Senator Cynthia Lummis (R-Wyo.) has revealed that the Trump administration is contemplating an ambitious plan to partially convert the United States’ gold reserves into Bitcoin (CRYPTO: BTC) as part of a strategy to establish a digital reserve. With the national debt reaching an unprecedented $38 trillion, the need for innovative fiscal strategies is becoming increasingly urgent.
The looming specter of $14 trillion in interest payments over the next decade amplifies concerns regarding long-term economic viability. Lummis has suggested that by selling or revaluing U.S. gold certificates, the nation could finance Bitcoin purchases and potentially “cut the national debt in half over 20 years.”
Supporting her argument, studies from Strategy Inc. founder Michael Saylor and economist Arthur Laffer advocate for the acquisition of approximately 5% of the global Bitcoin supply, roughly one million coins. They believe that such a move could yield remarkable long-term investment returns compared to stagnant gold reserves. Current data indicates that this 5% capital shift from gold to Bitcoin could drive BTC’s value to around $242,000 per coin.
“The U.S. could take undervalued gold on its books, reprice it, and convert into Bitcoin,” Lummis stated. This strategy, she explained, would enable the construction of a strategic reserve without incurring additional debt, leveraging Bitcoin’s potential for significant appreciation as a store of value.
Analysts estimate that the U.S. Treasury’s 261.5 million troy ounces of gold could be valued at about $1.3 trillion, based on a price of $5,000 per ounce. The potential revenues from this conversion would increase significantly if Bitcoin prices were to reach the projected highs.
The Treasury Department acknowledged that the national debt surpassed $38 trillion, attributing over $1 trillion of this increase to borrowing within just two months. White House spokesperson Kush Desai noted that while Trump has managed to reduce deficits by $350 billion this year, more extensive reforms are still necessary for sustainable economic management.
Despite the calls for fiscal reform, traditional approaches like spending cuts and tax hikes have yet to make substantial impacts on the debt. The concept of shifting gold into Bitcoin has gained traction amid rising skepticism regarding the sustainability of fiat reserves.
However, critics caution that liquidating over 8,000 tonnes of gold could negatively impact global prices and compromise the credibility of U.S. reserves. Furthermore, the potential for extreme volatility from large-scale Bitcoin purchases raises concerns about market stability, possibly unsettling global creditors. Analysts have pointed out that merely converting $1.3 trillion worth of gold would not significantly alleviate the national debt unless Bitcoin experienced dramatic price increases.
Lummis contends that the risks of inaction are far more dangerous. “We can’t borrow our way out of this,” she remarked, advocating for investment in assets with exponential upside potential that could benefit the country over time.
At present, the proposal remains speculative, sitting at the intersection of innovative fiscal policy and risky financial strategy. The future of this initiative will largely depend on market reception and the willingness of Washington to take bold financial steps. As the situation develops, it reflects a broader conversation about economic resilience and the exploration of alternative asset classes in today’s complex financial landscape.
