The US Should Avoid Gimmicks and Tackle Its Real Fiscal Problem

Revaluing gold reserves may seem like a useful idea, but its impact needn't work out well for the US

- Sachchidanand Shukla

A lot of innovative ideas are being floated to fund the gaping fiscal hole in the US. One of these involves selling gold card visas for $5 million each. As US President Donald Trump averred, "If we sell 10 million, that's $50 trillion. That means our debt is paid off, and we have $15 trillion above that." Treasury Secretary Scott Bessent hinted at "monetizing the asset side of the US balance sheet for the American people." Stephen Miran, Trump's nominee to chair the White House Council of Economic Advisors, also floated the idea of "selling the stash" and then exchanging those dollars for foreign currencies, which would also strengthen "undervalued" currencies, an outcome that Trump has signaled he wants. These statements set off speculation that the revaluation of US gold reserves to market levels was a possibility, though what Miran said was later dismissed.

For ages, gold has been seen as a reliable hedge against inflation and economic uncertainties. It has been on a tear in recent years due to triggers such as COVID, the Russia-Ukraine war, and the resultant sanctions that froze Russia's dollar- and euro-denominated assets. But it isn't just retail investors and traders who have taken a shine to the yellow metal. For the third straight year in 2024, central banks bought more than 1,000 tonnes of gold.