America’s store of gold seems to be burning a hole in the pocket of our new Treasury secretary, Scott Bessent. That’s the speculation we take from Gillian Tett’s latest column in the London Financial Times. “Another week, another record high for the gold price,” she writes — meaning another low for the value of the greenback in respect of the monetary metal. No wonder Mr. Bessent is itching to spend our gold. He’s like a youngster in a candy shop.

Then again, too, there’s a problem. It seems, Ms. Tett transmits, that the gold in question is being carried on America’s books at 42 dollars the ounce. Mr. Bessent knows that he doesn’t have to spend a 42nd of an ounce of gold to buy one of our one-dollar Federal Reserve fiat notes. For each one of those, he’d currently have to pay on the market less than a 2,800th of an ounce of gold. So there’s chatter that he wants to “revalue” the gold in America’s vaults.

As in, mark the gold we hold to market. Ms. Tett calls this a “less noticed issue.” The idea is that Mr. Bessent could devalue the dollar to roughly two thousand eight hundred dollars the ounce from the price at which we’re carrying the gold on our books. That would drop the amount of gold he’d have to spend to get one of them paper dollars. This may be to what Vice President Vance is referring when he speaks of the dollar as “overvalued.”

Ms. Tett quotes a business school professor as saying that re-marking the government’s gold to the current market would “mechanically deleverage the US balance sheet.” As in pay part of our debts? Could that mean replacing dollars valued at a theoretical 42nd of an ounce with ones valued by the market at a 2,800th of an ounce? If so, it starts to look like a devaluation by another name, making FDR’s devaluation in 1934 look like Tiddly Winks.

The professor notes that if, as Ms. Tett puts it, gold prices keep rising — meaning, in Sun-speak, if the value of the dollar keeps falling — then “this potential blessing swells.” That invocation of God’s protection is, let us say, timely. She quotes one analyst as saying it’s time to “get creative”  around  “Uncle Sam’s balance sheet.” She also suggests that the “Overton window” of policy options is widening.

What could possibly go wrong? Feature that of the last seven presidents, the ones in office since denominating currency in gold was barred, only three have seen the gold value of the dollar rise on their watch. They are Reagan (+38.8 percent), George H.W. Bush (+23.1), and Clinton (+24.2). As for the others, the value of the dollar plunged. In President Trump’s first term, it fell further (-35.7 percent) than it did under President Biden (- 30.9 percent).

President Trump has been consistent in saying that he is committed to maintaining the dollar’s status as a reserve currency. That’s a comment, though, less on the virtues of the current monetary system than on the relative position of America. It’s said that Tuckerman’s Ravine on Mt. Washington is the steepest hill a man can ski. It’s not as steep, though, as the chart of the collapse of the dollar since the end of Bretton Woods. 

It’s unclear, at least to our editor, whether Mr. Bessent is inclined to spend the gold in our vaults — or just borrow against it. Ms. Tett reports that if our gold stocks were marked at a 2,800th of an ounce “this could inject $800bn into the Treasury General Account, via a repurchase agreement.” That’s enough to keep the government in chowder for, at its recent burn rate, close to six months. Then what’s left in Mr. Bessent’s pocket?