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Gold revaluation risks 'messy' outcome for Fed, Wrightson says
By Alexandra Harris
Bloomberg News
via Yahoo News, Sunnyvale, California
Tuesday, February 18, 2025
Revaluing the U.S. gold stockpiles might look tempting under debt-ceiling constraints but it would have far-reaching implications for the financial system, boosting liquidity and prolonging the Federal Reserve's balance-sheet unwind, according to Wrightson ICAP.
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Treasury is allowed to pledge its holdings of physical gold to the Fed in exchange for cash. The proposal, which was also floated in 2023, centers around the idea that the government should revalue gold reserves from the $42.22 per ounce -- the legacy Bretton Woods price -- to market value.
That would put the collateral value of the Treasury's gold reserves at roughly $750 billion, up from about $11 billion, according to Wrightson ICAP.
While the idea reportedly isn't under serious consideration by the current administration, the debate over such a move has gathered steam in recent weeks as it is seen extending Treasury's ability to borrow under the debt ceiling before an agreement is reached. ...
... For the remainder of the report:
https://finance.yahoo.com/news/gold-revaluation-risks-messy-outcome-181642849.html
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