The U.S. Treasury can draw up to $700 billion in new funding from its gold revaluation account at the Federal Reserve. And the Treasury could invest this “new money” in a sovereign wealth fund (increasing the money supply by an equal amount).
It really helped me understand the mechanism by which gold "solves" Government's indebtness / deficit problems and is likely to be used. It also makes it clearer why so many CB's / Governments have been buying physical gold in recent years (over-and-above the confiscation of Russian Reserves).
Bessent is good friends with Stan Druckenmiller and Mike Green. Two very sharp minds. He is well advised and shrewd. His goal to lower 10Y yields in an effort to stabilize the US Government balance sheet has been stymied by his predecor, Yellen.
Yellen has left a massive mess as she left (Repo facility depleted, duration of US Govenment debt much lower, skew towards Bills vs. Coupons).
Bessent's options, using conventional means are thus limited. 'Asset Monetization' is a very shrewd strategy. Maybe he and Druck, or Green, have been talking?
If we look at the flow of physical gold from London --> COMEX and who is doing it, we can speculate that other asset managers (associates of Bessent? Within the circle?) are speculating on exactly what you lay out. The narrative of 'tariff fears' may be partially right, but I suspect there is a bigger picture. In addition, the 'logistics issues' getting gold out of London Vaults suggest that it would be wise to be at the front of the line. There are a lot of paper claims on a dwindling stack of physical gold ...
Exactly my guess. Repatriation of gold that over the years has been leased out from the US Treasury to bullion banks is probably what dramatically and in no time drove the price to >$2,900/oz. There is also the possibility that DOGE's announced audit of the Treasury alarmed the Treasury accountants who had to hurry in order to fill the empty racks with physical. All this probably comes in anticipation of C.Bessent's plan of "monetization of Treasury assets", as Nieuwenhuys suggests. He wants to start with a clean sheet, i.e. pure gold and not paper gold or unfunded claims.
US Treasury gold that had been leased out to bullion banks over the years, in the last two weeks (partly?) came back to the US. That drove the price up to $2,900/oz. My guess is this was in anticipation to the monetization Scott Bessent is talking of and/or auditing of the US Treasury by DOGE. I guess it's panick mode at the Treasury, or FAFO-mode, to use a more modern term.
Jan, your gold market analysis is the best I've ever read. Trump wants to give a big tax cut later this year. People in Asian markets say he's cutting spending and jobs now to get cash. It's possible a gold re-pricing could provide him a trillion dollars more. Is he really that craven? Also, banks are taking delivery on large volumes of gold. Could these events be linked? Also, why is Kitco offering to buy Eagles at $50 below spot but selling at $130 over spot? That's an extreme spread for them. Something big is going on in the gold market and it's possible you found the linkage.
That's a great piece Jans.
It really helped me understand the mechanism by which gold "solves" Government's indebtness / deficit problems and is likely to be used. It also makes it clearer why so many CB's / Governments have been buying physical gold in recent years (over-and-above the confiscation of Russian Reserves).
Bessent is good friends with Stan Druckenmiller and Mike Green. Two very sharp minds. He is well advised and shrewd. His goal to lower 10Y yields in an effort to stabilize the US Government balance sheet has been stymied by his predecor, Yellen.
Yellen has left a massive mess as she left (Repo facility depleted, duration of US Govenment debt much lower, skew towards Bills vs. Coupons).
Bessent's options, using conventional means are thus limited. 'Asset Monetization' is a very shrewd strategy. Maybe he and Druck, or Green, have been talking?
If we look at the flow of physical gold from London --> COMEX and who is doing it, we can speculate that other asset managers (associates of Bessent? Within the circle?) are speculating on exactly what you lay out. The narrative of 'tariff fears' may be partially right, but I suspect there is a bigger picture. In addition, the 'logistics issues' getting gold out of London Vaults suggest that it would be wise to be at the front of the line. There are a lot of paper claims on a dwindling stack of physical gold ...
Cheers John
Exactly my guess. Repatriation of gold that over the years has been leased out from the US Treasury to bullion banks is probably what dramatically and in no time drove the price to >$2,900/oz. There is also the possibility that DOGE's announced audit of the Treasury alarmed the Treasury accountants who had to hurry in order to fill the empty racks with physical. All this probably comes in anticipation of C.Bessent's plan of "monetization of Treasury assets", as Nieuwenhuys suggests. He wants to start with a clean sheet, i.e. pure gold and not paper gold or unfunded claims.
Excellent analysis. Just wondering though if they still have the 8133 tonnes of gold or not!
Yes we do need a better audit! https://www.thegoldobserver.com/p/us-official-gold-reserves-auditor-caught-lying?utm_source=publication-search
US Treasury gold that had been leased out to bullion banks over the years, in the last two weeks (partly?) came back to the US. That drove the price up to $2,900/oz. My guess is this was in anticipation to the monetization Scott Bessent is talking of and/or auditing of the US Treasury by DOGE. I guess it's panick mode at the Treasury, or FAFO-mode, to use a more modern term.
Well written post. Imagine if we have repatriated gold supposedly under the Vatican in tunnels that are miles long.
All the trillions fleeced from America recouped! Now that's what I call- balancing the ledger!🙃
I wish you well.
This is first class. Thank you
Hi, is this positive for gold ? If the base price is usd 2900 per ounce, is that a trigger for higher gold prices ?
Breat piece but trust being everything wont it be good to first perform an audit of Fort Knox and the other US vaults?
I mean a SERIOUS audit..😂
Outstanding investigative journalism on gold, Jan, and this for all the years you have been writing. The best I have ever read on monetary gold.
Good morning Jan! Thanks for the interesting article. I recently read something financial times that left me astonished and can you please give me your thoughts about it:https://www.ft.com/content/16d13b98-b1e7-4454-87c9-6f9060723f58
Jan, your gold market analysis is the best I've ever read. Trump wants to give a big tax cut later this year. People in Asian markets say he's cutting spending and jobs now to get cash. It's possible a gold re-pricing could provide him a trillion dollars more. Is he really that craven? Also, banks are taking delivery on large volumes of gold. Could these events be linked? Also, why is Kitco offering to buy Eagles at $50 below spot but selling at $130 over spot? That's an extreme spread for them. Something big is going on in the gold market and it's possible you found the linkage.
Thanks Boy,
I don't think there is a link.
The difference between buy and sell prices of dealers is their profit.
Kind regards,
Jan