America’s Gold Revaluation Could Wipe Out Half the U.S. Budget Deficit

The United States, holder of the world’s largest gold reserves, is sitting on a potential $1 trillion windfall that could reshape its finances but risks destabilizing global markets. Despite gold prices soaring 54% in 2025 to over $4,000 per ounce, the US Treasury’s 8,133 metric tonnes of gold are still valued at a mere $42.22 per ounce, a 1973 figure set by the Par Value Modification Act. This pegs the official ledger at just $11 billion, a fraction of the reserves’ true market value, which now exceeds $1 trillion. Revaluing these reserves at current prices could erase nearly half of the nation’s $1.973 trillion budget deficit without selling a single ounce or issuing new debt.

With the US national debt ballooning to $37 trillion and a government shutdown dragging into its second week as of October 11, 2025, the idea of tapping this undervalued asset has gained traction. Earlier this year, Treasury Secretary Scott Bessent floated monetizing the US balance sheet’s asset side, sparking heated debate before backtracking. A recent Federal Reserve note highlighted rare instances where countries like Germany, Italy, Lebanon, Curacao, and South Africa revalued gold or foreign exchange reserves to bolster finances. These moves funded debt reduction, balanced budgets, or supported banking reforms, but critics warn that revaluing US gold could act as backdoor money printing, devalue the dollar, and ignite inflation.

Historical precedents underscore the risks. In 1933, President Franklin D. Roosevelt’s Executive Order 6102 forced citizens to surrender gold bullion, followed by the 1934 Gold Reserve Act, which revalued gold from $20.67 to $35 per ounce. This 69% jump devalued the dollar by 41%, boosting government wealth but fueling inflation. In 1971, President Nixon ended dollar-to-gold convertibility, and by 1973, the official price was fixed at $42.22—an outdated benchmark still in use. A modern revaluation could flood the Treasury with funds to pay down debt or finance spending, as proposed by Wyoming Senator Cynthia Lummis, who suggested using proceeds for a sovereign wealth fund or a strategic bitcoin reserve endorsed by President Donald Trump.

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However, the ripple effects could be seismic. Devaluing the dollar against gold might erode confidence in the fiat system, prompting other nations and central banks to revalue their reserves or shift away from dollar-based assets. The Fed notes that some central banks, like India’s RBI, already value gold daily at 90% of the London Bullion Market Association price, with India’s 879.58 metric tonnes worth Rs 10.28 lakh crore as of September 2025. Others, like Germany and Italy, have used revaluation gains to offset losses or stabilize budgets, while Lebanon’s attempt failed to curb its soaring debt-to-GDP ratio.

Proponents see revaluation as a quick fix to ease fiscal pressures without austerity or borrowing, potentially freeing up funds for infrastructure, healthcare, or debt relief. Yet skeptics argue it could trigger a global race to reprice gold, unsettling currency markets and hiking commodity prices. With the US economy already strained and global faith in the dollar under scrutiny, this Midas-like gamble could either rescue America’s finances or unleash chaos across the world’s financial systems.

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