The value of the U.S. Department of the Treasury’s gold holdings passed $1 trillion on Monday as gold prices continue to climb.
Data from the Bureau of the Fiscal Service indicates the Treasury Department holds 261,498,926.241 fine troy ounces of gold.
Gold is trading at $3,865.43 per ounce at time of writing, according to data from Goldprice.org. The precious metal is up nearly 8.5% in the past 30 days, 23% in the past six months and 44% in the past year.
Colin R. Weiss, a Federal Reserve economist, explains in a note published in August that the US gold reserves are valued at a statutory price of $42.22, which was set by a 1973 law. At that statutory price, the Treasury Department’s gold holdings are only valued at around $11 billion.
Weiss notes that some governments have recently explored using proceeds from valuation gains on gold reserves as a way to finance additional expenditures without increasing debt or raising taxes. He outlines five countries that have done so in the past 30 years, though he acknowledges that the results have been mixed.
“Central banks have used revaluation proceeds to offset operating losses and maintain net profits or minimize reported net losses. In Italy, revaluation proceeds covered a one-off loss for the conversion of a specific bond the Banca d’Italia owned. In Curacao and Saint Martin, the proceeds covered losses generated by a fall in interest income from holding relatively lower-yielding securities than previous years and realized valuation losses as the central bank rebalanced its portfolio. The use of revaluation proceeds temporarily boosted profits for both central banks, but, in Curacao and Saint Martin, the use was paired with other measures to [generate] additional income on a sustained basis.
Central governments have drawn on revaluation proceeds to retire existing debts, often in exceptional fiscal circumstances. While reducing the debt stock using revaluation proceeds improves the fiscal situation at the margin, drawing on revaluation proceeds may not address larger structural challenges. For example, Lebanon’s debt-to-GDP ratio continued to increase even after revaluation proceeds were used to retire some existing debts.”
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