On February 3, 2025, President Donald Trump signed an executive order to create a Sovereign Wealth Fund (SWF) for the United States, commenting that this will become one of the largest SWF in the world.
For context, SWFs are state-owned investment funds or state-regulated private funds made up of money generated using surplus revenues. The surplus revenue can originate from trade or natural resource development, as in the case of Norway ($1.8 trillion U.S. dollars) and Abu Dhabi (1 trillion U.S. dollars), which rely on excess oil reserves. Chile uses individual contributions to fund a private retirement pension system (227 billion U.S. dollars).
The general objective of the SWF is to permit countries to invest surplus revenues to stabilize economies, grow national wealth, and generate long-term financial returns, investing in internal or global markets.
In the case of the United States, the SWF's objectives will be to promote fiscal sustainability, reduce the burden of taxes on American families and small businesses, set the path for economic security for future generations, and promote investment in developing different sectors that will contribute to expanding the U.S. economy.
If the creation of a SWF requires the accumulation of excess revenues, how would the federal government be able to generate such surpluses if it’s been running deficits since the 1970s (with the only exception of the period between 1998 and 2001), the constants deficits have reached roughly $36 trillion in debt, making the experts question whether there is a source of the surplus revenue or funding large enough on the hands of the federal government to create the SWF.
The government plan currently under examination related to how to raise the necessary funds for the SWF of the United States, as explained by the Secretary of Interior (Doug Burgum), consists of operating the properties of the federal government as if they are corporate assets, this includes properties listed in the balance sheet of the nation such as real state, national parks, public land, and natural resources such as timber, fossil fuels, and minerals.
Within its funding plan for a SWF, the federal government considers that the correct way to value public lands should be determined based on their potential market value. Based on this assumption, federal property can be worth as much as $200 trillion U.S. dollars. However, there are discussions if this could be a credible figure, considering that if the federal land leased with the purpose of extracting natural resources such as oil, gas, timber, mining, and grazing brought about $17 billion in 2024, viewed as not sufficient to challenge such a large public deficit.
Furthermore, the lack of an adequate law regarding royalty payments to exploit resources from federal lands makes analysts more skeptical about the federal government's capacity to raise sufficient revenues.
Another alternative suggested by some analysts and viewed as a more effective option to raise the necessary funding is that the Treasury Department may sell the public lands to the highest bidders. This will allow it to raise hundreds of billions or trillions of U.S. dollars in a relatively short period of time, facilitating the implementation of the SWF during the current administration.
If the aim of the federal government is to find the most effective way to fund the SWF, the discussion should not just concentrate on ‘non-financial’ assets such as real estate, national parks, and resources that can be extracted from public lands, primarily mentioned in related news and literature, and consider the potential of the ‘financial assets’ like accounts receivables (e.g. unpaid taxes, student loans), loan receivables (e.g. mortgage loans, small business loans, government to government loans), and federal credit programs among others that have a book value equivalent to 1.8 trillion U.S. dollars. By being guarantee promises of payment and based on their quality, they can be negotiated to raise capital resources. However, the current estimation of the value of the federal financial assets seems to reflect the book value under which most federal assets were recorded, which in some cases, is distant from their real market value.
This is most critically exemplified in the case of the U.S. Gold reserves, still valued according to the book value assigned to gold in 1973, which is 68 times lower than the current market value of gold, under which the existing 8,133.46 metric tons (or 261.5 million troy ounces) of gold in reserve are equivalent to $757 billion of U.S. dollars of 2025. Furthermore, most of the gold reserves are kept as a stock of gold without any apparent use. In fact, less than 5% of these reserves are used as collateral for federal reserve notes and mint gold coins.
So, if the federal government considers the option of using the U.S. gold reserve to fund the SWF, without the intention of selling the gold, using the gold reserves to issue financial instruments such as ‘gold denominated sovereign bonds,’ ‘gold-backed exchange-traded funds (ETFs),’ ‘gold certificates,’ ‘gold back bonds,’ ‘gold leasing,’ among others, that can be purchased by the private sector to collateralize, hedge, and leverage investment strategies. Therefore, this currently passive asset can be put to work at its market value, prompting the fundraising for the U.S. SWF.
Furthermore, being that the U.S. is the fourth largest gold producer in the world with 190 metric tons per year, the federal government may consider buying the local production of gold to keep expanding its SWF and support local mining.
It’s likely that solely the use of the gold reserves will not outweigh the burden of the U.S. federal debt, but actively increasing value of gold and its universal acceptance may turn it into an essential component of the U.S. SWF.
President Trump has already ordered the Secretaries of the Treasury and Commerce departments to develop a plan for finding the money needed within 90 days (since the executive order was signed). So far, Treasury Secretary Scott Bessent has commented on the possible source of the funding: “We are going to monetize the asset side of the U.S. balance sheet for the American people. We are going to put the assets to work.” that may likely indicate that such a considerable reserve of gold passively sitting in the hands of the federal government will not go unnoticed.
