Why Gold has been allowed to run (incentive-based analysis)
As of September 23rd 2025, Gold has risen 42.5% YTD and 49.74% on the 1 year.
Gold's market cap is $25.5T, so it is by far the largest asset by market cap in the world.
Letting gold run while containing Bitcoin fits the State's incentives.
Gold can satisfy the public's "store-of-value" impulse without granting a parallel, censorship-resistant payments rail; it trades in surveilled, gate-kept markets (London OTC/COMEX, custodian oligopolies).
Central banks themselves are heavy buyers, and its price can be influenced via regulated derivatives and custody choke-points.
Bitcoin, by contrast, threatens monetary sovereignty if it spreads as money.
1) Gold as a Controlled safety valve
- Let savers vent inflation/sovereignty anxiety into the least threatening SoV (store of value). Gold is surveilled at on/off-ramps, heavy, slow, taxable, and easy to ring-fence (customs, export rules, windfall taxes). Every dollar that flees to gold is a dollar not pressuring Bitcoin-as-MoE (medium of exchange) or moving into parallel rails.
2) Balance-sheet relief (without headline QE).
- A higher reference price quietly recapitalizes sovereigns and Central Banks that carry gold at legacy/statutory marks. It strengthens reserve ratios and collateral narratives without Congress/parliament votes.
3) Collateral & settlement optionality.
- When duration supply and term premium wobble, a higher, steadier gold price broadens acceptable collateral in cross-border finance while keeping the USD system central.
4) Narrative management: "We tolerate sound money".
- A visible gold bull market signals tolerance for a "traditional hedge", undercutting the story that authorities crush every escape hatch. It buys legitimacy while more programmable rails (stablecoins/CBDCs) normalize.
5) Diversion & crowding-out.
- A strong gold tape soaks risk appetite that might otherwise chase Bitcoin self-custody. Retail and many institutions will choose the IRA/ETF-friendly, audit-simple, reputation-safe shiny rock.
And the main points here really are - Gold absorbs social inflation angst into a non-transactional hedge and supports Central Banks' reserves without explicit bailouts.
At the same time, Bitcoin has to be kept in a vol-managed corridor while programmable money rails get public buy-in.
Letting gold run is rational if you want a nonthreatening pressure valve that:
1) stabilizes balance sheets,
2) placates reserve managers,
3) siphons speculative and hedging demand away from a grassroots MoE (Bitcoin),
4) and keeps the public believing "sound money is allowed".
I'm not really interested in buying gold other than on large dips on plumbing-driven drains. Even then, I'd buy very little in relation to my NW.
There is a lot of speculation and hopium in regards to the possibility of gold getting revalued higher (e.g. to $10K/oz) but I find this very unlikely.
- As of now, the US allegedly holds ~261.5M oz of gold.
- It is valued at $42.22/oz while the current price sits at $3,777.25/oz.
- So the US could mark it to market. E.g. the ECB/Eurosystem already marks gold to market.
- However, it largely does nothing, so it signals fragility if framed as "repairing the sovereign balance sheet". So timing skews to recession/credit stress or a political inflection.
The odds of revaluing gold to $6K-$10K/oz I find extremely unlikely.
A dramatic reprice screams monetary regime shift, risking USD confidence and imported inflation - not what policymakers want absent a crisis.
It is also a limited debt cure. It improves optics (equity) but doesn't cancel nominal liabilities unless you monetize the gain, which is politically charged and inflationary.
1) What a Gold revaluation actually does (accounting)
- The U.S. holds ~261.5M oz of gold (allegedly).
- At $42.22/oz it sits on the books at ~$11B.
- If you mark it to, say, $6,000/oz, it becomes ~$1.57T; at $10,000/oz, ~$2.62T.
- The difference (to $2.62T) is an accounting gain - it boosts the government's equity/revaluation reserve.
- But, this does not by itself retire any Treasury debt. The nominal debt still exists in full.
2) Why it’s a "limited debt cure"
- Even at $10k/oz (~$2.6T total value), that's well under 10% of the federal debt stock (~$38T).
- So, revaluation improves optics (the government looks "richer" on paper), but it's not a balance-sheet nuke that cancels most liabilities.
3) When (and only when) it helps cash and debt for real
To actually pay down debt, the gain must be monetized - i.e., turned into spendable dollars that can retire Treasuries:
- Sell some gold and use the proceeds to redeem debt; or
- Pledge/issue new gold certificates to the Fed, which credits Treasury's account (new base money), then use that cash to retire debt.
Either path creates/introduces dollars, which brings us to the inflation part.
4) Why it's "politically charged and inflationary"
- Politically charged: It's an explicit, visible devaluation signal - a regime move that concedes the dollar buys less gold than the statute implies. It picks winners/losers (gold holders vs. cash/bond holders).
- Inflationary risk: Monetizing the revaluation (Fed credit or gold sales used for spending/redemptions) expands the money base unless the Fed fully sterilizes it. If not sterilized - it will push inflation or force offsetting tightening elsewhere.
What I mean by "the Fed fully sterilizing it":
- "Sterilize" here means: if the Fed (or Treasury via the Fed) creates new base money by monetizing the gold revaluation, the Fed then drains or neutralizes that same amount so the monetary base doesn't rise.
Balance sheet example (with a random number - $500B)
1) Monetization step: Treasury gives the Fed higher-value gold certificates; the Fed credits Treasury's account +$500B. The Banking system reserves rise +$500B when that money is paid out.
2) Sterilization step: Fed sells $500B of Treasuries (or uses $500B RRP). Buyers pay with reserves -> reserves −$500B. Net change in the monetary base ≈ 0.
Based on my research, I expect financial repression (sticky inflation of 3-4% - headline CPI equivalent, not real -) in the US over the next 24 months, not hyperinflation nor systemic collapse.
Market signaling of repricing Gold much higher
Such a re-pegging/repricing can re-anchor expectations about currency, commodities, and policy - potentially lifting risk premia and term premiums in bonds.
Of course, precedent exists. The 1934 reprice to $35 transferred gains to the Treasury.
The legal/administrative muscle memory is there, however, the regime and tools today are different.
The new fiat era is headed toward stablecoins/CBDCs with 137 countries and currency unions (98% of global GDP) developing CBDCs right now.
So, I find the revaluation hopium of gold bugs unlikely because:
- Revaluation alone = mostly an accounting lift (stronger "equity"), no automatic debt reduction.
- True debt relief requires monetization, which is politically sensitive and will be inflationary.
- Even aggressive revaluation only chips at the debt stock, so it's not a silver bullet.
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