Gold is making global headlines this week, as this piece from Bloomberg details:
‘Wall Street Talk of Revaluing US Gold Is Drawing Attention — and Scepticism’
I’ll give you a brief overview of what’s happening before we look at the opportunity in Australia…
According to the government’s financial statements, the U.S. owns over 8,100 metric tons of gold. By far, the highest of any nation, as this graphic shows:
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| Source: Visual Capitalist |
While most countries revalue their gold reserves annually, quarterly, or sometimes monthly, the US hasn’t done so since the 1970s!
Its reserves are stuck at a set rate of about $42 an ounce, giving it a book value of just US$11 billion. As you probably know, gold is worth much more than that, now approaching $3,000 per ounce.
A revaluation would push up the market value of those holdings to nearly US$765 billion.
But why are US gold reserves heavily undervalued?
This is the most bizarre aspect…the US has long opposed a gold revaluation, as this would damage the dollar’s status as the world’s reserve currency.
How it has maintained this twisted fantasy for so long is anyone’s guess!
According to some sources, the US dollar has lost over 96% of its value since 1913.
However, the US, under Trump, has flagged the idea of revaluing its gold reserves.
That will push up its assets, leading to a one-off windfall gain for the US Treasury and a significant increase in the Fed’s balance sheet.
Which brings me to an idea…
What if Australia underwent its own gold revaluation?
Untapped gold could extinguish the national debt
Australia holds the world’s largest gold reserves.
But when I say ‘reserves’, I don’t mean gold sitting in a vault, like the US example; I mean the untapped bounty lying beneath the ground.
Gold that we know exists but, for whatever reason, hasn’t been extracted.
Geoscience Australia says these ‘unmined’ gold reserves total a staggering 9,500 tonnes. That’s about 17% of the world’s total estimated gold reserves.
In fact, if Australia extracted all of this gold, it would hold more bullion than the US government!
But it would take vast capital to pull all that wealth from the ground.
So, let’s play a hypothetical…
What would Australia’s untapped gold bounty be worth AFTER deducting the costs to extract and process it? Turning gold that’s locked up in the ground into pure bullion?
Well, gold miners have devised a neat measure that accounts for all the processing and mining costs associated with extracting gold. We call it the all-in-sustaining cost (AISC).
That averages to around US$1,200 per ounce across global gold mining operations.
With gold trading at almost $3,000 per ounce, by my calculations, Australia’s untapped 9,500-tonne bounty would be worth around US$600 billion!
Or $940 billion in Aussie dollars.
Now, here’s the real kicker…
According to the Treasury Department, Australia’s gross debt is estimated to be $940 billion in 2025.
That means Australia could hypothetically extinguish its national debt if it mined and sold its known gold reserves!
But the problem is that’s never going to happen.
Aussie gold: only the privileged will benefit
No doubt, we’re called the lucky country for a good reason.
The world’s largest untapped gold reserve… That’s as good a reason as any.
But does that make you feel lucky? Probably not!
You see, chances are the majority of Aussies won’t see any tangible benefit from this wealth. The bulk of these riches sitting below your feet will fall into the hands of mining executives, the owners of these underdeveloped gold deposits.
And with the collision of new mining innovations AND higher gold prices, extracting this untapped bounty has never been so profitable!
So, why not join these privileged few?
Become one of their shareholders and potentially get a slice of Australia’s untapped wealth.
I’ve made that case in my latest report, bringing my inside experience as a geologist so that I can aim to help you get a slice of what is ultimately yours.
You can get all the details here.
Regards,
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James Cooper,
Editor, Mining: Phase One and Diggers and Drillers
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