Over the last year, and especially the past 72 hours, the topic of gold price resetting has shifted from a fringe theory to mainstream discussion. The turning point came when former President Trump signed an executive order initiating the creation of a U.S. Sovereign Wealth Fund.
Standing beside him, Scott Bessent stated above: “We’re going to monetize the asset side of the U.S. balance sheet.” While various assets could be monetized, gold has captured the market’s attention.
Analyst Reactions and Market Sentiment
Following this announcement, market participants, particularly gold-focused analysts and traders, began speculating on gold’s role in the SWF. Financially literate communities, including GoldFix and ZeroHedge readers, Silver and Gold investors, and those familiar with the implications for bonds and spending, recognized the potential implications.
If Gold and Silver are remarked, it would be a sizable windfall…
The monetization of gold—even if it does not involve direct bond purchases—could function similarly to quantitative easing (QE), with potentially inflationary consequences. In other words, raising the price of Gold and Silver held on the US Government balance sheet and then spending that money, will be bullish for inflation and bullish for Silver and Gold.
Banks and analysts reacted differently to this possibility. Some, like Bank of America and Citibank, started discussing gold in more candid terms without directly addressing the reset narrative. Bank of America’s $3,500 gold target referenced China’s insurance industry adoption as a key driver. Citibank’s report suggested a potential rise to $3,400 based on physical supply-demand models. Others, likely those with short bullion positions, either remained silent or avoided the subject altogether.
The Missing Piece: Monetization Without Dollar Destruction
For the past two years, the central question for many gold-focused market participants was how gold could be revalued without destabilizing the U.S. dollar and Treasury markets. Initial thoughts included issuing gold-backed bonds—effectively putting gold “out on the yield curve.” This concept gained traction in 2022 during discussions with Tom Luongo and appeared again when Judy Shelton re-advocated her similar approach.
Gold’s true value remains outside the TGA (Gov’t “Checking”) Unmonetized…
However, concerns persisted. Issuing gold-backed bonds would compete with traditional Treasuries, undermining the dollar’s primacy. A senior bank executive responded bluntly when asked about this idea in 2022: “Are you fing kidding me? Why would the United States sell asset-backed bonds? We’ll keep selling our fing paper bonds as long as the world buys them.”
That essentially settled it. Revaluation would likely neither be a debt reducer nor an inflation reducer
Social Media Amplification and Viral Spread
On February 16th, 2024, Zero Hedge asked Elon Musk on X about auditing Fort Knox’s gold reserves. Musk responded assuming it was audited annually. This exchange triggered viral discussion.
It would be great if Elon Musk could take a look inside Fort Knox just to make sure the 4,580 tons of US gold is there. Last time anyone looked was 50 years ago in 1974.
To which Elon replied: “Surely it’s reviewed at least every year?”
Senator Rand Paul joined the conversation, as did others expressing support for an audit. This interaction pushed gold revaluation and audit narratives into broader public discourse.
Connecting the need for an audit with the bullion held domestically, Sources within the industry, including Scottsdale’s CEO Josh Phair, indicated that the U.S. might not only be repatriating gold but also adding to reserves.
The publicity of it all has forced banks reticent in the past to discuss Bullion to address a Gold price reset head on
Bank of America’s Explicit Mention of a Reset
On February 16th, Bank of America detailed report was received describing gold revaluation as a potential scenario. This marked the first time a major bank explicitly addressed a gold reset as more than speculative chatter. Previously, Hartnett, Bank of America’s own chief strategist, had been silent on gold in his most recent Flow Show report, likely because this larger gold-focused piece was in progress.
Having largely corralled the events of the last 72 hours, it is safe to ask Where are we possibly going?
Where are we possibly going?
Market participants are now asking three critical questions:
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What price will gold be revalued to if a reset occurs?
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What will the U.S. government use the proceeds from monetization for?
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Will revaluation trigger additional central bank gold buying globally?
The answers hold major implications for gold, bonds, and equities. Last time Gold’s price was re-marked was in 1973.
Very Bullish in 1973
Gold revaluation to $2,000 per ounce would be modestly bullish. A reset to $3,000 would be significantly bullish, likely prompting other central banks to adjust gold valuations upward, reinforcing gold’s role as a reserve asset by rewarding ownership. It could start a bubble in metals.
The intended use of proceeds is pivotal. If monetization funds deficit spending—akin to the 1973 gold revaluation—markets would likely view this as inflationary, driving gold much higher. If proceeds are used to reduce U.S. debt, the impact could also resemble QE, but benefiting equities more and bullion less.
Execution also matters. A gradual approach, akin to Hamilton’s sinking fund, would likely enhance market stability. A sudden injection of funds will trigger volatility.
Audit Before Revaluation
U.S. gold reserves would be required. Musk’s public inquiry aligned with broader calls for transparency, suggesting that auditing the nation’s gold holdings could become a prelude to revaluation.
Where the Gold and Silver reside on the US Balance sheet…
Final Thoughts:
Gold revaluation is no longer fringe speculation. Trump’s SWF, Bessent’s monetization comments, Grant’s sinking fund proposal, and growing mainstream attention signal that the Overton window has more than shifted. it has been been shattered.
The relationship between gold, debt, and monetary policy is being redefined. Investors should prepare for a future where gold plays a central role in U.S. fiscal strategy. If 1973 was any indication, this is the end of the beginning.
Source – GoldFix, Arcadia Economics
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