Repricing the US gold reserves to reflect current market conditions would likely push prices up, signaling that gold is still a valuable asset, according to Francisco Blanch, head of commodities and derivatives research at Bank of America Securities. This move would be an accounting exercise, but it would increase the Federal Reserve’s balance sheet.
The US currently owns 261.6 million troy ounces of gold, valued at $42.22 an ounce, resulting in a book value of $11 billion. However, at the current spot price of around $2,950 per ounce, the value would exceed $750 billion. Blanch believes that repricing gold would show that it’s no longer a “barbarous relic” but an asset that even the biggest central bank is taking a renewed interest in.
Gold has been gaining momentum, doubling in price since the COVID pandemic, and surging since Russia invaded Ukraine in 2022. Central banks are now among the biggest buyers of gold, and investors are piling into gold as a safe-haven asset amid economic fears.
Revaluing the US gold reserves would have significant implications, including:
- Increased financial stability: A revaluation would strengthen America’s position in global markets.
- More substantial backing for the US dollar: The increased value of gold reserves would provide a stronger backing for the US currency.
- Greater confidence in US financial assets: A revaluation would signal renewed interest in gold, boosting confidence in US financial assets.
- Increased foreign investment: The increased value of gold reserves would make the US a more attractive destination for foreign investors.
While Treasury Secretary Scott Bessent dismissed the possibility of revaluing the gold reserves, the idea has sparked interest and debate among analysts and investors.
