Sell the Gold

In the May 8 edition (electronic) of the Wall Street Journal, editorial writer Kimberley A. Strassel published an editorial titled “America Inc.’s Balance Sheet.” In it, she considered the proposals of Interior Secretary Doug Burgum (one of my two favorite Trump cabinet members, although I would have liked even better if Trump had chosen him as Veep) to tote up the asset side of the federal government’s balance sheet. She writes:

That’s why the interior secretary is proudly making a wonky addition to the “drill, baby, drill” mantra: “Map, baby, map.” He’s working to get USGS refocused on pinpointing and estimating resources rather than its recent climate obsession.

Good for him. My big surprise, though, was that Strassel didn’t consider one asset, an asset that has already been taken from the ground and is easily marketable. I refer, of course, to gold.

According to an unofficial August 11, 2023 report, the U.S. government currently holds 261.5 million troy ounces of gold. The government officially values it at $42.22 per troy ounce. That, of course, is absurd.

But while some government official is foolish enough to state the value at $42 an ounce, no one in the government is foolish enough to sell it at $42 an ounce.

That brings me to the serious point. If the feds sold all their gold, that would bring the price down somewhat. Let’s say the sale brings it down to $3,000 an ounce.

The government would then bring in 261.5 million * $3,000, which is $784.5 billion. That’s almost half of one year’s deficit.

I would rather have the federal government reduce bond issuance by almost $800 billion than speculate on gold while having us taxpayers pay the interest on that $800 billion.

When I eyeballed the data, I thought that the gold would be worth more like $1 trillion. But reducing the deficit by $800 billion would be a good start.