Gyroscopic Investing

The US treasury gold reserves (world's largest) are estimated at 8133.5 tonnes.  At $1500/oz gold is about $48.2 million/tonne.  So the entire US gold reserve is worth only $392 billion at a market price of $1500/oz (which is higher than today's price).

While not an insubstantial sum, that is only about half the current US budget deficit for 2013, or only a bit more than four months of Mr Bernake's Quantitative Easing (i.e. money printing) at $85B/month.  It would not even make a dent in the $17 trillion total federal debt.

Note that trying to sell off the reserves over a short period would likely result in a huge dive in gold prices, as it would quickly flood the market (the US has over 1/4 of the world's government held gold reserve).  Of course the selling of US gold reserves could also trigger secondary financial impacts (loss of confidence, etc) which would likely cost the government and economy more than any gain from the gold sale itself.

So selling off all of the gold would not really help our deficit problem for more than a few months.  Its not really a solution.

I'm thinking if the U.S. were to try to liquidate their gold it would be snatched up almost immediately by countries like China and other central banks and foreign holders of U.S. debt. It would be very bad for confidence in the dollar, especially if the gold sale was being done in the middle of a budget crisis to close a spending gap. Instead of gold prices falling, it's entirely possible it could kick off a panic in the dollar instead.

I think it is very unlikely that the US still has all that gold. If they do, they should arrange for an independent audit. Of course, if they don't, then it's obvious why they wouldn't want such an audit.

A currency issuer doesn't need Gold Tech. The US can never go broke. It's debt is risk-free. There will never be a default. The government's deficits will just mean our savings increase. The trade deficit is evidence of us getting rich. No one will ever have to pay on this debt. The printing press has solved a lot of these outdated, monetarist, gold-standard, austrian problems. I don't know why you persist in your world view when all the evidence is to the contrary. It's clear you've been proven wrong, time and time again. I don't know why governments and central banks even bother to hoard a worthless rock. They haven't gotten the memo of the new FIAT world we live in where the rules have all changed.

It's just sad that you're still stuck in this fantasy world.

I'm about to go to the bar and give them a T-bond and some good-will for some beer. I hope they don't need me to explain how these assets are the same as cash if they have the same nominal value on my balance sheet.

One day you will learn! 

But seriously imagine if they went into the vault and there was just a bunch of T-bonds of equal "value". Like it had already been sold off in the Regan years and the government blew the cash and stuck some IOUs in there.

Kshartle wrote: A currency issuer doesn't need Gold Tech. The US can never go broke. It's debt is risk-free. There will never be a default. The government's deficits will just mean our savings increase. The trade deficit is evidence of us getting rich. No one will ever have to pay on this debt. The printing press has solved a lot of these outdated, monetarist, gold-standard, austrian problems. I don't know why you persist in your world view when all the evidence is to the contrary. It's clear you've been proven wrong, time and time again. I don't know why governments and central banks even bother to hoard a worthless rock. They haven't gotten the memo of the new FIAT world we live in where the rules have all changed.

It's just sad that you're still stuck in this fantasy world.

I'm about to go to the bar and give them a T-bond and some good-will for some beer. I hope they don't need me to explain how these assets are the same as cash if they have the same nominal value on my balance sheet.

One day you will learn! 

Yes, I'm just incapable of learning such simple things. Maybe it would help if I got a tour of the empty vault? 

Libertarian666 wrote:

Kshartle wrote: A currency issuer doesn't need Gold Tech. The US can never go broke. It's debt is risk-free. There will never be a default. The government's deficits will just mean our savings increase. The trade deficit is evidence of us getting rich. No one will ever have to pay on this debt. The printing press has solved a lot of these outdated, monetarist, gold-standard, austrian problems. I don't know why you persist in your world view when all the evidence is to the contrary. It's clear you've been proven wrong, time and time again. I don't know why governments and central banks even bother to hoard a worthless rock. They haven't gotten the memo of the new FIAT world we live in where the rules have all changed.

It's just sad that you're still stuck in this fantasy world.

I'm about to go to the bar and give them a T-bond and some good-will for some beer. I hope they don't need me to explain how these assets are the same as cash if they have the same nominal value on my balance sheet.

One day you will learn! 

Yes, I'm just incapable of learning such simple things. Maybe it would help if I got a tour of the empty vault? 

Guys, please give this a rest.

I understand that you disagree with the MMR/MMT ideas that are discussed by some here, but it's not necessary to work that disagreement into posts on unrelated topics.

If the OP is about the merits of the U.S. government owning gold, let's talk about that.

Thanks.

Regarding the original topic of the US holding gold, as Gandhi said when asked what he thought about Western Civilization, "I think it would be a good idea."

IOW, I don't believe they have anything like the amount they claim, and won't unless I see an independent audit... which will be never, in my opinion.