Opinion: Clearing Australia’s debt with unmined gold

According to the U.S. government’s financial statements, the country owns over 8,100 tonnes of gold, the highest amount of any nation. But while most countries revalue their gold reserves annually, quarterly, or sometimes monthly, the U.S. hasn’t done so since the 1970s! 

Its reserves are stuck at a set rate of about $42 an oz., giving it a book value of just $11 billion. As you probably know, gold is worth much more than that, now well over $3,000 per ounce. A revaluation would push up the market value of those holdings to nearly $765 billion. 

Why undervalued? 

The U.S. has long opposed a gold revaluation, as this would damage the dollar’s status as the world’s reserve currency. (Revaluing gold from $42 an oz. signals that paper money has depreciated and would suggest that trust in fiat currencies, especially the U.S. dollar, has eroded.) 

How it has maintained this twisted fantasy for so long is anyone’s guess. According to some sources, the U.S. dollar has lost over 96% of its value since 1913. 

However, under Trump, the U.S. 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.  

So, with that in mind, what if Australia and other gold-rich countries underwent their own gold revaluation? 

Debt-erasing power  

Australia holds the world’s largest gold reserves. But when I say ‘reserves’, I don’t mean gold sitting in a vault, like the U.S. 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 “unmined” reserves. 

If Australia extracted and stored all this gold (rather than sold it to customers), it would hold more bullion than the U.S. government! However, it would take significant capital investment to extract all that wealth. 

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? 

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. That averages to around $1,200 per oz. across global gold mining operations. So with a conservative gold price of $3,000 per oz., by my calculations, Australia’s untapped 9,500-tonne bounty would be worth around $600 billion! Or about $940 billion in Aussie dollar terms. 

Now, here’s the real kicker. According to the Treasury Department, Australia’s gross debt is estimated to be precisely that — $940 billion in 2025! 

That means Australia could hypothetically extinguish its national debt if it mined and sold its known gold reserves. Of course, the rights to mine that gold are held by private corporations, not the taxpayer.  

But as gold gains more attention in the months ahead, will investors start to price in a country’s untapped reserves when accounting for its national balance sheet health? 

James Cooper is a geologist based in Australia who runs the commodities investment service Diggers and Drillers. You can also follow him on X @JCooperGeo.