The Federal Reserve’s consideration of revaluing its gold stockpiles poses significant risks for a messy outcome, says Wrightson ICAP. The proposal involves revaluing the gold reserves from their current price of $42.22 per ounce to market value, which would increase the collateral value of the Treasury’s gold holdings by approximately $739 billion.
This move could be seen as quantitative easing, and its effects on the financial system are far-reaching. Revaluing gold reserves would boost liquidity and prolong the Federal Reserve’s balance-sheet unwind, exacerbating existing debt-ceiling constraints. The proposal was also floated in 2023, highlighting concerns about the impact of this move on the economy.
The plan allows the Treasury to pledge its physical gold holdings to the Fed in exchange for cash, which could have significant implications for monetary policy and the financial markets.
Source: https://www.bloomberg.com/news/articles/2025-02-18/wrightson-says-gold-revaluation-a-messy-outcome-for-fed-policy