Understanding the Mar-a-Lago Accord: Implications for Currency Markets, International Trade, and Precious Metals

The Dollar Rebalancing Initiative Takes Shape

Recent economic policy discussions surrounding President Donald Trump’s administration have sparked renewed interest in a potential coordinated international effort to address currency imbalances. While no formal agreement has been officially signed, the financial community has adopted the term “Mar-a-Lago Accord” to reference what could become a watershed moment in global monetary policy—a framework aimed at recalibrating the relationship between the US dollar and other major currencies.

This concept draws parallels to the 1985 Plaza Accord, when the United States joined Japan, France, the United Kingdom, and West Germany in a coordinated strategy to reduce the dollar’s overvaluation. At that time, American manufacturers faced intense competition from Japanese exporters. Today, the same competitive pressures persist, though China has replaced Japan as the primary economic rival.

How the Accord Concept Emerged

The Mar-a-Lago framework gained prominence following the November 2024 release of a policy paper authored by Stephen Miran, Trump’s nominee for the White House Council of Economic Advisers. Miran outlined approaches to reform international commerce and counterbalance what he characterizes as excessive dollar strength. Treasury Secretary Scott Bessent has similarly indicated that a transformative “grand economic reordering” may unfold in coming years.

The underlying rationale is straightforward: with the US trade deficit reaching US$1.2 trillion in 2024, a weaker dollar could enhance the competitiveness of American exports abroad. However, the path to achieving currency adjustment involves multiple levers, each carrying distinct risks and rewards.

Proposed Mechanisms: From Tariffs to Debt Restructuring

Should policymakers pursue this agenda, several policy tools could come into play. Tariff restructuring represents one obvious avenue, as Trump has proposed replacing traditional income-based taxation with an “External Revenue Service” designed to extract economic contributions from trading partners. This signals a willingness to apply economic pressure to achieve compliance.

Direct foreign exchange intervention is another possibility, though its effectiveness remains debatable. With approximately US$7.5 trillion traded daily in currency markets—vastly larger than the market of the 1980s—traditional intervention strategies may prove insufficient without broader coordination.

More controversial still are proposals involving treasury restructuring. Some economists have floated the idea of compelling foreign governments holding US debt to exchange their treasury holdings for 100-year non-tradable zero-coupon bonds, with such agreements potentially linked to military and security commitments. As Adrian Day of Adrian Day Asset Management has noted, this represents leverage through both incentive and constraint: “keep the Seventh Fleet in the Red Sea if you exchange your treasuries, but if you don’t, you’re on your own.”

Why Gold Emerges as the Primary Beneficiary

Regardless of which specific policies ultimately materialize, consensus exists among analysts that precious metals would experience significant demand pressure. A depreciating dollar traditionally strengthens gold’s appeal as a value storage mechanism. Additionally, the prospect of fiscal unpredictability could redirect investor capital toward hard assets perceived as more stable than treasury instruments.

An intriguing dimension involves the US gold stockpile. The gold stored at Fort Knox and elsewhere currently possesses a market value of approximately US$758 billion, yet the Federal Reserve’s balance sheet values it at merely US$11 billion due to a 1973 law fixing its accounting price. Speculation has intensified regarding a potential revaluation—particularly given public statements from Trump and Elon Musk expressing interest in Fort Knox inventory verification.

Treasury Secretary Bessent has alluded to monetizing “the asset side of the US balance sheet for the American people,” suggesting creative approaches to leverage existing resources, though he has clarified this does not necessarily involve formal gold revaluation.

Weighing the Consequences

The potential consequences of such restructuring extend beyond precious metals. A softer dollar would likely drive inflation through elevated import costs. International investors accustomed to treating US assets as safe-haven investments might reallocate capital toward alternative currencies or commodities. The global treasury market, valued at approximately US$29 trillion, represents an especially vulnerable pressure point—any sudden restructuring could trigger significant market dislocation.

Whether the Mar-a-Lago Accord materializes as formal policy or remains a theoretical framework, the direction of Trump administration economic strategy appears increasingly clear: prioritizing domestic manufacturing competitiveness and fiscal leverage over conventional monetary orthodoxy. The coming months will determine whether these concepts transition from discussion to implementation.