America Plans to Sell Its Gold Reserves, Could It Trigger a Correction?
Surprising news came from America when their trade minister Scott Bessent was reported to be trying to reevaluate his gold bullion holdings. Although Bessent denied it directly, the issue had caused gold to experience a slight correction from its all-time high.
In addition to Bessent, Stephen Miran, a Trump candidate to lead the White House Council of Economic Advisers, also floated the idea of selling America's gold reserves. By selling gold for dollars, and then exchanging the dollars for foreign currency, the government would strengthen the "undervalued" currency, a result desired by Trump, Miran wrote in his report in November.
Exchanging gold bullion, which does not produce interest, for foreign government bonds would also create an additional revenue stream for the government, he added. Although it may be allowed by law, selling the nation's gold bullion reserves to buy foreign currency instruments could incur expensive political costs, Miran wrote.
Even releasing some of the 8,133 metric tons of gold held by the US government would likely hurt gold prices.
Quoting Nicky Shiels Head of Research and Metals Strategy MKS Pamp SA, wrote in a note. While a revaluation would boost the profile of gold in the US and globally, if those reserves were then sold to generate seed capital for a new sovereign wealth fund, this would be “very bearish” for gold prices, Shiels wrote.
So if you look closely, what Bessent and Miran are trying to do is actually aim to boost the US economy by strengthening the dollar, but if they do it, the opposite will happen to their gold reserves and not only will it affect US gold reserves but it will also cause a decline in global gold prices.
Source: (mrv@newsmaker)
