With the national debt ballooning and gold prices surging, a once-fringe idea has hit the mainstream: revaluing the U.S. gold reserves. We analyze a new Federal Reserve note that explores how this move could fund a strategic bitcoin reserve or provide much-needed debt relief and why it’s sparking a major debate over inflation and central bank independence.
The U.S. national debt is soaring past $37 trillion, while gold prices have hit new records. This has revived a long-dormant idea: revaluing the nation’s gold reserves. A new Federal Reserve research note explores how other countries have monetized their gold to raise cash. While Treasury Secretary Scott Bessent denies current plans, the proposal to use this new wealth for a strategic bitcoin reserve or debt relief is now a serious topic.
The United States owns the world’s largest official gold reserves. It holds an astounding 261.5 million ounces, mostly at Fort Knox. The Treasury, however, values this immense hoard at a historical price of just $42.22 per ounce, a figure set in 1973. This old valuation gives the hoard an official book value of only $11 billion.
Gold prices have recently climbed over 40% in the past year, now sitting at more than $3,400 an ounce. This exposes a stunning disparity. The same gold hoard is now worth over $750 billion at today’s market price. This massive, untapped wealth has revived a serious, though controversial, conversation among policymakers about gold revaluation.
The Federal Reserve has given legitimacy to this debate. On August 1, it published a research note, “Official Reserve Revaluations: The International Experience.” The paper is not a U.S. proposal, but it details how five countries—Germany, Italy, Lebanon, Curacao and Saint Martin, and South Africa—have monetized their gold to raise funds. They did this through creative bookkeeping, without selling any physical gold. These nations used the proceeds for various purposes, including paying down debt and covering central bank losses.
The process is essentially an accounting exercise. The Treasury could retire its old gold certificates and issue new ones at a higher, more modern price. The difference in value would create a one-time cash infusion for the government. This fiscal windfall would require no new taxes or bonds.
The uses for this gold-fueled windfall are as unconventional as the funding itself. A footnote in the Fed’s note highlights a proposal from Senator Cynthia Lummis. She suggests using the proceeds to create a “strategic bitcoin reserve.” President Donald Trump has echoed this idea. A reserve could hedge against a depreciating dollar and offer new financial and geopolitical leverage. This proposal would not sell gold. Instead, it would create new funds to acquire a stockpile of digital assets.
The idea of including digital assets like bitcoin in national reserve management is no longer just theoretical. Other reports show that several public companies are now adopting digital assets as a corporate reserve. This reflects a growing institutional acceptance of their role.
The appeal of a $750 billion cash infusion is clear. But gold revaluation comes with significant risks and criticism. Critics worry it is “backdoor money printing.” It could increase the money supply and fuel inflation.
History offers a warning. The 1934 gold revaluation under Franklin D. Roosevelt sharply increased the money supply. It also gave the Treasury control over monetary policy, sidelining the Federal Reserve. The central bank’s independence was not restored until 1951. In today’s climate of high tension between the White House and the Fed, any move seen as undermining the central bank would likely face fierce political opposition and a negative market reaction.
Despite the Fed’s recent research, officials have been quick to dismiss the idea. Treasury Secretary Scott Bessent stated in March that the Treasury was “not revaluing the gold.” This shows the political sensitivity and potential backlash of such a radical move. Unlocking Fort Knox remains a powerful theoretical option, but it’s one filled with complex economic and political challenges.