Gold is soaring while Bitcoin seems to be taking a breather, and this contrast might be more than just a market trend. It could be part of a bigger plan. A fascinating theory suggests that Washington might be allowing gold prices to rise to help manage U.S. debt and boost confidence in the dollar. The idea is that this is a temporary step before a shift towards Bitcoin as the ultimate global asset.
Key Takeaways
- The current economic climate, with high U.S. deficits and shifting global trade, creates a need for monetary stability.
- A theory proposes that revaluing gold could be a way for the U.S. to absorb inflation and restore confidence in the dollar.
- This gold revaluation might be a precursor to Bitcoin becoming a more central part of the global financial system.
- Stablecoins could be playing a role in bridging the gap, acting as a new form of petrodollar system.
- Bitcoin’s current price action might be suppressed intentionally to allow this transition to unfold smoothly.
The Macroeconomic Storm
As of late 2025, the economic picture is pretty stark. The U.S. is facing record peacetime deficits, the Federal Reserve is cutting rates even as inflation remains sticky, and countries are buying fewer U.S. Treasuries than before. On top of that, global energy and trade are becoming more fragmented, with places like the Middle East, China, and India increasingly settling oil deals outside the dollar. This all puts a strain on trust in the U.S. financial system, which is the bedrock of the dollar’s strength.
Washington is in a tough spot. Raising interest rates could destabilize the massive national debt, but printing too much money erodes confidence. The strategy, according to this theory, is to buy time and quietly re-anchor the financial system. This involves using gold, an asset the U.S. holds a lot of, to soak up inflation and rebuild credibility, while keeping Bitcoin, which is outside of direct control, from disrupting the process.
The Petrodollar System’s Cracks
For decades, the dollar’s global dominance was tied to oil. Every barrel sold in dollars meant more demand for U.S. debt. But this system is showing signs of wear. Nations are looking for more neutral ways to trade. Macro analyst Luke Gromen points out that if the petrodollar system weakens, gold is the most likely asset to step in as a global currency for oil. He notes that the ratio of gold to oil has been increasing, and countries like India and China are already buying Russian oil with Chinese yuan. This suggests the petrodollar system is indeed facing significant challenges.
Gromen explains that if the U.S. can’t shrink its deficits without causing a debt spiral, it might have to inflate away its debt. This means the real value of U.S. Treasury bonds could decline. He suggests looking at the ratio of gold ETFs (GLD) to long-term Treasury ETFs (TLT) as an indicator, noting that gold is outperforming Treasuries significantly.
The Gold First Theory
This is where the "Gold First Theory" comes into play, largely developed by former Wall Street trader Josh Mandel. The idea is that the U.S. could re-anchor the dollar by revaluing its gold reserves. Currently, the U.S. holds about 8,100 tons of gold, officially valued at a price frozen since 1971. If this gold were valued at today’s market prices, or even higher to cover a significant portion of the U.S. monetary base, the Treasury’s liabilities would look much more manageable. Mandel’s calculations suggest revaluing gold to around $16,000 per ounce could cover about 75% of the monetary base. This would effectively reprice gold, restore confidence, and pave the way for the next phase of the dollar system – one that’s digital and global.
Stablecoins: The New Financial Lifeline
To manage this transition, stablecoins might be playing a key role. The U.S. administration seems open to stablecoins, potentially using them to fill the gap in demand for Treasury issuance. This could create a new petrodollar system, where dollar-backed stablecoins circulate globally, still supporting the Treasury market. Essentially, the U.S. can’t sell enough long-term debt at affordable rates, so it’s exporting short-term debt through these digital dollars. This buys time while gold’s value increases.
The Bridge to Bitcoin
If stablecoins are the bridge, Bitcoin is seen as the end goal – a truly neutral asset outside any single nation’s control. Luke Gromen suggests that individuals should consider holding a portion of their wealth in both gold and Bitcoin. He believes that while Bitcoin might outperform gold in the long run, both are necessary to navigate the current monetary challenges. He likens owning gold and Bitcoin to building an ark to get through a monetary flood.
Gold’s Role in U.S. Debt
Luke Gromen further analyzes the relationship between U.S. gold reserves and foreign-held U.S. Treasuries. He points out that the market value of U.S. gold reserves currently covers only about 11% of foreign-held debt. Historically, this figure has been much higher, reaching 20% in the late 1980s and averaging around 40%. For gold to simply return to its long-term average, it would need to quadruple in price, reaching $15,000 to $16,000 per ounce. This suggests that the current gold rally might be a form of debt devaluation disguised as a bull market, potentially setting the stage for a monetary reset.
The Future of Money: Gold and Bitcoin
This theory helps explain why Bitcoin’s price might be suppressed. If gold is being allowed to rise to stabilize the system, Bitcoin’s volatility might be intentionally dampened. The massive liquidation event in crypto recently, occurring on a low-liquidity Friday just as gold hit new highs, could be seen as a deliberate move to keep Bitcoin’s price steady. The narrative is controlled: gold rebuilds confidence, and then the system pivots towards Bitcoin.
However, there’s another perspective: perhaps Bitcoin’s price action is simply a rotation of capital, with investors moving into gold and equities, believing the crypto cycle has peaked. Regardless of the reason, gold is doing the heavy lifting now, but Bitcoin remains the ultimate escape hatch when trust in other assets collapses. Unlike gold, which can be repriced by decree, Bitcoin cannot. It settles itself, making it the logical endpoint of this monetary realignment.
A Controlled Transition?
Whether this gold revaluation is a deliberate strategy or not, the incentives are clear. The U.S. has a strong reason to revalue its gold holdings before fully embracing an asset it can’t control. If gold repairs the balance sheet, Bitcoin can secure the future. Signs of this shift are already appearing: record global Bitcoin hash rates suggest large-scale mining, the U.S. government is acquiring seized Bitcoin, and even political figures are showing interest in Bitcoin. The limited supply of 21 million Bitcoin means every player in the global financial game is starting to recognize its importance. Gold might be the state’s ark, but Bitcoin is humanity’s.
