With high public debt levels, governments are increasingly exploring ways to finance additional expenditures without raising taxes or increasing the outstanding public debt. In this context, the Federal Reserve recently published an article in its FEDS Notes on official reserve revaluations, focusing primarily on the international experience of using proceeds from valuation gains on gold reserves.
Central banks employ a variety of accounting methods to value gold holdings on their balance sheet. Some value their gold reserves at historical cost, while others report them at current market prices. When gold is valued at market prices (fair value), unrealized gains or losses from price changes are recorded in revaluation accounts on the liability side of the balance sheet. In practice, valuation changes in gold reserves are often reported together with changes in foreign exchange reserves in a single line item.
For gold valued at historic cost, a revaluation to market prices (or values close to them) can generate one-off revenues. When all official reserves are marked to market, the unrealized gains in the revaluation account can be transferred to other parts of the balance sheet to generate funds. Importantly, the volume of international reserves remains unchanged during such transactions – whether measured in physical gold or the par value of reserve assets – regardless of the valuation method used.
Gold price development (Jan 2020 – Aug 2025, USD/oz)
Source: Bloomberg, InterCapital Research
A revaluation of US gold reserves could yield significant revenues given the sharp rise in gold prices. The US Treasury still values its 261.5m ounces of gold at USD 42.22 per ounce, a figure set in 1973. At today’s market price of over USD 3,300 per ounce, these holdings would be worth more than USD 850bn.
A revaluation transaction would not involve selling any gold. Instead, the Treasury could update the book value of US gold reserves through a few accounting adjustments. First, the Treasury would have to retire the existing USD 11bn gold certificate. Then, they would have to establish a new, higher official gold price, and “transfer” the gold to the Federal Reserve at this new price, generating a large revaluation gain. The Fed would then “return” the gold to the Treasury for a new certificate. No physical gold would change hands, but the Treasury would receive a substantial amount of newly created funds. At current market prices, the proceeds from such a revaluation would amount to roughly 3% of US GDP.
Revaluation proceeds have been used either by central banks (such as in Italy and Curacao and Saint Martin), or by central governments (as in South Africa, Lebanon, and Germany). In the Italy case, the revaluation was used to cover a one-off loss related to the conversion of a specific bond held by the Banca d’Italia. As for the Curacao and Saint Martin, the use was to offset losses from lower interest income on securities and realized valuation losses after portfolio rebalancing. In both cases, revaluation temporarily boosted profits, although Curacao and Saint Martin paired it with other measures for sustainable income growth.
On the other hand, revaluation proceeds have been applied to retire existing debt in exceptional fiscal circumstances for the central government needs. Although reducing the debt stock improved the fiscal situation at the margin, Lebanon’s debt-to-GDP ratio continued to rise despite using revaluation proceeds to reduce debt, implying that this does not fully address larger structural challenges. Moreover, in Germany, the transfer of revaluation proceeds to meet central government needs was criticized for undermining central bank independence, representing a political risk.
Applying this approach in the United States could face similar challenges. The country’s high federal debt is a structural, rather than cyclical, problem, and any revaluation proceeds would be a one-off measure. Additionally, political interference concerns are already elevated, with ongoing pressure from President Trump on Fed Chair Jerome Powell. Such factors reduce the likelihood of gold revaluation for central government purposes in the short term.
US National Debt (USD trillion, Aug 2015 – Aug 2025)
Source: US Department of Treasury, InterCapital Research
Nonetheless, the idea has surfaced in alternative contexts, including proposals to establish a strategic bitcoin reserve or a sovereign wealth fund (SWF). Senator Lummis and the Trump administration have both considered using revaluation proceeds for such purposes. While this would not resolve the US’s structural debt issues, it could provide a significant capital boost to launch a bitcoin reserve or SWF. Given the political risks and concerns over Federal Reserve independence, a near-term revaluation appears unlikely. However, it should not be dismissed outright, as it may resurface under different fiscal or strategic priorities.
The full FEDS Notes article can be found here, while our earlier blog on the potential establishment of a sovereign wealth fund is available here.