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H/T TAVI COSTA FOR CHART

Are we headed back to a time when gold will back the U.S. Treasury market like it did before President Nixon severed the tie between gold and the dollar on August 15, 1971? That 100% seems to be the world we are moving into.

The world is demanding more value backing the U.S. currency versus it just being a fiat instrument; and of course, one used to control the actions, behaviors, and directions of other countries. Central banks are loading up on gold as if it were pre-1971, before the Nixon Shock. It all seems to be coming full circle.

Well, if that’s the case, how much coverage of foreign-owned Treasuries does the U.S. need to have in gold? What did they have pre-Nixon Shock? Has the rise in gold since March of 2024 satisfied this, or is there more needed?

The U.S. has a stable supply of gold (reported at 8,133 metric tons), so therefore price must do all the work. To avoid a total and disorderly collapse of the Treasury market, it is in the U.S.’s best interest that gold is allowed to rise; and rise sharply, to meet the price point where their gold holdings cover foreign-held Treasuries like it’s pre-August 15, 1971.

The answer is stark: gold currently covers only 14% of the $9.4 trillion in foreign-held U.S. Treasuries. Pre-Nixon, that coverage was 70-100% or more. To restore that level of confidence today, gold must rise to between $25,044/oz (for 70% coverage) and $35,777/oz (for 100% coverage). This is not speculation. This is the math of monetary survival that the U.S. faces right now and I will detail below.

Here is what you need to know;

• You need to know the current U.S. gold reserves are 8,133 metric tons (261.5 million troy ounces), and valued at $1.32 trillion at current prices (~$5,050/oz).
• You need to know foreign-held U.S. Treasuries equal $9.4 trillion as of February 2026, up from just $30-50 billion in 1970.
• You need to know current gold coverage of foreign Treasuries is about 14%, down from 70-100%+ pre-1971 under the Bretton Woods system.
• You need to know that to restore the 70% coverage (pre-Nixon standard), gold must rise to $25,044/oz (+396% from today).
• You need to know that to restore 100% coverage (full backing), gold must rise to $35,777/oz (+608% from today).
• You need to know that central banks bought 863 tons of gold in 2025, echoing pre-1971 accumulation patterns. Gold now represents 25% of global reserves, up from 10% in 2000 (but still far below the 70% in 1970).
• And you need to know with U.S. gold supply fixed, price is the only variable that can adjust to restore confidence in the dollar and prevent a disorderly Treasury market collapse.

What we are witnessing is the reverse Nixon shock. Gold Coverage of Foreign-held U.S. Treasuries sits at only 14% today vs. 70-100% pre-Nixon. Price must rise to $25,044-$35,777 to get to the pre-Nixon zone in order to restore confidence. Central banks clearly understand this and are leading the charge by front-running this monetary reset!

Let’s Dig Into The Following:

1. The post World War II Bretton Woods monetary system was a world backed by gold. Under the Bretton Woods system, established in 1944 and lasting until President Nixon’s shock in 1971, the U.S. dollar was directly convertible to gold at $35 per ounce. Foreign central banks could exchange their dollar reserves for physical gold from the U.S. Treasury. This created a powerful discipline on the system. Why the U.S. could not print unlimited dollars without risking a run on its gold reserves and therefore, gold, in effect, backed the dollar and by extension, the global monetary system!
2. Then came August 15, 1971. Facing a run on U.S. gold reserves as foreign central banks (particularly France) demanded conversion, Nixon unilaterally closed the gold window (supposed to be temporarily). Why the dollar became a pure fiat currency at that time, backed by nothing more than the “full faith and credit” of the U.S. government and the printing press was unleashed!
3. Fast forward to today. The U.S. still holds the same 8,133 metric tons of gold it has held for decades (or at least, that is what is officially reported). At the current market price of approximately $5,050 per ounce, that gold is worth $1.32 trillion. Impressive, until you compare it to the mountain of debt the U.S. has accumulated. Why the current U.S. gold reserves cover only 14% of its foreign-owned debt obligation and that is far below pre-Nixon shock levels!
4. Here is the critical insight: the U.S. is not going to mine or buy significantly more gold in the near term. The 8,133 metric tons (261.5 million troy ounces) is effectively and relatively fixed. Therefore, to restore confidence and avoid a disorderly collapse of the Treasury market, price is the only variable that can adjust. Why to restore a 70-100% coverage ratio (a reasonable pre-Nixon standard), the market value of U.S. gold must rise much further to equal $25K-$35K!
5. And the most telling sign that we are headed back to a pre-1971 world is the behavior of central banks. They are buying gold at a pace not seen since before the Nixon Shock. In 2025 alone, central banks added 863 tons of gold to their reserves. This is not a one-year anomaly; it is part of a multi-year trend of aggressive accumulation. Why the global powers of money are positioning themselves for a world where gold once again plays the dominant central role in anchoring the monetary system!