The U.S. Proposes to Use Gold to Purchase Bitcoin: The Rise of a New Reserve Asset?

Recently, the executive director of the U.S. President's Advisory Council on Digital Assets proposed a striking suggestion—to use the profits from gold reserves to purchase Bitcoin, thereby increasing the country's Bitcoin reserves in a "budget-neutral" manner. This proposal comes at a time when the International Monetary Fund (IMF) has officially incorporated Bitcoin into the global economic statistical system, requiring central banks and statistical agencies to record Bitcoin transactions and holdings in their balance of payments and investment position reports. This is not only a formal acknowledgment of Bitcoin's influence in the international financial system but also signifies its evolution from a speculative asset to a more institutionalized financial instrument.

However, this proposal from the United States raises a fundamental question: is gold still an undisputed safe-haven asset? If so, why have no companies, for thousands of years, adopted aggressive strategies similar to those in the Bitcoin market to accumulate gold for the long term? As countries around the world reassess the positioning of this emerging asset in the financial system, the United States seems to have made its stance clear. Can Bitcoin become the vanguard of a shift in the financial paradigm?

The Truth About U.S. Gold Reserves

The United States has the world's largest official gold reserves, totaling 8,133.5 tons, a position it has maintained for 70 years. However, this gold has not been circulated in the market for a long time and is stored in specific reserve vaults. Since the end of the Bretton Woods system in 1971, the U.S. gold reserves have no longer been used to support the dollar but are held as a strategic reserve asset and are generally not sold directly.

Therefore, if the United States wants to use the "surplus of gold reserves" to purchase Bitcoin, the most likely way is to utilize gold-related financial instruments, rather than selling physical gold. Historically, the U.S. Treasury has created dollar liquidity by adjusting the book value of gold, without increasing the actual gold reserves. This method is essentially an "appraisal" operation of assets and can also be seen as an alternative form of debt monetization.

Currently, the U.S. Department of the Treasury has fixed the book value of gold on its balance sheet at $42.22 per ounce, far below the current market price. If Congress approves an increase in the book price of gold, the book value of the Treasury's gold reserves will increase significantly. Based on this new price, the Treasury could apply to the Federal Reserve for more gold certificates in exchange for the corresponding new dollars.

This means that the United States can implement a "stealth dollar devaluation" by adjusting the book value of gold, while generating large-scale fiscal revenue. These newly added dollar funds can be used to purchase Bitcoin, further increasing the United States' Bitcoin reserves. The gold revaluation not only provides financial support for Bitcoin purchases but may also drive an increase in Bitcoin demand in a broader financial context.

However, although this approach can superficially encourage other institutions and investors to follow suit, attracting more liquidity into the Bitcoin market, if the market deems that the loss of credibility of the US dollar is a long-term trend, the global asset pricing system may change, and the price discovery mechanism of Bitcoin may become more uncertain.

The Lack of Freedom in the Gold Market

If the U.S. Department of the Treasury adopts the method of re-evaluating gold and uses the surplus "book value" to exchange for dollars to purchase Bitcoin, the Bitcoin market may experience a short-term frenzy, but at the same time, it faces risks of tightening regulation and liquidity control, which is similar to the situation when gold entered the "free pricing" era due to the collapse of the Bretton Woods system.

However, the gold market has never been truly free. Historically, gold has not only served as a safe-haven asset but also played the role of a "shadow leverage" in the monetary system. There are countless examples of using gold for geopolitical games, such as the "Gold Door Incident" in the 1970s and the "Gold Swap" operations in the 1980s.

In addition, the credibility of gold is not unbreakable. The official gold reserve data of the United States has never undergone independent audits, and the condition of gold in certain vaults has long been a "black box" issue hotly debated in the market. More importantly, although the U.S. government does not directly sell gold, it may manipulate its value through financial derivatives, implementing shadow monetary policy operations.

Bitcoin: The Future Shadow Currency Policy Tool?

As the interest in holding Bitcoin rises in the United States, the market may enter the "Bitcoin as a shadow asset" phase—where the authorities acknowledge the value of Bitcoin but use policies and financial instruments to limit its direct impact on the existing system.

Assuming the U.S. government includes Bitcoin as a strategic asset and begins to accumulate it, the government may operate in the market through shadow institutions (such as Bitcoin ETFs or trusts), indirectly affecting the price of Bitcoin and market sentiment. These institutions can take advantage of the liquidity and volatility of the Bitcoin market to accumulate a large amount of Bitcoin into a "hoarding" state, to be released at specific moments, affecting market supply and demand as well as price trends. This operation is similar to the "gold swaps" and "gold leasing" in the gold market, which do not involve actual Bitcoin transactions but achieve their goals through financial instruments and market strategies.

However, the technical characteristics of Bitcoin may prevent it from repeating the mistakes of gold:

1. Transparency: Unlike the "black box" of gold, Bitcoin transactions can be traced on the chain. Blockchain technology makes all transactions publicly auditable, and anyone can track the circulation of Bitcoin through on-chain data tools.

2. Decentralization: The Bitcoin network is composed of independent nodes, each holding a complete transaction ledger and collectively verifying transactions, making it impossible for a single institution or country to tamper with or manipulate transaction data.

3. Real-time: The flow of funds for Bitcoin is completely public and globally searchable, with efficiency far surpassing that of most countries' gold reserve reports updated on a quarterly or annual basis.

4. Risk Resistance Ability: The technical characteristics of Bitcoin give it a stronger resistance to runs. Some trading platforms have launched proof of reserves (PoR) programs, ensuring that the assets held by the platform not only cover all user deposits but also maintain an additional reserve of funds, which contrasts sharply with the "fractional reserve" model of traditional banking systems.

The U.S. proposal to exchange gold for Bitcoin is not only a form of shadow currency operation but also reveals the fragility of the global financial system. Whether Bitcoin can truly become an independent and free "digital gold" in this process, rather than merely an appendage of the U.S. financial system, remains to be seen. However, from a technical perspective, both the real-time verifiable transactions on the blockchain and the reserve proofs of centralized institutions provide a new solution for the traditional financial system. This proposal undoubtedly opens up a profound dialogue about the future financial system.