In recent days, the United States’ gold reserves—particularly the Fort Knox stockpile—have drawn a lot of attention. Treasury Secretary Scott Bessent rejected revaluing the gold holdings to market values. However, one analyst stated that it would be optimistic for prices, which have already been rising sharply.
According to a Wall Street expert, revaluing US gold stockpiles to reflect current market conditions would boost prices by indicating the precious metal isn’t an outdated asset.
Francisco Blanch, head of commodities and research at Bank of America Securities, said repricing the gold would be an accounting exercise but still raise the Federal Reserve’s balance sheet in an appearance on Bloomberg TV on Friday.
Since it would demonstrate that gold is no longer this savage artifact lying at central banks and somewhat disregarded, I believe it would likely be suitable for the gold market. Even the largest central bank in the world is suddenly showing fresh interest in gold, he added.
The Gold Reserve Act of 1934 transferred gold to the Treasury Department. Therefore, the Fed no longer owns it. Gold certificates were sent to the Fed in return.
With a book value of $11 billion, the United States had 261.6 million troy ounces of gold, valued at $42.22 an ounce in the 1970s. However, the value would exceed $750 billion at the current price of gold, which is over $2,950 per ounce.
This month, Treasury Secretary Scott Bessent sparked rumors that a revaluation may be forthcoming when he declared, “We’re going to monetize the asset side of the U.S. balance sheet for the American people.” He then explained that repricing gold reserves was not what he meant.
However, there is still increased scrutiny of America’s gold reserves from other countries. President Donald Trump reaffirmed on Saturday that he and Elon Musk will visit Fort Knox to ensure the gold is still stored there. According to Bessent, “all the gold is there.” He told Bloomberg on Thursday that he had no intentions to visit Fort Knox.
Since the COVID outbreak, the price of gold has doubled and has been on a rip in recent years. Since Russia’s 2022 invasion of Ukraine, which led to Western sanctions that froze Russia’s assets denominated in dollars and euros, it has increased significantly.
As a result, other nations began to worry that their dollar holdings might eventually become susceptible, leading to a move toward gold. Central banks are now one of the largest purchasers of gold. As concerns about the economy grow, gold has also been a popular safe-haven investment among consumers and investors.
Blanch of BofA noted that repricing gold would not help the Trump administration achieve its three main goals: devaluing the currency, reducing energy costs to reduce inflation, and causing the Fed to slash interest rates.
However, this week, Secretary of State Marco Rubio hinted at the possibility of economic cooperation between the US and Russia, which Blanch believes would probably entail Russian energy exports that may drive down costs.
One possible viewpoint is if a new supply of petrodollars will enter the market if sanctions against Russia are lifted. He went on. Will the US government eventually be able to use those petrodollars to pay for its ongoing efforts to close the $2 trillion budget deficit in Washington?
