I am not and never have been an economist, so I cannot claim any technical expertise regarding the topic of this essay. But I can smell (and spot) a rat.
Anyway, I knew that something must be afoot when I read that President Trump has been threatening repeatedly to visit Fort Knox to see for himself and ‘audit’ the gold that allegedly is held there. No doubt, to touch and feel it, to luxuriate and ensconce himself in it. You can picture the scenes. Allen Forrest or Ben Garrison would have a field day!
The clincher for me was that the media were all achatter about the possibility of a gold revaluation. The official book value of US government gold that is held in Fort Knox (just over 50% of total holdings) and in other places in the US is based on a valuation of just over $42 an ounce or about a hundred times less than the current market price. A revaluation of the roughly 8,000 metric tonnes of gold held by the US Treasury would produce a windfall of over one trillion US$. Crucially, it seems that things could be arranged so that some of the usual strings would not be attached to this money.
Knowing what we do about President Trump and his ‘colony of domesticated phocine honkers and clappers’, I naturally thought that the prospect of being able to create in one fell swoop such a huge amount of relatively unencumbered money would be a temptation that would be impossible for them to resist.
At the very least, it suggested that the possibility deserved to be examined more closely.
This essay therefore discusses briefly:
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Why the production of such a bonanza would be relatively straight forward;
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Some of the standard economic arguments against such a manoeuvre;
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A three-card trick that is designed to achieve the same result without incurring market consequences that the president is sensitive to; and
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What all of this implies about the validity of my supposition regarding what President Trump and his relatives and friends are likely to do.
Cheap and Easy Money
In total, the U.S. Treasury holds 261,498,926 troy ounces (approximately 8,133.5 metric tons) of gold. This is the largest official gold reserve in the world, with Germany a distant second at roughly 3,350 metric tons.
The official “book value” of this gold as listed on the U.S. government’s balance sheet is fixed by law at $42.22 per ounce, totaling just over $11 billion. Meanwhile, the market price sits at around $4,000 an ounce, with JP Morgan forecasting a surge toward $5,500 by the end of the year. Revaluing these holdings would instantly produce a financial bonanza of more than $1 trillion out of thin air.
For the Trump team, the appeal of this glittering prize is enhanced considerably by the possibility that the Executive Branch could make this book-entry adjustment without the approval of Congress. By exploiting executive authorities to re-monetize gold certificates under the Gold Reserve Act 1934, some argue the administration could bypass the traditional legislative hurdles entirely.
Having their finger on a trillion-dollar monetary trigger would allow Trump et al. to do this whenever they liked. Their track record in government to date strongly suggests that they would then position themselves ahead of the inevitable market volatility, fluctuating gold price, and shifts in federal spending to take advantage of insider-trading opportunities.
Conventional Arguments Against
There are many reasons why conventional economists would advise against such a move. Arguments tend to be along the following lines.
First would be that it has no real economic value. It is primarily just a balance sheet adjustment or a nominal accounting change that creates the illusion of a better financial position.
Second, markets might interpret a revaluation as an admission that government cannot manage its debt, and that the Treasury will issue new money or debt against the increased asset value.
Third, the spending that flows from injecting significant liquidity or balance-sheet gains into the financial system could be highly inflationary depending on how the proceeds were deployed. This could force the Federal Reserve to extend quantitative tightening (by restricting the money supply) or to raise interest rates.
Fourth, internationally, foreign central banks and bond markets might see it as a loss of confidence in fiat currency. The US dollar would weaken, and this could trigger a flight by investors to non-dollar assets.
Fifth, other central banks who do not already use fair value accounting for their gold reserves might follow suit, leading to currency debasement and volatility in global currency and commodity markets.
A Sleight of Hand ‘Fix’
To avoid some of the structural obstacles of direct revaluation, and ingratiate themselves with you know who, Treasury Secretary Scott Bessent, in conjunction the economist Judy Shelton, have cobbled together a sneaky alternative: Treasury Trust Bonds (TTBs).
