Senior Government Officials Actually Considered '$1 Trillion Platinum Coin'

Gold and silver prices rose on Thursday, with gold up $14 to $2,494, while silver was trading $1.07 higher at $28.41. 

The metals rallied off the lows from Wednesday afternoon, traded higher overnight in Asia, and continued upwards throughout the Thursday session in the US.

Although while it's encouraging to see the metals rallying (even if somewhat disconcerting to see some of the events that are driving the rally), there was a story that emerged last week that's perhaps the epitome why there’s such a renewed fervor for gold right now.

You may remember that over the past decade there’s been speculation about the government minting a $1 trillion platinum coin as a means of skirting the debt ceiling limit. Which is of course as ridiculous as it sounds—for the government to take just one particular coin and give it an arbitrary value (even if not entirely dissimilar from what the Federal Reserve does with some of its open market operations).

However, last week Bloomberg author Jason Leopold wrote an article about a set of Freedom of Information Act requests he submitted over the past decade, which provided "a series of memos from the Justice Department that show a large denomination platinum coin was discussed at the highest levels of government."

One memo titled –  “Authority of the Secretary of the Treasury to Issue a Large Denomination Platinum Coin” – came from two top Justice Department attorneys on Nov. 26, 2013, and stated:

¨During the debt ceiling crisis of January 2013, the office considered whether 31 U.S.C. 51 12(k) authorizes the treasury secretary to issue a large denomination platinum coin in order to obtain funds for making debt payments and other expenditures if Congress fails to raise the debt ceiling. The outline below summarizes our preliminary research and thinking on the question.¨

Most of the records were heavily redacted, including the one this memo referenced. Yet this still confirms that there was discussion about the plan, which shows the types of options the US government now has to consider to manage a debt load that's grown considerably larger in the time since the memo was written.

(Miles Franklin CEO Andy Schectman Talks About $1 Trillion Platinum Coin Proposal)

For the sake of the American people, one can only hope that the proposal isn’t revisited. As you can only wonder what would be left to stop them from minting 35 of the $1 trillion coins instead of just one. 

On the other hand, the possibility of seeing the gold price eventually revalued in some form as the debt and interest expense continues to grow seems a lot more plausible. And on August 15, 2024, the 53-year anniversary of Richard NIxon’s decision to remove the dollar’s tie to gold, a gold revaluation remains one of the few realistic options left to meaningfully address the debt. 

Although of course they wouldn’t be able to just revalue only 1 of their ounces to make it work.

Ultimately, while it's somewhat amusing to discover that the government was actually exploring the idea, it's also a bit alarming to see the kind of options that are under consideration. Which is why you see an increasing portion of the globe de-dollarizing away from US dollars and debt.

And why gold’s role in global trade is taking on an increased importance, as the fragility of the current monetary regime continues to be exposed.

Arcadia EconomicsSilver Research, Trading, and Financial Show Host

Website: https://arcadiaeconomics.com/ Youtube Channel: https://www.youtube.com/user/ArcadiaEconomics/videos