In a recent interview with Kitco News, Tavi Costa, a partner and macro strategist at Crescat Capital, laid out a compelling, if startling, scenario for the future of gold prices. In the segment Costa argued that a historical revaluation of U.S. gold reserves could send prices soaring to unprecedented levels, potentially reaching between $25,000 and $55,000 per ounce.
Costa's analysis, presented at the PDAC 2025 conference, centers on the relationship between U.S. gold reserves and outstanding Treasury debt, a metric he believes has drifted dangerously far from historical norms. "The note was more about putting to the perspective of history," Costa explained to Kitco News’ Jeremy Saffr. "I think we talk a lot about calculations of how gold gets value relative to the monetary base and money supply. To me, it comes down to the treasury."
Historical Disparity: Gold's Shrinking Role
Costa’s report highlights a stark contrast between today's gold backing of U.S. debt and historical figures. "Even marking to Market where gold prices are currently, we're about 2% of those Treasuries outstanding," he stated. This figure pales in comparison to the 40% seen during World War II and the 17% peak in the 1970s.
"If we're going to go back to the 17%, it takes us back to 24, 25,000 dollars an ounce. Or if we go back to the 40%, it's close to $55,000 an ounce," Costa calculated. He was quick to add, "Those are crazy numbers, and I'm not here to say those are price targets or anything like that, but I think that's important to put into perspective how much we've gone away from the anchor of owning an actually monetary metal."
Dollar Debasement: The Catalyst for Change?
A key driver of Costa's bullish outlook on gold is his conviction that the U.S. dollar is significantly overvalued. "The dollar is now at probably at its most overvalue levels in history versus other currencies," he asserted. He believes that the U.S.'s growing debt burden and increasing interest payments will force the Federal Reserve to lower interest rates, weakening the dollar and boosting gold prices.
"Clearly there is a real push from the administration to lower all rates," Costa said. "So we can reduce the interest payment to GDP from a 5% level to maybe more of an international level."
He pointed to historical precedents, such as the Plaza Accord of 1985 and the currency devaluations of the 1930s, as examples of how coordinated or organic actions can significantly impact the dollar's value. "We don't know if it's an organic or a coordinated act like the 1930s or the 1985 environment," Costa acknowledged. "What we do know is that the dollar is at its peak most likely, and that's the key part of it."
Silver's Explosive Potential and Market Rebalancing
Beyond gold, Costa sees significant potential in the silver market. "Silver has been acting short term in a very positive way," he noted. "It wouldn't surprise me if we see a jump in silver prices to close at a quarterly high finally." He also emphasized the increasing industrial demand for silver, suggesting that a "squeeze" could be imminent.
Costa also predicts a major rebalancing of global capital flows, away from U.S. equities and towards emerging markets and commodities. "MSCI World Index has 70% weight on the US equities," he pointed out. "At some point, that money has to go somewhere else." He highlighted the significant valuation disparity between U.S. and emerging market stocks, suggesting that a shift from growth to value investing is likely.
"US Stocks alone Cape ratio is like 60," Costa stated. "So think something's got to give, as I said, and I think that performance of those parts of the markets are due to worsening quite significantly in my view."
Costa's analysis, while bold, is rooted in historical data and a deep understanding of global macro trends. His focus on the relationship between gold and U.S. Treasury debt provides a unique perspective on the potential for a significant revaluation. His warnings about the overvalued dollar and the potential for a market rebalancing offer valuable insights for investors navigating an increasingly complex economic landscape.
As Costa concluded, "I think we're in that turning point in history where some of these figures about U.S. reserves of gold relative to treasuries and all are starting to matter."
Watch the full interview:
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