When we did our short “QuickTake” on October 10 about gold, “Gold, Electrical Power, and Possibility,” we added a comment about using the rise in the gold price to mitigate the electricity generation and distribution issues evolving throughout the United States as a result of AI-induced power demand. (For an analysis of both the power requirements and water requirements for meeting AI demands, see “Environmental impact and net-zero pathways for sustainable artificial intelligence servers in the USA” | Nature, https://www.nature.com/articles/s41893-025-01681-y. See also the reading list at the end.)
Some critics of the grid project proposal argue that this approach helps gold bugs (speculators in gold). Others say it will fuel a gold price bubble. To the former we suggest that using the gold certificates to fund the sovereign wealth fund for the United States neither increases nor decreases demand for gold. The actual price could be adjusted to any number Congress determines. I use the approximate market price ($4000/oz.) to demonstrate the concept.
To the latter we offer the link to this research paper about gold prices and bubbles.
“Gold and bubbles: an impossible binomial? A review of historical and current evidence” | Applied Economic Letters, https://www.tandfonline.com/doi/full/10.1080/13504851.2021.1897070
Readers asked about the linkage from gold to kilowatts. They wondered how that was possible without additional taxation or without additional issuance of federal debt in the face of huge, forecasted deficits. Those are very fair questions.
We propose another way. No addition to the federal debt. No taxation or federal grants. All costs borne by investors and by users in their utility bills. And an economic model that generates jobs and tax revenue and national security and climate improvement better than existing approaches do. We combine equity investment, corporate debt, preferred and municipal bonds.
A major national priority, this multiyear project can be achieved without using federal funding by employing Treasury bonds. Meanwhile, the project can generate jobs for years, be financed through user fees in electricity bills, add to federal tax revenue, and improve national security for the entire electricity grid.
Our proposal is prepared in an outline form with citations and references. It is not a thoroughgoing, detailed study. It is a start for talking points. Whether anything happens depends on politicians, and that in itself makes any proposal problematic. But here we go anyway.
The idea is to revalue the gold certificates held by the Federal Reserve. They are currently valued at a rate of about $42 an ounce. Let’s use $4000, which will generate a change of about $1 trillion. The revaluation will require congressional and presidential agreement. In other words, for any good to happen, politicians would have to stop fighting with each other and instead try to build our country rather than destroy it.
The proposal will take a commitment to use the sovereign wealth fund as the seed money equity. And it will have an expectation that the sovereign wealth fund will get paid back with a return on investment and reuse those monies for other purposes. We are estimating utility-type investment costs and investment returns. And we think of this project in national terms, just like the railroads, or canals, or the interstate highway system.
We must note that, on Feb. 20th, 2025, Treasury Secretary Scott Bessent opposed the idea of gold revaluation in an interview on Bloomberg Surveillance (hat tip to Joe Kalish). A lot has happened between that interview and today.
For those who want to see the history about the gold hoard, here’s Chris Whalen’s interview of economist Alex Pollock. He tells the story well. The way I see it, $500 billion is raised by the stroke of a pen. The asset side of the Fed’s balance sheet goes up; the liability side goes up; and the money goes to Treasury. Treasury seeds the sovereign wealth fund. No change in federal debt. Instead, a $10 trillion, multiyear, job-creating project improves the entire national electricity system.
“Interview: Alex Pollock on the Fed and Gold: Part I” | Institutional Risk Analyst, https://www.theinstitutionalriskanalyst.com/post/theira763
“Interview: Alex Pollock on the Fed and Gold | Part II” | Institutional Risk Analyst, https://www.theinstitutionalriskanalyst.com/post/theira766
Anyone who wishes to forward or share this proposal with any politician is welcome to do so. The idea is to start the dialogue. It’s clear that a $4000 gold price has arrived. The need for a more robust electricity infrastructure has arrived. How to do this program and how to finance it is the debate. Maybe this proposal can be helpful.
We may run some reader responses in a separate piece. So email if you wish.
