By now, you've likely heard chatter all over the internet about a possible revaluation of gold in our near future. Lately, the narrative has been picking up quite a bit of steam. Most people have no idea about this, what this actually means or its implications. Still, there are a few in the know who do understand and have been screaming "buy, buy, buy" gold, not just as a hedge against inflation but against a possible revaluation.
In fact, I wrote a post, published on November 5, 2022, titled 'Central Banks Considering Revaluing Gold?' where I delved into the subject. I stated the U.S. national debt had ballooned to $31.259 trillion and gold would have to be revalued to $120,000 to cancel the federal debt.
Fast forward to today and the federal debt has climbed to a mind boggling $36.5 trillion. To cancel the debt today, gold would have to be revalued to about $140,000. Could something like this actually happen. In this insane world, we've all seen stranger things. Gold was revalued in the 1930s in the USA from $20 to $35 after all the gold was confiscated and gold ownership was made illegal. This marked a 75% increase in dollar terms so in other words, dollar holders were left on the hook. Gold holders (a.k.a. the rest of the world) saw their wealth held in gold rise by 75% overnight!
It again happened in 1972, the year after the 'Nixon Shock', when gold was 'temporarily' de-coupled from the dollar. Gold was revalued from $35 to the book price it is still at today, $42.2222. With some 260 million troy ounces of gold the USA supposedly still has, that 0.0022 fraction of a penny can still add up to a lot. In fact, the revaluation of 1972 created $2 billion without having to borrow or go into deficit. That $2 billion was considered a 'winfall'. A revaluation of $3,000 today would result in an extra $750 billion or so for the treasury without any borrowing.
Looking at the market this morning, gold touched $2,950 so it should be obvious to everyone that $3,000 gold is just around the corner. Heck, we might even see gold do that by the end of this week with the hot CPI print that came out for January which came in at a hotter than expected 3%!
You've probably heard of the mad dash going on since about the time Trump was re-elected with gold being repatriated from London vaults back to New York. We're talking billions here, so far about 8,000 (400 ounce) bars. It's gotten so severe that delivery times, which is usually 3 to 5 days, has shroomed to 4 to 8 weeks.
There have been suggestions that tariffs are fueling gold's repatriation to America.That may be true, maybe. Likely though, is that the wealthy know what's about to happen and are positioning themselves to reap the profits of a gold revaluation. The consensus is that gold will hit $3,000 soon. If and when gold is revalued, it will likely be to the present market price. It would put a floor on the price of gold. In other words, gold would never go below $3,000 again. From then on, the only direction the spot gold price will be headed, is higher!
Fortunately though, I (as I'm sure many of you have also) have been tracking DOGE's progress as they expose hundreds of billions in fraud waste at USAID and now trillions at the treasury with social security benefits being handed out to people who are supposedly hundreds of years old. DOGE now has its eyes on the Federal Reserve and the country's gold reserves. The FED has never been audited and the gold holdings (Fort Knox, N.Y. FED) were last audited around the year 1954, more than 70 years ago. What kind of waste (theft) will DOGE surely find there (AND at the Pentagon?).
DOGE's efforts have, in my opinion, already removed the budget deficit with the savings they have and will continue to uncover. A one-time gold revaluation will help to buy time to get the USA's financial affairs in order, hopefully anyways. This would also be a boon for other treasuries around the world as they too will revalue their gold accordingly, especially in the E.U. bloc. Their gold has a book value of just $35!
Know what else is costing less that $35? It's gold's little cousin, SILVER! The silver to gold ratio is so out of whack with reality (and history) at 90:1 that silver is a screaming buy, buy, buy. It has yet to play catch up with gold but it's coiling and getting ready to blast off. In fact, after languishing for about 4 months, silver is finally back above $33 this morning.
Another reason silver may be poised for a record run is the annual production deficit going back to the beginning of the decade. The Silver Institute is projecting a shortfall of 149 million ounces for 2025. By the end of this year, the silver deficit total of the last 5 years will amount to an entire year of supply. Somebody out there ain't gonna get any silver!
Cocoa is at historical highs. Coffee is at historical highs. So is gold, of course but did you know that silver has yet to breach its 1980 high of $50. Adjusted to inflation, we're looking at about $170 silver. So, even if and when silver finally breaches $50, it will still have a ways to go to beat the inflation adjusted all-time high.
With a gold revaluation possibly in the cards, expect silver to play Mr. Catchup and fast! In 2011, when silver climbed to $49.50, the silver/gold ratio fell to 35:1 as gold went to about $1,950. Gold has now risen about 50% higher since then, although it's been a bumpy road. The math says it's inevitable. If the ratio falls to 35:1 again, silver will at least double its present value. Add the ever growing yearly silver deficit along with industrial demand for silver and we have ourselves an excellent investment play.
Nothing is guaranteed so invest wisely and exercise due diligence. The more you know, the more 'in the know' you are. The best way to do that is to educate yourself. As for the 'Gold Revaluation Account', there really is such a thing...
One last note: The Morning JAVA website is coming together nicely, code by code (yes, all hand coded). Target date is March 1 for the official launch.
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