Could the U.S. Treasury Return to Its 1934 Gold Playbook?
Former Swiss banker Clive Thompson explains how America’s rising debt burden could eventually push policymakers toward revaluing the nation’s gold reserves. He also explores what that could mean for Treasury yields, government financing, and the future of the monetary system.
For nearly a century, the United States has carried its official gold reserves at a price that bears almost no resemblance to reality.
The Treasury still values its gold at a statutory price of just $42.22 per fine troy ounce, even though gold now trades for thousands of dollars on the open market. That accounting relic rarely attracts much attention outside monetary circles, but former Swiss banker and wealth manager Clive Thompson believes it could eventually become part of Washington’s response to its mounting debt problem.
In this wide-ranging conversation where Alexander Smith hosts the latest Podcast, Thompson described how the Treasury could potentially revalue its gold holdings, create additional financial capacity and reduce its immediate dependence on the bond market.
“I’m surprised they haven’t done it yet,” Thompson said. “But I guess they’re waiting for a crisis.”
Why America’s Gold Is Still Valued at $42.22
The United States reportedly holds more than 261 million fine troy ounces of gold. At the statutory price of $42.22, those reserves are recorded at only about $11 billion.
Their market value is dramatically higher.
That difference has led some analysts to ask whether the Treasury could eventually mark its gold closer to the market price and use the resulting accounting gain to strengthen its balance sheet or support government financing.
The idea may sound radical, but it has historical precedent.
In 1934, President Franklin Roosevelt signed the Gold Reserve Act after the federal government had restricted private gold ownership. The legislation transferred control of monetary gold to the Treasury and increased the official gold price from $20.67 to $35 per ounce.
That revaluation created a large windfall for the federal government and helped establish the Exchange Stabilization Fund.
Thompson believes a modern version could involve a transaction between the Treasury and Federal Reserve. Under his theoretical scenario, the Treasury could sell its gold to the Federal Reserve at a substantially higher official price, receive newly created dollars and then regain the gold in exchange for non-interest-bearing gold certificates.
“The Treasury suddenly gets a ton of money for nothing,” Thompson explained during the interview.
This would not erase America’s underlying obligations. It would, however, potentially provide the Treasury with cash that could be used to retire maturing debt or finance spending without immediately issuing the same volume of new bonds.
Reduced Treasury issuance could then create greater demand for the remaining bonds, pushing prices higher and yields lower.
It is a controversial idea, and implementing it would likely require legislation. But the growing interest in such proposals reflects a much larger problem: America’s borrowing requirements are becoming increasingly difficult to ignore.
The Interest Bill Is Becoming the Story
The Congressional Budget Office projects a $1.9 trillion federal deficit in fiscal 2026, equal to approximately 5.8% of U.S. GDP. It also expects net interest outlays to reach roughly $1 trillion this year, before rising to $2.1 trillion by 2036.
Treasury data show that gross interest expense had already reached approximately $1.05 trillion during fiscal 2026 through June 30.
That means Washington is borrowing enormous sums simply to operate the government while also paying interest on debt accumulated in previous years.
Thompson compared the arrangement to repeatedly borrowing from Peter to pay Paul. As older debt matures, the Treasury must refinance it. As government spending exceeds tax revenue, it must borrow still more.
The system remains functional as long as investors retain confidence in U.S. government debt and remain willing to accept the available yield. The greater danger, according to Thompson, is not necessarily reaching one predetermined debt level.
It is a sudden change in sentiment.
“The sentiment can swing much faster, much further than the number,” he warned.
A geopolitical shock, failed bond auction, policy error or unexpected financial accident could cause lenders to demand higher yields. Those higher yields would then increase government interest costs, requiring still more borrowing.
That feedback loop is one reason Thompson believes authorities will eventually intervene if long-term Treasury yields rise far enough.
What Happens When the Bond Market Pushes Back?
Thompson pointed to the United Kingdom’s 2022 gilt crisis as an example of how quickly confidence can fracture.
After the government announced a large package of unfunded tax reductions, gilt prices plunged and yields surged. The decline exposed leveraged positions held by British pension funds, forcing the Bank of England to intervene with temporary bond purchases.
The crisis did not begin because Britain suddenly reached one magical debt threshold. It began because investors lost confidence in the government’s fiscal plan and the market uncovered hidden fragilities.
Thompson believes a comparable moment in the United States would likely force the Federal Reserve to support the Treasury market, whether through outright bond purchases or another form of yield suppression.
That might stabilize bonds, but renewed money creation could also strengthen the case for scarce assets.
Gold Is Becoming More Than an Inflation Hedge
For decades, gold was commonly presented as protection against rising consumer prices.
Thompson believes that perception is changing.
“What I think has changed over the last few years is people have moved away from gold as an inflation hedge,” he said. “Gold is what will get me to the other side of what’s coming.”
That distinction is important.
Investors are not necessarily buying gold because they expect next month’s inflation report to surprise higher. Some are buying it because they are questioning the long-term durability of government debt, fiat currencies and the financial institutions built around them.
In that context, gold is viewed less as a trade and more as an asset that does not depend on another party’s promise to pay.
Thompson is not predicting the exact shape of a future monetary restructuring. It could involve higher inflation, financial repression, capital controls, central bank digital currencies or another policy that has not yet entered mainstream discussion.
His argument is that governments will eventually be forced to respond because debt cannot grow faster than the underlying economy indefinitely.
Property, productive businesses and certain equities may survive that transition. Physical gold could also retain value because it exists outside the liability structure of a bank or government.
Silver’s Supply Problem Has Not Disappeared
The interview also explored the outlook for silver.
Thompson believes silver’s long-term bull case remains intact because industrial consumption continues to compete with investment demand for a limited supply.
The Silver Institute forecasts that the market will record its sixth consecutive annual supply deficit in 2026. Although total supply is expected to rise to a decade high, the organization still projects a structural deficit of approximately 46.3 million ounces.
Industrial uses in electronics, electrical infrastructure, solar energy and other technologies continue to consume large quantities of silver. When annual demand exceeds newly available supply, the gap must be filled from above-ground inventories.
As Thompson put it, every available ounce has a price at which its owner may finally be willing to sell.
The Biggest Mistake Investors Make
Despite the dramatic discussion surrounding debt, gold and monetary resets, Thompson’s most practical warning had nothing to do with predicting the next crisis.
It concerned position sizing.
After roughly 50 years in financial markets, he believes investors repeatedly make the mistake of putting too much capital into their favourite idea.
When the investment rises, they become nervous and sell too early. When it falls, the loss becomes emotionally unbearable and they refuse to sell at all.
“If you’re watching the price every day, you own too much of it,” Thompson said.
His approach is to begin with a small allocation and increase it gradually. That allows an investor to remain objective rather than having every price movement influence their emotions.
It also connects directly to his broader philosophy. No one can know precisely which monetary, political or economic scenario will unfold. The objective is therefore not to construct a portfolio that depends on one perfect prediction.
It is to remain in the game when the unexpected happens.
Is Washington Waiting for a Crisis?
The U.S. Treasury may never revalue its gold in the manner Thompson describes. Even if officials considered it, the eventual structure could look very different from his theoretical transaction.
But the fact that such an idea can be discussed seriously tells us something about the current financial environment.
Federal deficits remain historically large. Interest costs are approaching levels once reserved for major government programs. Gold is still officially valued at $42.22 per ounce, leaving an enormous gap between its statutory and market value.
Washington possesses a potentially powerful monetary asset that has remained largely untouched for generations.
The question is what circumstances might finally persuade policymakers to use it.
As Thompson suggested, the answer may only become clear once the next crisis has already begun.
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