Recent anomalies in the gold market, including delivery delays in London, repeated record highs, and unusually large shipments of bullion to US vaults, have led precious metals analysts to speculate about an official revaluation of the price of gold.
If the “deep storage gold” on the US Treasury's balance sheet were to be increased from its current $42.22 per ounce to improve the country's fiscal position or borrowing capacity, the move would constitute a devaluation of the US dollar against gold.
A revaluation of gold is not out of the question. It has happened before.
It could happen again despite what Treasury Secretary Scott Bessent did or did not imply earlier this month when he suggested that the Trump administration “is going to monetize the asset side of the US balance sheet for the American people.”
Gold revaluations and dollar devaluations have occurred several times in US history.
President Jackson revalued gold against the silver dollar
The passage of the Coinage Act of 1834 revalued gold against the silver dollar by raising the ratio of silver to gold from 15 to 1 to 16 to 1. By signing the law, President Andrew Jackson raised the official price of gold to $20.69 per troy ounce, up from $19.39 previously.
It was the first revaluation of the price of gold in the country since the gold-silver ratio was established by the Coinage Act of 1792, which defined the dollar in terms of the purity and weight of monetary metals.
Since the nation's founding, the United States had been governed by a bimetallic standard, and the dollar was defined as 371.25 grains of pure silver. By reducing the gold content of the $10 Eagle coins from 247.5 to 232.2 grains of fine gold, Jackson and his supporters in Congress altered the gold-silver ratio.
Jackson was a strong currency advocate and deficit hawk who despised the central bank. In 1832, he ended the Second Bank of the United States, which charged interest, by refusing to renew its charter and eliminating the national debt in 1835. It was the first and only time the nation was not burdened by the fiscal albatross.
While Jackson's revaluation of gold did not contribute to his phenomenal achievements, it motivated gold miners in Georgia and North Carolina, increased the circulation of gold coins, and boosted gold imports, just like the influx occurring today.
Precious metals move toward higher prices. They always have and always will.
The Coinage Act of 1837 introduced another slight adjustment to the silver-gold ratio. By minimally reducing the standard weight and size of the silver dollar, the law reduced the official price of gold by two cents, to $20.67 per troy ounce. It was a rare case of gold devaluation against the dollar.
The price of gold remained at that level in the Treasury's ledger for nearly a century.
President Roosevelt devalued the dollar against gold
In the midst of the Great Depression, the devaluation of the dollar was a central piece of federal policy aimed at promoting economic recovery.
After President Franklin Roosevelt banned private ownership of most monetary gold in 1933, his administration took deliberate steps to encourage gold production, increase gold imports, and raise the price of gold at the expense of the US dollar.
“The United States must firmly take control of the value of our dollar,” Roosevelt said during a radio broadcast on October 22, 1933, before authorizing the Reconstruction Finance Corporation (RFC) ‘to purchase newly mined gold in the United States at prices to be determined from time to time’ and to ”buy or sell gold on the world market.”
Formed during the administration of President Herbert Hoover, the RFC was a government-sponsored lender of last resort, financed with $500 million in federal funds to stimulate recovery from the severe economic crisis.
In 1933, the corporation purchased 128 metric tons of gold for $134 million to raise its market price, devalue the dollar, increase commodity prices, and expand U.S. exports. Through a series of purchases at increasingly higher prices, the RFC achieved a minimum gold price of around $34 per ounce.
In 1934, Roosevelt signed a proclamation setting the official price of gold at $35 per troy ounce. His measure devalued the dollar by 59 percent against gold, allowing the Federal Reserve to inflate the supply of fiat currency in an effort to revive the depressed economy.
President Nixon revalued gold twice in the early 1970s
In an attempt to save the 1944 Bretton Woods agreement and combat deteriorating economic conditions in the United States, President Richard Nixon revalued gold twice in the early 1970s.
In 1971, against a backdrop of declining US gold reserves, rising unemployment, and increasing inflation, Nixon stopped redeeming the country's gold for dollars at $35 per ounce. While the decoupling of the dollar from gold halted the loss of the country's bullion reserves, the dollar remained overvalued compared to other currencies in the foreign exchange market, contributing to growing US trade imbalances.
In an effort to maintain dollar-gold convertibility, weaken the dollar, and increase US exports of raw materials, Nixon raised the official price of gold to $38 in 1972 and to $42.22 in 1973, which together devalued the US currency by 20 percent. However, Nixon's devaluations did not preserve the international gold standard.
Together, the demonetization of gold and the devaluation of the dollar allowed the US government to spend and borrow fiat dollars endlessly, causing the currency to depreciate against gold, whose price skyrocketed to $800 an ounce in 1980.
Like his predecessors, who devalued gold, President Donald Trump could revalue it if his audit team at the Department of Government Efficiency (DOGE) confirms that US deposits contain the 8,133 tons of bullion listed in the Treasury's books. They will also want to verify that the bullion, if present, is not legally encumbered in any way.
Now that gold is approaching $3,000 an ounce, revaluing the country's gold at market price could provide Uncle Sam with a $770 billion windfall to spend or pay off outstanding obligations.
Most likely, the revalued gold will be used to inflate the currency and finance more debt. In that case, the revaluation would constitute a devaluation of the dollar against gold and further devalue the country's currency.
Either way, the revaluation could be a windfall for gold enthusiasts. If the official price of gold were raised, it is almost certain that the metal would trade at higher levels, as it did six decades ago, provided that the possession of gold is not prohibited, God forbid, as it was in 1933.
Stuart Englert, Money Metals