In the last press conference of his first term, President Barack Obama warned Congress that it must raise the debt ceiling to avoid disastrous side effects. He goes on to claim that failure to raise the ceiling could cause delays in Social Security benefits and checks for veterans. As usual, the two political parties are not expected to resolve their bickering before the last possible moment, which is creating a debate over bandaid solutions. However, ridiculous platinum coins and the nation’s gold reserves appear to be off the table.

The United States started the new year by hitting its record debt ceiling of $16.394 trillion. In the final days of 2012, Treasury Secretary Timothy Geithner sent a letter to Congress warning of the inevitable event and said the Treasury Department will take “extraordinary measures” to provide approximately $200 billion in headroom. The tricks will give the bobble-heads in Washington roughly until the beginning of March to work out a deal.

The first so-called temporary solution to the current debt ceiling fiasco was an idea that began a couple years ago. Due to a law intended to allow the Treasury Department to produce commemorative coins for collectors, the Treasury could theoretically mint a platinum coin with a face value of $1 trillion. In theory, the Treasury could order the West Point Mint to produce a one ounce $1 trillion platinum coin and have it sent to the Federal Reserve. Since it is legal tender, the central bank would be obligated to accept it. The coin could then be used to wipe out $1 trillion in debt or even be credited to the Treasury’s checking account at the Fed, allowing Washington to deploy another $1 trillion without issuing more debt. This bandaid was scrapped before it was even removed from the box.

No platinum or golden bandaid…

Over the weekend, Treasury spokesman Anthony Coley said the government and the Federal Reserve are opposed to minting platinum coins. He explains, “Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit.” In a statement, the White House adds, “There are only two options to deal with the debt limit: Congress can pay its bills or it can fail to act and put the nation into default.”

In addition to platinum miracle coins being ruled out, gold is also not likely to be used. During the previous debt ceiling debate that took place in 2011 and resulted in a credit downgrade, some called upon the government to sell its gold reserves in order to make good on its bills, without issuing more debt. For many reasons, this short-term fix also appears to be ruled out.

In a recent letter to Congressional leadership, Geithner writes, “Selling the nation’s gold to meet payment obligations would undercut confidence in the United States both here and abroad, and would be extremely destabilizing to the world financial system.”

Selling America’s gold reserves would truly be a quick-fix that would give way to longer-term problems. According to the World Gold Council, the United States holds 8,133.5 tonnes of gold, or about 261.5 million ounces. Although this is the largest stockpile in the world among individual countries, at a price near $1,600 an ounce, it only amounts to about $418 billion. In comparison, the U.S. budget deficit in fiscal 2012 came in above $1 trillion for the fourth consecutive year. Even if the country could manage to sell its gold reserves without causing a drop in price, the funds raised would only cover debt needs for a few months. In the bigger picture, the nation would be giving up a hard asset that has served as money for thousands of years.

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Disclosure: Long EXK, AG, HL, PHYS