The US has the largest gold reserve. But repricing it to $1 trillion 'would backfire in a big way'

Key Points:

• Treasury yields have surged to their highest levels in over 20 years, increasing pressure on U.S. interest expenses and prompting the Treasury Department to explore unconventional measures like debt buybacks and currency interventions.
• Speculation has arisen about the Treasury repricing its vast gold reserves, officially valued at $42.22 per ounce since 1973, to current market prices near $4,000 per ounce, which could theoretically add about $1 trillion to the government's balance sheet.
• Treasury Secretary Scott Bessent has hinted at monetizing assets and acknowledged the large market value of U.S. gold holdings, though the administration states that repricing gold is not under serious consideration.
• Experts caution that repricing gold could destabilize the U.S. dollar, increase inflation, and raise the term premium on Treasury yields, potentially worsening borrowing costs despite providing a temporary fiscal boost.
• While some countries have revalued gold reserves to improve fiscal situations, the Federal Reserve notes that such measures are insufficient to address the U.S.'s massive $40 trillion debt and ongoing multi-trillion-dollar annual deficits.