In recent years the financial system has been hit by ever more frequent and unpredictable shocks that undermine its resilience. Classic support measures no longer deliver, and talk of another global crisis is growing louder.
Against this backdrop, the adoption by TradFi of technological novelties—digital currencies, tokenised assets, blockchain platforms and the like—looks logical. On the other hand, there are quieter calls to return to old tools, among them the monetisation of gold.
On August 1st the US Federal Reserve published a note on international experience with revaluing gold reserves. According to its author, Colin Weiss, over the past 30 years Germany, Italy, Lebanon, Curaçao and Sint Maarten, and South Africa have taken such a step.
By his calculation, if the United States revalued its 261.5m ounces of gold, it would yield about 3% of GDP—roughly $900bn—without actually selling the metal. How that is possible, and how it could affect crypto, is set out below.
What gold monetisation means
Gold monetisation is a way to turn a state’s bullion stock into ready money without selling the precious metal. Instead of selling bars, the government revalues them.
In the US reserves, gold is still booked at $42 per ounce (the 1973 standard), even though its market price now exceeds $3,300 per ounce.
At the new price the Treasury issues gold certificates and transfers them to the Fed. The Fed, in turn, credits dollars to the Treasury’s account. Formally the money is backed by gold, but in substance it is created out of thin air. The state need not take on new debt—indeed, the proceeds can be used to reduce it and to buy back Treasuries.
There were precedents. In 1933 President Franklin Roosevelt seized the public’s gold and soon raised its price from $20.67 to $35 per ounce (about 69%). The step effectively devalued the dollar and generated substantial profit for the Treasury, allowing it to top up the Exchange Stabilization Fund and expand the monetary base. The Fed received gold certificates at the new price, increasing its issuance capacity: at the time the dollar required partial gold backing.
In 1971 President Richard Nixon ended the dollar’s link to the metal, effectively devaluing it. The official price was then raised—to $38 in 1972 and to $42.22 in 1973. In those years the Treasury used the monetisation mechanism: it issued gold certificates at $38 and handed them to the Fed, which credited the difference to the department’s account. Without selling a single ounce, the government padded the budget by roughly $800m and channelled the funds into the economy.
Such actions shook confidence in the dollar: it became evident that the United States would resort to stealth issuance if it needed to plug a budget hole in a hurry.
The Fed’s note points to the experience of other countries, acknowledging that such measures do not fix structural problems: in Lebanon debt kept rising despite retiring some bonds via revaluation, and in South Africa the effect is not yet clear. In Germany the step was taken to comply with budget rules or to lower debt-service costs, but it sparked debate over the permissibility of such interference in the central bank’s work.
History repeating?
In February 2025 the Financial Times noted that the debate over gold monetisation is taking place at a high level. In the view of macro strategist Luke Gromen, revaluation to $20,000 per ounce would enable the issuance of up to $5trn. By his calculations, that would cut the debt-to-GDP ratio from about 122% to around 70%.
Gromen added that such a step is “a real option expressly spelled out in Federal Reserve documents,” citing an excerpt as evidence:
“The Secretary of the Treasury is authorized to issue gold certificates to Federal Reserve Banks for the monetization of gold owned by the Treasury.”
In February the speculation was stoked by Treasury Secretary Scott Bessent. He said the government plans to “monetize part of the assets on America’s balance sheet for the American people.” On July 10th investor George Gammon drew attention to the possibility. In his podcast he suggested that, amid macroeconomic instability and US President Donald Trump’s policies, the likelihood of revaluing the asset to market levels grows by the day.
Some experts argue that revaluation is not the best way to address the problem. Former US Treasury Secretary Robert Rubin believes the only real solution to the debt issue is a substantial tax increase. Even so, the very fact that the Fed issued a note on the topic suggests the idea of revaluing gold has moved from mere speculation into the sights of financial institutions. And among those favouring manipulations with gold certificates are some who back the crypto industry.
What this could mean for bitcoin
In July last year it emerged that in the draft of the “Bitcoin Act of 2024” Cynthia Lummis proposed creating a strategic reserve based on the first cryptocurrency by revaluing gold certificates. The intention was to avoid additional costs for taxpayers.
The idea found support in Donald Trump’s circle: his adviser on digital assets, Bo Hines, called capturing the gain between old and new gold-certificate prices “the best way” to build the reserve:
“If we do realize a profit from [these assets], it would be a budget-neutral way to acquire more bitcoin.”
Lummis’s initiative shows that gold monetisation is being considered as a potential funding source for strategic assets, alongside its role as an emergency budget-support tool. In effect, the discussion is not only about lowering debt but also about a possible transformation of the very structure of state reserves.
If the scenario were implemented—formally improving fiscal metrics and reducing the debt burden—it would entail a host of serious economic risks:
- faster inflation;
- loss of confidence in the dollar;
- capital outflows;
- persistence of systemic distortions such as chronic deficits and rising public debt.
For the crypto market such a shift would likely be a powerful catalyst: as fiat is debased, investors would more actively seek alternatives. States may be among them—if confidence in the dollar and Treasuries wanes, bitcoin could start to be seen as a new reserve asset alongside gold. Building crypto reserves would extend the de-dollarisation trend, especially in countries with fragile national currencies.
But risks lurk here, too: the arrival of large players—institutions and states—threatens to reshape bitcoin’s role from an independent, decentralised asset into a tool of control.
That could lead to:
- tougher pressure from regulators;
- attempts to curb its free circulation;
- dependence on political decisions.
As a result, instead of becoming a decentralised alternative to the global financial system, the first cryptocurrency risks being integrated into it, with all the attendant constraints.
Text: Alisa Ditz