“Gold! You’re indestructible!”
These were the words of Tony Hadley, the lead singer with eighties new romantic outfit Spandau Ballet. According to the Kemp brothers who wrote the song, the 1983 smash-hit explored themes of pride, resilience, and the enduring power of self-belief.
Gold, as well as having a commercial use in industry, technology, jewelry and most recently the decoration of the Oval Office, has also been a store of wealth when other assets have become stressed.
But all that may be about to change.
Worried government and treasury officials are exploring how the shiny yellow metal could drag the US out of its current debt death spiral.
At the time of writing, the US is in the second week of a government lockdown. That means federal bank accounts have been frozen and spending on a range of services from paying military wages to border security, national parks and air traffic control has stopped.
So, what has this got to do with gold?
The shutdown is a political consequence of the $37trillion debt the US carries. Congress is arguing about how to set a budget, how much more to borrow and how to even start paying the debt down. The US is living way beyond its current means, such that the dollars it raises through taxes are having to be used to pay the $2billion a day interest on the debt rather than funding defence, Medicare or other services.
Like in most democracies, advocating massive tax rises is not a politically popular option, slashing services hits those who rely on them hardest – in this case the working poor and retirees who constitute much of Trump’s voter base – and crashing the economy is unpopular with the asset owning classes whose portfolios of stocks, bonds and property wealth take a nose dive.
The problem wasn’t created by Trump, but his administration now has a radical plan to address it.
The solution involves gold, crypto currencies and the GENIUS Act.
According to a 1 August 2025 Federal Reserve Note, the US is sitting on more than 260million ounces of gold. That has a statutory price of $42.22 per ounce, a rate set in February 1973 and not adjusted since. All this sits on the US Government financial statements.
Valued at the statutory price, that mountain of gold locked away in Fort Knox is worth somewhere around $11billion. But if we look at the market value of gold, which the Fed Note priced at $3300 an ounce, the sums look different.
The new value of the gold stash would be around $860billion.
This simple accounting trick means the US government has found nearly $850billion in new funds. And because the Treasury and the Federal Reserve Bank have an understanding, the government can go to the Fed and drop off its gold certificate – confirming it has the gold – and pick up somewhere around $800billion in cash.
The government then faces a choice. It can use the windfall to pay down some of the debt, or spend it on things which boost the economy in the hope of generating new future tax income.
Radical indeed, but not unprecedented.
In 1933 off the back of the great recession, President Roosevelt did something similar. FDR issued an Executive Order – Trump’s instrument du jour – to compulsory purchase all American citizens’ gold at $20.67 an ounce before revaluing it at $35.00 an ounce a short time later. This boosted treasury funds and devalued the dollar meaning real dollar debts fell.
If the administration did revalue gold, why choose today’s spot price – why not set a price which anticipates future growth to say $5000 per ounce or $10,000? There are even those sheltering in the rare air of think tanks and academia who argue, if you are going to fundamentally shake the global financial system in such a major way, why not go all in and set the price of gold at $150,000 an ounce and wipe out all $36trillion of debt in one go?
A change in the valuation of gold – at any level – will have an impact on the global financial architecture with implications for the dollar, its role as a reserve currency, trade flows and even monetary sovereignty. Previous Presidents have been too concerned about these impacts, but perhaps the current incumbent doesn’t care so much making this the moment change may occur?
While I think it’s unlikely that Trump or any administration is going to seize private gold stores, the idea of having the nation’s wealth available is still attractive. So instead of seizing gold, what about other assets?
In March this year, Trump issued an order which stopped the Government from selling seized crypto assets from crooks, swindlers and bankrupts. Instead, they will be placed into a Strategic Bitcoin Reserve or US Digital Asset Stockpile, which will grow as the crypto currency boom continues. The supporting paper to his order indicated that ‘premature
sales’ of Bitcoin has cost the treasury $17billion. The Trump administration aims to build a $75billion pile of crypto and, like gold, that can be certified to the Federal Reserve in return for a similar cash sum.
So, we can reprice gold, load up on seized crypto, and now the GENIUS Act rounds out the plan.
Passed into law in July, GENIUS Act – Guiding and Establishing National Innovation for U.S Stablecoins – promises to make USA the crypto capital of the world.
Stablecoins? Sounds good in a time of nervous finances. Good enough for President Trump’s family and his US envoy to the Middle East Steve Witkoff to have launched one themselves with the backing of the Abu Dhabi government.
The act sets the rules for who can issue Stablecoins, aka Digital Dollars, limiting it to only approved banks, credit unions or financial institutions, and stating that any public company will need the unanimous support of the Treasury, Federal Reserve and Federal Deposit Insurance Corporation. The barriers to entry are very, very high.
Stablecoins, despite the name, aren’t actually that stable. What they are in 99% of cases is pegged to the US dollar. Or more specifically US treasury debt which is what a dollar is. Every Stablecoin has to be backed by a corresponding US dollar investment. With current estimates suggesting the value of global Stablecoins is $255billion and rising, that is a potentially huge source of buyers of US debt, which is good news for tackling the debt bill and keeping interest rates in check.
There are also a lot of new surveillance elements within the GENIUS Act. The law allows the state to partner with firms like Palantir – run by Trump funder Peter Theil, a German American investor – to monitor your funds including ‘the technical ability to freeze, seize or burn stablecoins when legally required’.
So, if you are nervous about digital ID and tracking – and the early reaction to Starmer’s National Identity Card suggests Brits are – unsure about the long-term financial future or independence of crypto and digital currencies, that leaves gold as perhaps still the best place to hoard your money so it is there for your retirement.
As Hadley croons… “These are my salad days, Slowly being eaten away, Just another play for today…”
