diff --git a/client/tx/factory.go b/client/tx/factory.go
index b65264d6671f..8a89e80142dd 100644
--- a/client/tx/factory.go
+++ b/client/tx/factory.go
@@ -317,15 +317,40 @@ func (f Factory) BuildSimTx(msgs ...sdk.Msg) ([]byte, error) {
 		return nil, err
 	}
 
-	// use the first element from the list of keys in order to generate a valid
-	// pubkey that supports multiple algorithms
+	pk, err := f.getSimPK()
+	if err != nil {
+		return nil, err
+	}
 
+	// Create an empty signature literal as the ante handler will populate with a
+	// sentinel pubkey.
+	sig := signing.SignatureV2{
+		PubKey: pk,
+		Data: &signing.SingleSignatureData{
+			SignMode: f.signMode,
+		},
+		Sequence: f.Sequence(),
+	}
+	if err := txb.SetSignatures(sig); err != nil {
+		return nil, err
+	}
+
+	return f.txConfig.TxEncoder()(txb.GetTx())
+}
+
+// getSimPK gets the public key to use for building a simulation tx
+// note we should only check for keys in the keybase if we are in simulate and execute mode
+// (f.e. when using --gas=auto - ref #11283)
+// when using --dry-run, we are is simulation mode only and should not check the keybase
+func (f Factory) getSimPK() (cryptotypes.PubKey, error) {
 	var (
 		ok bool
 		pk cryptotypes.PubKey = &secp256k1.PubKey{} // use default public key type
 	)
 
-	if f.keybase != nil {
+	// use the first element from the list of keys in order to generate a valid
+	// pubkey that supports multiple algorithms
+	if f.simulateAndExecute && f.keybase != nil {
 		records, _ := f.keybase.List()
 		if len(records) == 0 {
 			return nil, errors.New("cannot build signature for simulation, key records slice is empty")
@@ -338,20 +363,7 @@ func (f Factory) BuildSimTx(msgs ...sdk.Msg) ([]byte, error) {
 		}
 	}
 
-	// Create an empty signature literal as the ante handler will populate with a
-	// sentinel pubkey.
-	sig := signing.SignatureV2{
-		PubKey: pk,
-		Data: &signing.SingleSignatureData{
-			SignMode: f.signMode,
-		},
-		Sequence: f.Sequence(),
-	}
-	if err := txb.SetSignatures(sig); err != nil {
-		return nil, err
-	}
-
-	return f.txConfig.TxEncoder()(txb.GetTx())
+	return pk, nil
 }
 
 // Prepare ensures the account defined by ctx.GetFromAddress() exists and