Why Did Treasury Hire the Architect of a Gold-Backed Bond?

Why would the U.S. Treasury hire one of the most prominent advocates of gold-linked government debt at a moment when borrowing costs are rising and foreign central banks are accumulating physical gold?

In Episode 311 of The Secret War on Cash, Dean Heskin and Chris Agelastos of Swiss America Trading examine the appointment of economist and longtime gold advocate Judy Shelton as counselor to Treasury Secretary Scott Bessent.

Shelton has spent years arguing that gold should play a larger role in the monetary system.

One of her more unusual proposals involves Treasury Trust Bonds.

Her 2012 concept envisioned zero-coupon Treasury securities that holders could potentially redeem at maturity in either conventional dollars or a predetermined amount of gold.

She has also argued more recently for very long-term Treasury debt backed by U.S. gold reserves.

The idea is straightforward.

If investors receive some form of gold-linked protection, they may be willing to accept a lower interest rate on U.S. debt.

That could theoretically help reduce Treasury borrowing costs at a time when long-duration yields are placing growing pressure on federal finances.

But there is an important distinction.

The Treasury Department has not announced a gold-backed bond.

Shelton’s role is advisory, and her appointment does not prove that the government intends to implement one of her gold-linked proposals.