29 Sept 2025
The US Treasury's gold reserves have surged past $1 trillion in market value, reflecting gold's historic highs driven by investor caution and geopolitical tensions. Concurrently, the US labor market faces challenges with low hiring and layoffs, impacting new entrants and experienced workers, while ongoing debt ceiling negotiations threaten broader economic stability.
The US Treasury's gold reserves have reached a market valuation exceeding one trillion dollars, significantly surpassing the officially reported amount by over nine times.
Gold prices have surpassed $3,800 per ounce, marking historic highs after a 45% increase this year, driven by increased demand for safe-haven assets.
Investor flight to safety amidst trade wars, geopolitical tensions, concerns over the US debt ceiling, government financing issues, and significant inflows from ETFs, along with recent Fed rate cuts, have fueled the demand for gold.
An accidental statement by Mr. Basant suggesting the government might revalue its gold reserves to market value, potentially freeing hundreds of billions of dollars, was later denied but attracted considerable attention.
Unlike most countries, gold in the United States is directly under government control, not the central bank; the Federal Reserve holds gold certificates (CFTs) corresponding to Treasury reserves, crediting the government with equivalent dollar value.
Updating the market valuation of gold reserves based on current prices could introduce approximately $990 billion in new liquidity into the Treasury.
While potentially controversial due to debt ceiling limitations, revaluing gold reserves would place the financial system under pressure, increase liquidity, and prolong the Fed's balance sheet reduction process.
Countries like Germany, Italy, and South Africa have previously adopted market-to-market valuation for their gold reserves in recent decades, a practice noted by Fed economists.
Over half of the US gold reserves are stored in a high-security vault at Fort Knox, Kentucky, with additional reserves located in West Point and Denver.
The US labor market is characterized by low hiring and low layoff rates, which keeps millions of individuals outside the employment cycle.
Recent graduates, new entrants, and middle-aged unemployed workers seeking full-time positions are particularly affected, often finding themselves in part-time roles or facing extended periods of joblessness.
More than a quarter of unemployed individuals have been without a job for over six months, representing the highest share since the mid-2000s, excluding the COVID-19 pandemic period.
Economists anticipate the September employment report to indicate minimal wage growth and a relatively low unemployment rate of 4.3%.
Due to uncertainties, tariffs, and the general economic situation, employers are primarily focused on retaining their current workforce rather than expanding or reducing staff.
The flow of individuals into and out of jobs, known as labor market churn, remains significantly below pre-COVID levels, suggesting that people are staying in their current positions for longer durations.
Job opportunities are constrained for those actively seeking employment, with this trend observed across various states and sectors, particularly in construction, tourism, retail, and professional services.
Young Americans aged 16 to 24 face one of the most challenging labor markets in a decade, with their unemployment rate reaching 10.5%, the highest since 2016 (excluding the pandemic period).
Hiring in administrative sectors like technology has declined, and the advancement of AI is eliminating many entry-level jobs that historically served as career starting points.
Unemployment is also increasing among individuals without college degrees, as traditional sectors such as transportation and manufacturing have reduced their hiring.
US factories have experienced a loss of 42,000 jobs over the past four months, marking the longest period of decline since 2020.
Many factories and companies are not replacing retiring or departing employees due to concerns about trade policy instability and rising costs, leading to a reluctance to hire for vacant positions.
Negotiations between Democrats and Republicans regarding the US debt ceiling have not yet yielded a resolution, leading to threats of a government shutdown.
The government has threatened a shutdown, with former President Trump blaming Democrats, who in turn have proposed three conditions for their agreement to raise the debt ceiling.
The unresolved debt ceiling issue could significantly impact markets and potentially lead to delays in the release of crucial economic data.
The potential market valuation of US gold reserves at over $1 trillion could inject nearly $1 trillion in new liquidity into the Treasury, while simultaneously highlighting the profound implications of market-based asset valuation on national finances.
| category | metric | value | significance |
|---|---|---|---|
| US Gold Reserves | Market Valuation | Over $1 Trillion | Exceeds official book value by 9x; potential for $990B new liquidity. |
| Gold Price | Current Price & Increase | > $3,800/ounce (45% YTD) | Historic highs, driven by safe-haven demand amidst global instability. |
| US Labor Market | Hiring/Layoff Rates | Low | Keeps millions out of employment cycle, limits opportunities. |
| Unemployment Duration | Long-term Unemployed | > 25% for 6+ months | Highest share since mid-2000s (excluding COVID). |
| Youth Unemployment (16-24) | Unemployment Rate | 10.5% | Highest since 2016 (excluding COVID), tough for new graduates. |
| Manufacturing Sector | Job Losses | 42,000 in 4 months | Longest decline since 2020 due to trade policy concerns and cost control. |
| US Debt Ceiling | Negotiation Status | Unresolved | Threat of government shutdown; potential market impact and delayed data. |
