On February 3 of this year, the White House issued an "information bulletin" regarding President Donald Trump's plans to establish a U.S. sovereign wealth fund (SWF).
Without question, Trump's executive order to form a United States SWF represents a groundbreaking transformation in national financial policy.
Here's just a segment of what the EO declares. . .
This initiative not only indicates a reassessment of America's fiscal strategy but also presents fascinating considerations for reappraising the nation's gold reserves.
By now, unless you've been completely disconnected from current events, you're aware of the extensive media attention surrounding DOGE's (the Department of Government Efficiency) initiative to audit Fort Knox and its gold bullion holdings. Trump wants to confirm the gold's actual presence!
But the implications run much deeper. The U.S. government's persistent valuation of gold at $42.22 per ounce stems from the Bretton Woods Agreement of 1944, which created a fixed exchange rate framework. Under this system, the U.S. dollar was linked to gold at $35 per ounce, with other currencies tied to the dollar.
The figure was subsequently adjusted to $42.22 in 1973 following Bretton Woods' collapse, yet gold remained officially recorded at this value on government financial statements. The reasoning for maintaining this artificial valuation even after the U.S. abandoned the gold standard in 1971 was largely administrative and accounting-based. Since the government no longer supported the dollar with gold, there wasn't an urgent requirement to update the valuation. Instead, the Treasury continued documenting gold holdings at the outdated official price, maintaining a legacy accounting practice that reflected historical monetary policy rather than market reality.
Trump aims to reassess the government's gold stockpile at current market value. This would expand the government's asset portion of its balance sheet by almost $800 billion!
Bringing the valuation in line with market rates would substantially enhance the Treasury's asset foundation, creating potential financial opportunities — like issuing gold-secured bonds or strengthening a sovereign wealth fund. Yet, such an action could also trigger significant monetary and economic ripple effects, including escalated inflation worries and alterations in worldwide trust in the U.S. dollar.
Should the U.S. government update its gold valuation to reflect market rates rather than the outdated $42.22 per ounce figure, the consequences could be far-reaching, possibly transforming global gold markets, sparking a commodities surge, and shaping monetary policy across the globe.
In this edition of Wealth Daily, we'll examine the prospective framework of a U.S. sovereign wealth fund, evaluate the possible ramifications of gold reassessment, and consider how a gold-backed digital currency, such as NatGold, might fit into this financial ecosystem.
What a US Sovereign Wealth Fund Might Look Like
Important Disclosures:
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of NatGold Corp.
- Brian Hicks: I, or members of my immediate household or family, own securities of: NatGold Corp. I determined which companies would be included in this article based on my research and understanding of the sector.
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