November 28, 2022

Sale Of U.S. Gold Reserves Would Accomplish Little

FORT KNOX

The U.S. slammed against the $14.3 trillion debt ceiling last week with a quick resolution to the problem no wheres in sight.

Congressional authorization to extend the debt limit remains mired in ideological disputes.  Secretary of the Treasury Tim Geithner states that the U.S will default in early August if the debt ceiling is not raised.

As the Treasury scrambles to avoid default, a discussion has started on the merits of selling United States gold reserves to avoid default and put the U.S. back on sound financial footing.

While the sale of U.S. gold reserves may appear to be an appealing solution, it would accomplish virtually nothing from a financial standpoint.

According to the U.S. Treasury, total gold holdings of the United States as of April 2011 were 261.5 million troy ounces.

At $1,500 per ounce, the total value of U.S. gold reserves is about $393 billion.  Sound like a lot of money?  Enough to get the U.S. out of the debt/spending crisis that we are in?  Here’s what the U.S. could do with an extra $393 billion.

  • Pay off 2.75% of the national debt
  • Pay less than one year’s interest on the national debt
  • Reduce the estimated 2011 budget deficit of $1.645 trillion by about 23%
  • Reduce this year’s U.S. budgeted spending of $3.8 trillion by about 10%
  • Pay for 40% of the $1 trillion dollar cost of the wars in Iraq and Afghanistan
  • Cover about 33% of the estimated cost of the bailing out Fannie Mae and Freddie Mac
  • Cover half of one percent of the estimated unfunded U.S. government liabilities for social security and medicare
  • Pay off about 4% of total mortgage debt held by American families

Selling the U.S. gold reserves may sound like a good idea until you take a look at the numbers.  The total value of U.S. gold reserves amounts to a mere rounding error in terms of total U.S. debt, spending, deficits and future obligations.   The United States has numerous valuable assets that it could sell, but the sale of U.S. gold reserves would accomplish little.

 

 

 

 

Comments

  1. rick greenhoygh says

    thats TRILLION not billion

  2. Alfredo Corona says

    Felicidades al autor de este artículo, directo y muy claro, y hay “analistas” que dicen que el Oro y la Plata están “sobrevaluados”, ¿cómo es posible que afirmen semejante barbaridad?. Por cierto, la deuda total de USA ya rebasa los 55 millones de millones de dólares, se depliega de manera impresionante en: http://www.usdebtclock.org/

  3. The value is over 11 trillion on the chart. So what is this talk of only 393 billion?

    • That’s $11 billion, not trillion – the US Treasury values gold reserves at the official price of $42.22 per ounce.

  4. So what is the value of 8,133.5 tonnes of gold? Which is apparently what they have.

    • As noted in the post, at $1500 per ounce, US gold reserves are worth $393 billion.
      Interestingly, at $5,000 per ounce, US gold reserves would be worth $1.3 TRILLION dollars, not even enough to cover one year’s worth of US deficit spending!

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