New Fed study examines recent Gold revaluations, elsewhere

Last week, the Federal Reserve seemed to take note of the increasing speculation about the possibility of revaluing U.S. gold reserves to improve the financial position of governments and central banks, enabling more money creation and debt reduction.

This took the form of a research study written by Fed economist Colin R. Weiss about gold revaluations undertaken by five countries in the last 28 years: Curacao/Saint Martin, Germany, Italy, Lebanon, and South Africa.

Weiss concludes that gold revaluation did the following:

1. Prevented the Banca d'Italia from having to report a loss in 2002.
2. Provided funds that could have been used by Germany to avoid a fiscal deficit that would have impaired the country's entry to the European Monetary Union, but in the end, didn't have to be used.
3. Created money for Lebanon to use to rebuild after its civil war, but did little to offset the country's "larger structural challenges."
4. Offset some minor losses for the Curacao/Saint Martin central bank.
5. It is too recent in South Africa to show that it has done much for that country.

Disappointingly, Weiss's study does not cover the various gold revaluations undertaken throughout history by the United States. 

Nor does the Fed report address how the United States might use gold revaluation to reduce its huge, growing, and increasingly worrisome debt, which is the main point of interest in recent discussions of gold revaluation. 

But the Fed may have concluded that simply acknowledging the gold revaluation issue is risky enough politically at the moment, what with the dollar showing signs of sustained weakness and with President Trump mocking Federal Reserve Chairman Jerome Powell practically every day while trying to hasten his replacement.

To receive free commentary and analysis on the gold and silver markets, click here to be added to the Money Metals news service.