Trump's Gold-Bitcoin Plan: A Solution for $38 Trillion Debt!

Senator Cynthia Lummis (R-Wyo.) has stated that the Trump administration is considering a plan to convert a portion of the country's gold reserves into Bitcoin (crypto: BTC) to create a strategic digital reserve. This proposal comes as the United States faces the national debt reaching $38 trillion, leading to increased searches for new approaches to restore fiscal stability.

Over the next decade, interest payments are projected to reach $14 trillion, raising concerns about long-term debt sustainability. Lummis emphasized that selling or revaluing the U.S. gold certificates to purchase Bitcoin could halve the national debt over twenty years.

Michael Saylor, founder of Strategy Inc. (NASDAQ:MSTR), and economist Arthur Laffer have conducted research supporting this idea. The duo argues that acquiring approximately 5% of the global Bitcoin supply, or one million coins, could provide significantly higher long-term returns compared to stagnant gold assets.

Data suggests that a 5% capital conversion from gold to Bitcoin could push the BTC price to approximately $242,000. Lummis added, "The U.S. can reprice its low-value gold on the books to convert into Bitcoin. This would allow us to create a strategic reserve without taking on new debt; we can leverage Bitcoin's asymmetric increase in value."

Analysts estimate that the U.S. Treasury’s 261.5 million ounces of gold could raise approximately $1.3 trillion at a price of $5,000 per ounce. Should Bitcoin's price rise into six-figure levels, this value would increase significantly.

The Treasury Department has confirmed that the national debt has surpassed $38 trillion and has added $1 trillion in the last two months. White House spokesperson Kush Desai acknowledged that Trump reduced the deficit by $350 billion this year but admitted that deeper reforms are necessary. Desai emphasized, "Structural change is needed," underscoring that long-term debt management remains a priority.

Traditional options, such as cutting spending and increasing taxes, have failed to slow down borrowing. The concept of converting gold to Bitcoin is garnering attention amid growing skepticism regarding the sustainability of existing fiat-based reserves.

Critics warn that selling 8,000 tons of U.S. gold could lower global prices and undermine the reliability of reserves. Large-scale Bitcoin purchases could also trigger extreme volatility, potentially driving up prices during acquisition and increasing the risk of sharp reversals in the future.

Market analysts believe that this move could shake global creditors. Replacing a proven reserve asset with a volatile one may raise borrowing costs and erode confidence in U.S. debt markets. Observers note that even a $1.3 trillion conversion would not be enough to wipe out the national debt, requiring Bitcoin to increase by 700% from its current prices.

Lummis argues that remaining stagnant is riskier. "The only way out of this debt burden is not to borrow," she said. "But we can invest in an asset with asymmetric growth potential and allow time to work in America's favor." For now, Trump's proposal remains speculative; it strikes a balance between financial innovation and a game of financial fortune. The market reaction and Washington's willingness to take risks will determine whether this remains policy or a political spectacle.