Gold America’s Financial Future
The comments below are an edited and abridged synopsis of an article by Alex J. Pollock, New York, The Sun
The US dollar has experienced a significant decline in value over the years; it’s now worth less than 1/3,000th of an ounce of gold. This stark depreciation highlights a critical issue with an outdated American law from 1973, which fixes the gold value of the dollar at $42.22 per ounce—an amount that no longer reflects the true worth of gold in today’s economy. At current market prices, gold is trading for over $3,000 per ounce, about 71 times the statutory price. This means that the official dollar value is now less than 2% of what it would be based on the market price of gold.
The 1973 Par Value Modification Act established the dollar’s gold value at a time when the purchasing power of the dollar was much stronger. Fast forward more than 50 years, and that statutory price is out of touch with the dollar’s current worth, which has depreciated by over 98% in terms of gold. This mismatch has profound implications for the U.S. Treasury, which holds more than 261 million ounces of gold. If the gold price were to be adjusted to reflect current market conditions, the Treasury would realize an unrealized capital gain of approximately $773 billion—a sum too substantial to ignore.
However, this gain remains largely unrecognized on the government’s balance sheet because of the outdated statutory price. To realize this gold asset, the US government would need to update its legal framework. If Congress were to amend the law and align the official price of gold with its current market value, the Treasury could access this substantial capital without the need to sell any gold. One way to do this would be by issuing gold-backed bonds or Gold Certificates, as has been done historically. These instruments would allow the Treasury to leverage its gold holdings for cash or financing, providing the government with more flexibility, especially in times of economic crises.
This shift could also pave the way for a more practical and updated US monetary system. By bringing the nation’s gold valuation in line with current market conditions, the US government could ensure that its fiscal policies are more transparent, accountable, and better aligned with the realities of today’s global economy. A potential step toward this reform would be the introduction of the “Gold Value Modification Act of 2025,” which would replace the outdated gold price with the fair market value certified by the Secretary of the Treasury.
The rise in the value of gold over the past few decades represents a dramatic change in the financial landscape. Updating the legal relationship between gold and the US dollar would not only better reflect this reality but could also reintroduce a meaningful role for gold in US monetary policy. This update would have far-reaching implications—not just for US fiscal practices, but potentially for the broader global monetary system.
In conclusion, bringing the US financial system into alignment with the current value of gold would provide a much-needed reset in how the government accounts for its vast gold reserves. This update is not just a matter of adjusting a number; it’s a chance to reflect the evolving dynamics of global finance and ensure that US economic policy is prepared for the future.