Revalue Gold to Buy Bitcoin?

The notion that the U.S. government might soon move to officially revalue its gold reserves has been a hot topic thus far in 2025. Let's keep it going with some commentary on recent developments.

If you've been following these weekly columns, you know that the idea of gold revaluation has been a popular theme. As we get started this week, here are two links to review. This first one is from three weeks ago and focused upon remarks by the U.S. SecTreas Bessent regarding the "monetization of the asset side of the U.S. balance sheet”:
https://www.sprottmoney.com/blog/possible-gold-price-revaluation

In this column from two weeks ago, we speculated about how a gold revaluation could be used to fund a sovereign wealth fund:
https://www.sprottmoney.com/blog/possible-gold-price-revaluation

The Strategic Bitcoin Reserve and Its Funding

After giving everyone a break last week, recent events demand that we revisit the topic today. And what are those recent events?

Recall that U.S. President Trump has often mentioned the creation of a "Strategic Bitcoin Reserve." He first began discussing this idea while campaigning in the summer of 2024. He has brought it up several times since the election, and the White House officially unveiled the idea on March 5 with an Executive Order. See the link below:
https://www.whitehouse.gov/presidential-actions/2025/03/establishment-of-the-strategic-bitcoin-reserveand-united-states-digital-asset-stockpile/ 

The Bitcoin Act of 2025 and Gold Revaluation

Whether or not this reserve can be created simply by executive fiat remains unclear. The usual process would require instruction by Congress to codify legislation. How would that work? In the U.S., both houses of Congress pass nearly identical bills. These bills are then reconciled into one, and if that combined bill passes, it heads to the president for his signature or veto.

With this in mind, please take a few minutes to review the link below. Back in 2024, Congressman Nick Begich and Senator Cynthia Lummis introduced "Bitcoin Reserve" bills to their respective chambers. Nothing happened, and the bills were tabled...temporarily.
https://www.lummis.senate.gov/wp-content/uploads/BITCOIN-Act-FINAL.pdf

I say "temporarily" because early last week, both bills were resubmitted before Congress—the Begich bill in the House of Representatives and the Lummis bill in the Senate:
https://begich.house.gov/media/press-releases/congressman-nick-begich-and-senator-lummis-introduce-landmark-bitcoin-act
https://www.lummis.senate.gov/press-releases/lummis-colleagues-introduce-legislation-to-codify-trumps-revolutionary-strategic-bitcoin-reserve-secure-americas-financial-future/ 

The Impact of Gold Revaluation on Gold Prices

As the second link openly states, these bills are intended to "codify Trump's Strategic Bitcoin Reserve." Please allow me to state that more clearly: If Trump's plan for a Bitcoin reserve is going to move forward, this might be how it will legally happen. If the bills are passed in both chambers, the combined "Bitcoin Act of 2025" will be sent to Trump for his signature.

If passed, the Strategic Bitcoin Reserve will purchase up to 200,000 Bitcoin per year over a five-year period with the goal of creating a 1,000,000 Bitcoin stockpile. OK, great. Sounds good. But from where will the funds be created to buy all those Bitcoin? That's where it gets interesting for all of us with an interest in gold.

See below the relevant section of the proposed "Bitcoin Act of 2025." For funding the reserve, the act proposes a revaluation of the gold held as an asset on the U.S. balance sheet. Wait a second. Recall what SecTreas Bessent said about the asset side of the balance sheet back in early February. Now read on...

Gold Revaluation and Dollar Debasement

Well, what do you know about that? There it is in fine print. Notice that the legislation even makes mention of amending the current code, which established the gold price at $42.22. It sure looks to me like this is the direction they're heading.

As an aside, if the Federal Reserve banks are soon forced to "tender all outstanding gold certificates," one can't help but wonder if this pending legislation, and not the threat of tariffs, is what's driving the current, massive repatriation of gold back to the U.S.—a repatriation that the StoneX Group has repeatedly stated now exceeds 2,000 metric tonnes.
https://www.stonex.com/en/media-room/in-the-news/2025-02-14-philip-smith-gold-tariffs-sky-news-arabia/

How will the revaluation impact the gold price in the short term? That's hard to predict. If the U.S. simply revalues its stockpile by "marking it to market," the price impact might be negligible. After all, what we're talking about here could be simply an accounting gimmick that enables the U.S. Treasury to create a trillion dollars from nothing, while not impacting the net deficit of the current balance sheet. If the treasury adds $1T to the asset side while simultaneously adding $1T to the liability side, net/net nothing changes.

But "the markets" should be able to see right through this scheme. If revaluing your official gold reserves provides the balance sheet space needed to create a trillion new dollars, then all that's really happening is another debasement of the dollar, similar to QE programs and/or the massive deficit spending response to Covid.

And this is where gold (and silver) stands to benefit. This sort of plan for gold revaluation becomes synonymous with dollar devaluation. As such, as we've learned since 1971, unhinged and unbacked dollar creation cheapens its relative value versus gold.

In 1971, you needed 35 dollars to acquire an ounce of gold. Today, it requires 3000 dollars to purchase that same ounce. The gold remains the same, it's the dollar that is losing value. If the "Bitcoin Act of 2025" passes and becomes law, expect the VALUE of gold to continue to increase, regardless of whatever price the U.S. officially recognizes.

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