(Kitco News) - As gold prices continue to push towards the $3,000 an ounce level, mounting concerns over supply constraints and central bank accumulation are driving uncertainty in the global market. According to Andy Schectman, President of Miles Franklin Precious Metals, the physical gold market is experiencing unprecedented stress, with massive outflows from the London Bullion Market Association (LBMA) to U.S. vaults and an increasing number of countries repatriating their gold reserves.
Schectman points to data showing that since November 2024, more than 12.5 million ounces of gold and 40 million ounces of silver have moved from London into the U.S. COMEX system. “It’s a different script that everyone is going off of,” said Schectman, emphasizing that the sheer scale of these transfers suggests a deeper shift in global monetary policy. He also highlighted that JPMorgan is set to deliver $4 billion worth of gold into COMEX for the February contract, questioning which entities are acquiring such vast quantities of gold. “What customer’s got $4 billion in their back pocket to buy gold with?” he asked.
U.S. Gold Reserves and Revaluation Speculation
With the U.S. national debt surpassing $36 trillion and the CBO's projections indicate that interest costs are expected to rise significantly, with net interest costs projected to increase from $952 billion in 2025 to nearly $1.8 trillion in 2035, speculation is growing over how policymakers might respond. Schectman points to recent comments from U.S. Treasury Secretary Scott Bessent, who suggested that the administration may be exploring ways to “monetize the asset side of the U.S. balance sheet.”
One possible strategy, according to Schectman, is revaluing the gold held by the U.S. Treasury, which is still accounted for at $42.22 per ounce—a figure that has remained unchanged since 1973. At current market rates of nearly $2,900 per ounce, that would represent a massive unrealized gain. “Every $1,000 increase in the price of gold adds a trillion dollars to the Treasury’s general account,” he explained.
The idea of a gold revaluation has gained traction among monetary experts like Judy Shelton, who has previously advocated for issuing gold-backed Treasury bonds. Meanwhile, Senator Cynthia Lummis has supported proposals to audit Fort Knox, where the U.S. claims to hold more than 8,000 tons of gold, but which has not been independently verified since 1956.
Now Elon Musk, head of the Department of Government Efficiency (DOGE), has expressed interest in auditing the Fort Knox gold reserves. Prompted by public queries on social media, Musk questioned the frequency of these audits, to which Senator Rand Paul responded, inviting Musk to undertake the task.
A Brewing Supply Crisis?
According to Schectman, one of the biggest concerns facing the gold market is the increasing difficulty in sourcing physical metal. “The LBMA is now a T+6 to 8-week market. That’s basically a default,” he said, referring to the longer-than-normal delivery times for gold from London vaults. In China, several major banks have reported selling out of their gold products due to surging demand, while in South Korea, the country’s mint has temporarily suspended sales of gold bars, citing market tightness.
Schectman also noted that 16 tons of gold have recently been removed from GLD, the world’s largest gold exchange-traded fund (ETF). He argued that this could indicate large institutional players redeeming their shares for physical metal—a move that could signal growing distrust in the paper gold market.
Reflecting on the current state of the market, Schectman shared his perspective: "I have a feeling something big is happening. And I will tell you in 35 years of doing this, Jeremy, I've never seen anything like what's happening right now."
As global markets react to these developments, questions remain over whether the U.S. will move to revalue its gold reserves or introduce new policies to counterbalance rising BRICS influence. “It all points to revaluing the price of gold, which is held in the gold revaluation account,” said Schectman.
Watch the full Kitco News interview embedded above for the full breakdown of Andy Schectman’s insights.