A note on the ballpark size of the project: In 2018, Joshua Rhodes, a research associate at UT Austin who works in the area of smart grid and bulk energy systems, published an analysis suggesting that replacing the aging US electrical grid would cost somewhere in the neighborhood of $5 trillion. We all know things have changed, so we contacted him again to see if he might update his estimate. While he did not have time to redo his entire detailed analysis, he offered this back-of-the-envelope estimate in an October 20 email:
Considering 8% electric growth and a roughly doubling of power plant and transformer and power line costs, I think I’d put the replacement cost at about $11 trillion today.
In the proposal below, which is a conceptual rather than a precise rendition, we used the figure of $10 trillion to keep the math simple.
Proposed: A National Grid Modernization and Resilience Act (NGMRA)
Executive Summary
The National Grid Modernization and Resilience Act (NGMRA) proposes a bold, market-driven strategy to overhaul the aging US electrical grid. With over 70% of transmission lines nearing the end of their lifecycle and outages increasing in frequency and duration, the grid is no longer equipped to meet the demands of a 21st-century economy. This plan outlines a $10 trillion investment over 30 years—financed entirely through private sector bonds, equity, and state/local municipal bonds, without issuing any additional federal debt.
A newly established US Sovereign Wealth Fund will provide seed equity, catalyzing private investment and ensuring national strategic alignment. The proposal focuses on modernizing infrastructure, integrating renewable energy, deploying smart grid technologies, and enhancing cybersecurity and resilience. It also emphasizes equitable access, workforce development, and long-term economic sustainability.
Grid modernization is expected to create hundreds of thousands of jobs in the near term and sustain millions of clean energy roles over the long term. With coordinated governance and phased implementation, this initiative will transform the grid into a reliable, secure, and future-ready backbone for American prosperity.
Objectives
- Modernize transmission and distribution infrastructure
- Integrate renewable energy and storage systems
- Deploy smart grid technologies nationwide
- Enhance resilience against climate, cyber, and physical threats
- Ensure equitable access and affordability for all communities
- Achieve all goals without issuing any additional federal debt, using a US sovereign wealth fund as seed equity
Strategic Investment Plan
This structure balances affordability (via low-cost debt), private-sector discipline (through equity), and national strategic interest (via a sovereign wealth fund). The sovereign fund could also recycle returns into future infrastructure or climate resilience projects.
Key Components
1. Grid Infrastructure Modernization
- Replace aging transmission lines and substations
- Expand high-voltage transmission corridors
- Harden infrastructure against extreme weather
2. Smart Grid Deployment
- Install advanced sensors, controls, and analytics
- Enable real-time monitoring and automated fault response
- Support dynamic pricing and demand-side management
3. Renewable Integration
- Build interconnections for solar, wind, and battery storage
- Streamline permitting and interconnection processes
- Support decentralized generation (e.g., rooftop solar, microgrids)
4. Cybersecurity and Resilience
- Upgrade digital defenses across grid networks
- Fund regional resilience hubs and emergency response systems
- Develop national standards for grid security
5. Equity and Access
- Prioritize investments in underserved and rural communities
- Cap rate increases for low-income households
- Create workforce development programs for clean energy jobs
Implementation Timeline
Modernizing the US electrical grid will require a 30-year horizon due to the immense scale and complexity of the undertaking. The grid spans hundreds of thousands of miles of transmission lines, thousands of substations, and millions of distribution components—many of which are owned and operated by different utilities across diverse jurisdictions. Coordinating upgrades across this fragmented landscape demands careful planning, regulatory alignment, and phased investment cycles. Integrating new technologies like smart sensors, renewable energy, and battery storage also requires interoperability testing, workforce training, and supply chain expansion. Environmental reviews, permitting, and community engagement add further time to each project phase. A multi-decade timeline ensures that modernization is strategic, resilient, and economically sustainable—without overwhelming ratepayers or destabilizing the energy market.