Rather than a crude accounting trick that pulls cash out of a hat, TTBs are a class of sovereign debt tied directly to physical bullion:
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Gold-convertible, zero-coupon debt: The Treasury issues ultra-long-term (such as 50-year) securities that pay no periodic interest but grant holders the right to redeem the bond at maturity in either cash or physical gold.
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Collateralization at spot prices: The underlying value of the security is explicitly tied to real-world gold spot prices rather than the $42.22 statutory book value.
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The capital influx: Global investors, sovereign wealth managers, and crypto-institutions on the look out for systemic hedges pile into these bonds, providing the Treasury with significant capital upfront.
This structure provides rhetorical cover for the President’s financial ambitions and evades standard institutional objections:
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It capitalizes the sovereign wealth fund (SWF): The money raised from these gold-backed sales provides immediate seed capital for the President’s beloved SWF. While it technically expands the federal balance sheet, proponents can wave away deficit naysayers by claiming that the debt is entirely offset by solid, unmonetized gold bullion.
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It avoids a direct Federal Reserve veto: As the Treasury is issuing debt to the open market rather than forcing the Fed to accept revalued gold certificates, it is a move that the central bank might be unable to prevent.
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It disguises risk as patriotism: Rather than alarming Wall Street with a Weimar-style accounting ploy, TTBs can be marketed to international capital as a stabilizing, secure asset. Proponents have even suggested a launch to coincide with the US’s 250th anniversary, which would depict TTBs as a bold, historic return to the sound money principles of the Founding Fathers.
By shifting from revaluing the gold to borrowing against its current market worth, the Bessent and Shelton plan gives the President access to the ‘loot’ while maintaining a veneer of fiscal responsibility.
This sleight of hand demonstrates how, in a highly politicized environment, demand from the ultimate source creates its own supply of intellectual rationalization. The boundaries of what is safe, prudent, or constitutional change overnight. Recent US military escapades and support for genocides are testament to how quickly and easily institutional guardrails can be bent to executive predilections.
When a president lusts for a trillion dollars that he believes can be realized at the stroke of a pen, in Washington DC there will always be a large number of think-tank analysts, heterodox economists, and ambitious financial planners ready to deliver a polished strategy paper that tells him exactly what he wants to hear. They will package the gambit to appeal to his fondest sensibilities – for example, as a historic riposte against an archaic global banking elite. To a leader who relishes defying institutional constraints, has a penchant for easy money, and is accustomed to getting his way, this is an alluring—gilt-edged—pitch.
There is no need to repeat here the evidence that demonstrates that the sitting US president is oblivious to cautionary advice, to international law, and the deadly harm his actions may do to others. These qualities are combined with ruthless megalomania and a seemingly insatiable appetite for massive financial and military gambles.
He is not someone to be trifled with or taken lightly. The body language of those around him tells you how much they fear his displeasure. When such a person is convinced that he has a ‘bright idea’, it is their job to tell him what a genius he is for thinking of whatever it happens to be.
The safety nets of economic, financial, and security systems can be ignored or cast aside very quickly in such circumstances.
The Irresistible Meets Mr. Insatiable
This is clearly a match made in Trump heaven – an alchemy of biblical proportions that is custom-made for someone who likes to portray himself as divine.
In the knowledge that risk and return for President Trump are always measured purely in personal terms (what’s in it for me?), it would be courageous in the extreme to wager against those golden chips being cashed in at some stage before his term as president comes to an end. That he would knowingly allow such a ‘get a lot richer a lot quicker’ scheme to pass him by seems inconceivable.
When presented with such a ready-made means of enormous self-enrichment and self-aggrandizement that could be packaged (no matter how unconvincingly) as something that is politically and commercially palatable, and over which he has executive authority, is it likely that President Trump will show restraint, look the other way, or do what was in the common good?
Can you think of an occasion when he has done so before?
You decide.