After a record surge, the value of U.S. gold reserves hits $1 trillion.

```

As gold prices soar and hit historic highs, the market value of the US Treasury's gold reserves has surpassed $1 trillion for the first time.

On Monday, gold prices once broke through $3,824.5 per ounce, with a cumulative increase of as much as 45% this year, driving the value of the US, the world's largest gold reserve, higher. Behind the surge is investors' search for safe havens amid trade wars, geopolitical tensions, and growing concerns over a potential US government funding crisis. In addition, continued inflows into gold exchange-traded funds (ETFs) and the Federal Reserve restarting its rate-cutting cycle have also provided strong momentum for the price increase.

However, the official value of gold on the US government's balance sheet remains fixed at just over $11 billion, a valuation based on the $42.22 per ounce price set by Congress in 1973. The huge gap between the two means that the market value of US gold reserves is more than 90 times their book value.

If the gold reserves were revalued at current market prices, this would release about $990 billion for the US Treasury. Earlier this year, an off-the-cuff remark by US Treasury Secretary Bessent sparked market speculation that the US government might revalue its gold reserves at market price, thereby unlocking hundreds of billions of unexpected revenue. But Bessent later denied this, saying the idea was not under serious consideration.

Safe-Haven Demand and Easing Policy Propel Gold Prices to New Highs

This year, gold prices have repeatedly broken records, with the core driving force being strong safe-haven demand from investors. Facing ongoing trade frictions, escalating geopolitical risks, and concerns that the US government may encounter a funding crisis, market participants have flocked to gold, the traditional safe-haven asset. As the Federal Reserve resumes interest rate cuts, the resulting lower rate environment reduces the opportunity cost of holding non-yielding gold, further boosting its appeal.

In addition to macro factors, institutional and official buying has also provided solid support for gold prices. According to Deutsche Bank data, since resuming year-on-year growth in February this year, demand for gold ETFs has rebounded strongly, making this one of the strongest years since the beginning of the century.

Official purchases have also displayed "price-insensitive" characteristics. Central banks of various countries have increased their pace of gold purchases, indicating that their buying decisions are little affected by price volatility.

From a positioning perspective, speculative long positions have increased but have not reached extreme levels, suggesting that market sentiment has not entered the “panic buying” stage. In addition, gold volatility is relatively cheap, making bullish views expressed via options strategies more attractive than chasing spot prices directly.

Analysts point out that the current gold price trend has many similarities with the breakout at the beginning of 2025, when gold rose about 25% before bullish sentiment subsided, suggesting the current rally may still have room to run. Technical analysis shows that the trendline connecting previous highs points toward the $4,000 level, making it a potential target watched by the market.

Gap Between Book Value and Reality: The "Revaluation" Hypothesis of Trillion-Dollar Reserves

The gap between the market value and official book value of US gold reserves is as much as $990 billion, triggering discussions about the possibility of "revaluation." Unlike most countries where gold reserves are held by the central bank, US gold is held directly by the Treasury Department. The Federal Reserve holds gold certificates equal in legal value to the Treasury's gold reserves and provides dollar credit to the government based on these certificates.

This means that if gold reserves were revalued at current market prices, in theory, about $990 billion could be injected into the US Treasury. Amid debt ceiling constraints, such funds would undoubtedly be tempting. However, this move would have far-reaching effects on the financial system, including a sharp rise in market liquidity and a potential extension of the Fed’s balance sheet reduction process.

Earlier this year, an offhand comment by Secretary Bessent sparked market speculation that the US government might revalue its gold reserves at market price to release hundreds of billions in windfall funds. But Bessent later denied this, saying the idea was not under serious consideration.

Bank of America analyst Mark Cabana pointed out that revaluation of gold is technically feasible but faces legal issues and could be seen by the market as both fiscal and monetary easing. Although Bessent previously rejected this suggestion, the potential trillion-dollar windfall keeps the possibility alive.

Cabana analyzed that revaluing gold could cause Treasury General Account funds to be spent in ways that stimulate macroeconomic activity, with risks of pushing up inflation and injecting excess cash into the banking system. This operation would essentially ease both fiscal and monetary policy simultaneously. The US has not conducted a gold revaluation for decades, mainly to prevent volatility in the balance sheets of the Treasury and the Fed, as well as to safeguard the independence of fiscal and monetary policy.

Nevertheless, the US is not without precedent. Germany, Italy, and South Africa have all revalued their gold reserves in recent decades.

Fort Knox Gold: The Storage and Rumors Surrounding 261 Million Ounces

According to the US Treasury Department, US gold reserves total approximately 261.5 million ounces. The location of these massive reserves has always been a focal point of public attention. Slightly more than half of the gold is stored deep within the vaults next to the US Army base at Fort Knox, Kentucky. This portion of gold was moved here from New York and Philadelphia in the 1930s, partly to make it less vulnerable to foreign military attack from across the Atlantic.

The remaining gold is spread among vaults in West Point, Denver, as well as in the basement vault (80 feet or 24 meters below ground) of the Federal Reserve building in Lower Manhattan. In February this year, conspiracy theories questioning whether the gold at Fort Knox actually exists surfaced, with remarks by President Trump and Elon Musk fueling the rumors. At the time, Trump said:

“We are going to Fort Knox—the legendary Fort Knox—to make sure the gold is there. If the gold is not there, we will be very disappointed.”

Risk Warning and DisclaimerThe market involves risks, and investment needs to be cautious. This article does not constitute personal investment advice, nor does it take into account any individual user’s special investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions contained in this article are suitable for their particular circumstances. Invest accordingly at your own risk. ```