Gold investors have seen an exceptional rally, with the metal's price soaring over 40% in the past year—more than double the gains of the S&P 500. While many turn to gold as a hedge against fiat currency, economic uncertainty, or other motivations, the U.S. government remains the largest holder of the metal. A simple accounting adjustment could potentially add around $750 billion to the country's balance sheet.

The U.S. officially holds approximately 261.6 million troy ounces (about 8,200 metric tons) of gold. However, these reserves are currently recorded at a fixed value of $42.22 per ounce—a price set in the early 1970s—giving them a book value of just $11 billion. At today’s spot price of roughly $2,920 per ounce, the actual market value of these holdings is close to $765 billion.

There is ongoing debate about whether adjusting the book value would have any real financial impact. Speculation on this topic has grown as Treasury Secretary Scott Bessent works to implement the administration’s economic strategy while maintaining market stability.

“We’re going to monetize the asset side of the U.S. balance sheet for the American people,” Bessent stated last Monday when President Trump signed an executive order establishing a sovereign wealth fund. “We’re going to put the assets to work, and I think it’s going to be very exciting.”

The Treasury Department has not commented on the matter, but in financial terms, "monetization" generally means converting an asset into money or at least revaluing it in currency terms. However, would an additional $750 billion in reported assets make a significant difference? Not necessarily, according to Jay Hatfield, CEO of Infrastructure Capital Advisors.

For the adjustment to have a meaningful effect, the U.S. would likely need to sell some of its gold reserves. However, such a move could flood the market, potentially driving prices down.

“If they attempt to offload a significant amount of gold, it could be catastrophic,” Hatfield cautioned.

Rob Haworth, a senior investment strategist and commodities researcher, echoed similar concerns. Gold prices have been supported by central bank purchases, particularly from China, since 2022. A major U.S. sell-off could reverse this trend.

Addressing Economic Challenges
The discussion about monetizing gold reserves highlights the balancing act Bessent faces: managing the growing deficit while advancing the administration’s fiscal priorities. Reports indicate that House Republicans are considering tax and spending measures that could add $6.5 trillion to the national debt, doubling its growth rate. Already, interest payments on the debt exceed spending on Medicare and defense.

According to David Teeters, a professor at a leading business school, a $750 billion mark-to-market gain could improve the government’s balance sheet. By increasing total asset value, the country’s debt-to-assets ratio would decline, potentially giving Bessent more room to maneuver.

However, the Treasury secretary must also reconcile conflicting goals: the administration seeks to weaken the U.S. dollar while simultaneously strengthening its role as the world’s reserve currency. Proposed tariffs may complicate both objectives.

“Something has to give,” Teeters noted in a recent blog post.

A global race to devalue currencies is not an appealing scenario.
“One possible alternative is a coordinated reset of the global monetary system, where all currencies are devalued against a neutral reserve asset,” Teeters explained. “The best candidates for this are either gold—which has historically served this function—or Bitcoin, a rising alternative among younger generations. Both could see significant gains in 2025.”

For gold investors, this could be a promising development.