Britain and Ireland, 3d ed. (Edinburgh, 1818), 137-140

• Edward A. Ross, Sinking Funds (Baltimore, 1892), 10-11.

• Grant’s Interest Rate Observer Vol. 43, No. 3

• Letter from Alexander Hamilton, Concerning the Public Conduct and Character of John Adams

1. possibly using a stable buy moving price like a 5 year moving average, not unlike what the BRICS are doing. Reductions in price could also be utilized as well. In essence if Gold is inverse to economic growth, then when gold drops, its buying power should be offset by organic US growth anyway…. There are obvious risks to this. The answer is likely to find 1 price thea market and the government can live with. Keep it Simple

2. For argument’s sake; If during Bretton Woods the gold standard was analogous to an anchor with too short a tether holding the US economy back, then the current debt-fiat system is completely unmoored.

3. Bonus: Europe would follow suit with their Gold revaluation account entry

4. The US voter’s resensitization to inflation and unsusutainable debt is after all, arguably what cost Biden the election. If they want to get clicks.. report those concerns being addressed

5. reducing deficit is not retiring debt

6. Bitcoin? A little from Column A and a little from Column B. We have already created a strategic reserve for it. The U.S. Government owns more Bitcoin than any other nation—without counting ETFs and other privately held coins. The United States already possesses enough Bitcoin to strategically protect itself (and even to wage war on those who might seek to weaponize it against us), and it can acquire more at any time if the need arises.