Job Creation Impact
Grid modernization is not only an infrastructure investment—it’s a workforce engine. According to the World Resources Institute, this initiative could create hundreds of thousands of jobs in the near term, spanning transmission construction, smart meter deployment, renewable interconnection, and cybersecurity. Over the long term, it will sustain and expand the clean energy workforce, which already employs over 3.5 million Americans, more than those working as servers, cashiers, or elementary school teachers. The Department of Energy has emphasized that modernization will require coordinated efforts across asset owners, manufacturers, service providers, and local governments—creating roles in engineering, IT, manufacturing, and skilled trades. These jobs will stimulate local economies, support workforce development, and position the US as a global leader in energy innovation.
Governance and Oversight
- Grid Modernization Council (GMC): A non-federal, multi-stakeholder body to coordinate standards, investment priorities, and oversight
- Public-Private Investment Board: Oversees deployment of sovereign wealth fund capital and ensures transparency
- State-Level Implementation Compacts: Encourage regional collaboration and innovation
Legislative Actions Required
- Establish the US Sovereign Wealth Fund for Infrastructure using non-budgetary assets
- Authorize state and municipal bond expansions for grid projects
- Expand regulatory support for private investment in transmission and clean energy
- Mandate national grid resilience standards
Expected Outcomes (We will not attempt to quantify these, except to ballpark a jobs figure.)
- Reduction in outage frequency and duration
- Increase in renewable energy share of total energy supply
- A million or more new jobs in energy and infrastructure sectors
- Reduction in economic losses from outages and disasters
References and Additional Reading
(https://x.com/KobeissiLetter/status/1989781951784292547?s=20)
“Grid Modernization and the Smart Grid.” US Department of Energy. Office of Electricity, U.S. DOE. Accessed October 2025. https://www.energy.gov/oe/grid-modernization-and-smart-grid
“Grid Modernization: Creating Jobs, Cutting Electric Bills, and Improving Resiliency.” World Resources Institute. WRI Research Brief. Published April 2020. https://www.wri.org/research/grid-modernization-creating-jobs-cutting-electric-bills-and-improving-resiliency
“More Americans Working in Clean Energy Than as Servers or Cashiers.” Yale School of the Environment. Yale Environment 360. Published September 24, 2025. https://e360.yale.edu/digest/us-clean-energy-jobs-2024
“What Does It Take to Modernize the U.S. Electric Grid?” U.S. Department of Energy. Grid Deployment Office. Published October 19, 2023. https://www.energy.gov/gdo/articles/what-does-it-take-modernize-us-electric-grid
Freedman, Andrew. “Why the High Price of Modernizing the U.S. Power Grid Is Worth It.” Axios. Published July 11, 2023. https://www.axios.com/2023/07/11/us-power-grid-modernize-climate-change
Rhodes, Joshua. “The Old, Dirty, Creaky U.S. Electric Grid Would Cost $5 Trillion to Replace.” University of Texas Energy Institute. Published March 17, 2017. https://energy.utexas.edu/news/old-dirty-creaky-us-electric-grid-would-cost-5-trillion-replace-where-should-infrastructure
“Grid Infrastructure Investments Drive Increase in Utility Spending.” U.S. Energy Information Administration. Today in Energy. Published November 18, 2024. https://www.eia.gov/todayinenergy/detail.php?id=63724
Crumley, Bruce. “Power Gets Pricier as Electric Grid Update Costs Rise.” Inc.com. Published July 22, 2024. https://www.inc.com/bruce-crumley/power-gets-pricier-as-electric-grid-update-costs-rise.html
“AI Data Centers Are Sending Power Bills Soaring” | Bloomberg,
https://www.bloomberg.com/graphics/2025-ai-data-centers-electricity-prices/
“Stargate: A Citrini Field Trip” (A deep dive into the Stargate Data Center project in Abilene) | Citrini Research, https://www.citriniresearch.com/p/stargate-a-citrini-field-trip-bde?r=52h00r&utm_medium=ios&triedRedirect=true
