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Gold Revaluation Risks ‘Messy’ Outcome for Fed, Wrightson Says
- Surge in Fed assets could be seen as quantitative easing
- Move may extend debt-ceiling X-date to 2026: Barclays’ Abate
By Alex Harris
19 February 2025 at 2:16 AM SGT
Updated on
19 February 2025 at 4:06 AM SGT
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Revaluing the US 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.
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.