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The Need for a Public Debate on the Fate of National Gold Reserves

Gold, once the foundation of currencies worldwide, may be on its way to becoming just another commodity. Key to whether gold in the future is a worthwhile or worthless investment will be the decisions of national treasuries, central banks, and international institutions about whether to sell significant shares of their gold reserves. Already, such sales have happened, and others are planned. Thus central banks, rather than mining companies or gold buyers, may have the most influence over the future price of gold.

Central banks and international financial institutions hold more than 34,000 tons of gold. This is more than 13 times the annual production of the world’s mines; if sold, these reserves could satisfy gold demand for more than 8 years (current demand is approximately 4,000 tons per year). Of this demand, 85% is typically used for jewelry.

The United States, as the world’s largest holder of gold reserves (8,600 tons), holds 54% of its reserves in gold. U.S. citizens deserve a voice in a broader public debate on the future of U.S. gold reserves, even from a purely financial perspective.