Sirwin
Sirwin
Gold Revaluation Account?

Central Banks Considering Revaluing Gold?


Almost a year ago, on December 10, 2021 I published a post titled, ' Gold would have to reach $112,000 to cancel U.S. debt'. In it, I detailed how all the gold kept at Fort Knox and other secure areas in the U.S, between the U.S. government and the FED, it is believed they hold some 260 million troy ounces of gold. When I wrote this article, the U.S. federal debt had just surpassed $29 trillion. With these numbers, I roughly estimated the revaluation of gold to $112,000 to cancel the debt.

Eleven months have passed and that debt has ballooned to over $31.259 trillion. With this in mind, the revaluation of gold would have to surpass $120,000. The reason I'm bringing this up again is because of an article that popped up on Zero Hedge overnight titled, 'Governor of Dutch central bank states gold revaluation account is solvency backstop', in which the governor suggests the ECB revalue gold to cover losses.

Most of Europe's gold was purchased in the original Bretton Woods era (post WWII - 1971) and is still valued at just $35. The U.S. Treasury's gold is officially on their books at having a value of just $44.22 per ounce. Here's Friday's closing for gold...

Spot gold close November 4, 2022

$1,682 is a lot higher than $35 or $44!

If the U.S. were to revalue its gold to the present market price, it would be in the $400 billion range and wouldn't be near enough to cover its debt of $31 trillion and counting. The governor of the Dutch central bank (DNB), Klaas Knot suggests the ECB (European Central Bank) put a floor on the price of gold (or basically set a fixed price) and to revalue gold again if the banks incur more losses.

If one bank governor is openly taking about this, then is it safe to assume others are thinking about it as well? If central bankers decide to fix the price of gold higher, does this mean the end is nigh for the COMEX and LBMA? Also, how much higher will they fix the price? If and when they do, I'm betting on incremental increases so they can use this little trick a few times before finally reaching an apex for the gold price.

For starters, gold will probably be revalued to twice today's market price, $3,500 to $5,000. Then, they'll push it up to $8,000 and then $10,000. As mentioned above, the target is $120,000 per ounce (and counting).

It's crazy insane, I know. So is the amount of debt around the world, the result of fiat money being created out of thin air to fund our / their excesses. If gold is revalued, then I would expect other commodities like silver and copper to also explode higher. Knot suggests they are incurring losses. What kind of losses? Anyhoo, they've now begun to openly discuss revaluing and setting a floor on the price of gold. 

That means a much higher price for gold is in the cards. Much higher than Friday's closing price.

It's happened before. In 1929, gold was valued at $20 an ounce. You know the story. Roosevelt confiscated all the gold from the people and paid them the said $20. Afterwards, he revalued gold to $35, a 75% increase in the dollar value of gold but  massive loss to those holding dollars. It would eventually rise to over $42 until Nixon decoupled gold from the dollar entirely in 1971 and they've been on a massive spending spree ever since. Hey, why not? A credit card with no limit and you never have to pay it back. Sounds like a good bargain to me!

Now, the big question is, 'when are they going to play their wild card'? It should be noted that currencies are getting a bit wonky (See Japanese, English currencies). The last few weeks have been very interesting indeed. The currencies of the third and fifth biggest economies in the world have suffered multi-decade lows against a high flying U.S. dollar. Pension plans in the U.K. came within inches of collapsing. Serious stuff!

Looks like we're going back to some form of gold backing and it surely means a much higher gold price. We're in the Basil III era now.

Update (Nov. 6, 2022): King World News published an interview with Nomi Prins this weekend and guess what the topic is. Click the link below to listen in on this great interview.

'Gold surges $55: Nomi Prins says China and Russia will use their massive gold hoards to form a new currency'.

 

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SweptOverNiagara
SweptOverNiagara

Name's Joe and I live in Ontario, Canada. I like writing on a wide variety of topics. I enjoy keeping track of markets, investing and commodities and the crypto sector. Also do some coding for web browsers.


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