Is America Going Back to a Gold Standard Someday?

By Greg Hunter’s USAWatchdog.com

America went off the gold standard in 1971 when Richard Nixon closed the “gold window.” That meant the U.S. didn’t have to pay foreigners with gold, only dollars.  President Nixon created the first world reserve currency that was officially backed by nothing.  The U.S. has gotten to print money at will until this very day, but nothing lasts forever.   Recently, Steve Forbes (President and Chief Executive Officer of Forbes and Editor-in-Chief of Forbes magazine) predicted that a return to a gold standard is likely “in the next five years.” A recent Humanevents.com story said, “Such a move would help to stabilize the value of the dollar, restore confidence among foreign investors in U.S. government bonds, and discourage reckless federal spending, the media mogul and former presidential candidate said.” (Click here for the complete Humanevents.com story.)

Forbes is not some fringe player.  He is wealthy, well connected and knows his way around all types of media.  His thoughts are probably reflecting what other people in his sphere (meaning other wealthy and connected people) are contemplating.  And speaking of Forbes, in an article in the online publication of the same name, Forbes.com said, “. . . unless an inflationary boom is fed with more and more inflationary credit a deflationary bust we will quickly get.  And with the first signs of an ensuing bust, a massive QE III effort courtesy of deflation hawk extraordinaire Ben Bernanke is sure to follow.  In other words, if the private banks don’t inflate, a deflationary scare first than another Federal Reserve orchestrated inflationary cycle.  In the end, QE III one way or another.” (Click here for the complete Forbes.com story.) That’s just what the world wants, more money printing from the U.S. to pay its bills.  Foreigners will be increasingly shunning the dollar as the money creation continues.

Even a recently launched fund by PIMCO (EqS Pathfinder) is very fond of the yellow metal.  The largest holding in the $1.2 billion fund is gold.  By the way, PIMCO is no longer holding Treasury bonds.  The company is now betting against the world’s most liquid market and is shorting Treasuries.  That is flashing a great big warning sign for the buck.  Eventually, the U.S. will probably be forced to back the dollar to stop its inflationary fall.  A gold standard would stabilize the dollar, but the price of gold would have to be much higher than it is today.

Jim Rickards, Senior Managing Director for Market Intelligence at Omnis, Inc., agrees with Mr. Forbes that the dollar will be backed by gold within five years.  Rickards is what I call the “insider’s insider.”   Rickards predicts gold would need to be “$6,000 to $7,000 an ounce” to back the buck with the yellow metal, but he adds, “The devil is in the details.” In a recent interview at King World News, Mr. Rickards said there were many factors to consider when implementing a gold standard, “No matter how you do it, the price of gold is going up as you bring money back in line with gold.” Rickards said that depending on how the buck is backed by gold, the price per ounce could range between “$3,000” to “$30,000” or more per ounce.  (Click here to listen to the entire KWN interview with Jim Rickards.)

Finally, Jim Grant, Founder of Grant’s Interest Rate Observer, is also fond of gold.  Grant’s well-circulated publication warned of an impending financial catastrophe long before the 2008 meltdown.  In a recent King World News interview, Grant was asked, “How the United States will resolve its debt and deficit problems.”  Grant remarked, “Well, in my mind it will resolve them necessarily by undertaking the step of restoring the dollar to convertibility into gold.” (Click here for more from KWN.)

“Convertibility into gold” means a gold standard because, after all, gold is money and it has a 5,000 year history as such.

Comments
  1. therooster

    There’s no need to shore up the value of the dollar with gold when gold has the liquid characteristics of any digitised currency. Gold title is now used as currency , where said title is denominated as digitised weight based on real-time conversions for purchaseof something that is inevidibly priced in a fiat currency at this time. The dollar has a wonderful role in this context of real-time gold money, but not as a currency within a gold-money paradigm. The dollar’s role would simply act as the real-time measure for gold, a measure that bridges fiat pricing to weighted gold payment. Arriving in a real-time environment (for gold !) was a huge key in the severing of the fixed dollar-gold peg back in 1971. The economy, after all, is a real-time event.

    • Greg

      Therooster,
      Thank you for the comments.
      Greg

  2. Davis

    As long as the criminal gangsters on Wall Street and at the FED remain in control they will do everything to stop this, unless and until they have managed to drive the price down low enough to where they think they can gobble up lots of it. Problem with that is that the various bourses are having trouble finding physical to deliver. The PM market has become flooded with unbacked paper futures contracts in the range of 100 or more oz of paper gold for every 1 oz of actual gold of a deliverable status held in the COMEX vaults. Silver is even worse. If one were to take the total M3 money supply and divide it by the quantity alleged to be held at Ft. Knox the price of gold would be north of $10,000 an oz. Even if a return to the gold standard were allowed the government would just as quickly pull another FDR and ban private holdings. You have to remember one thing here, we’re dealing with criminals here and they have no regard for anything but their own power.

    • Robert

      Everything Davis says is true, except for one glaring mistake: The Fed, and not “the American people” owns what we like to think of as “our” gold in Fort Knox, or wherever it happens to be. Just as Nixon declared, sickly, “We’re all Keynesians now as he “closed the gold window” (this is a sort of euphemism for “and gave creditors pictures of gold instead of bullion”), in return for enabling trillions of new debt (something that could never have occurred with a gold standard), the central bank devils extracted their pound of flesh- or rather, 11 million ounces of it.

      • Davis

        Robert, Maybe yes maybe no. There has never been an audit of the Fed or Ft. Knox. As for the gold actually belonging to the “people,” you’re right, I have no doubt the FED worked some convoluted “swap” arangement with Wall Street years ago. Maybe it’s time to invest in tungsten and an electro-plating line.

        • Robert

          Davis, the issue is not whether or not there has been an audit of the bullion in Fort Knox, but who owns it. Ron Paul , for all of his courage in taking the Fed on, and for trying to focus Americans’ attention on what a pernicious effect central banks exert, has not found the courage to ask Ben Bernanke in plain terms “Is it true that the Fed owns what is referred to as “U.S. gold reserves?”
          They are a private corporation, run by the banks, and in it strictly for themselves, “the people” be damned. Proof of this is in their rejection of a Freedom of Information Act demand by Judicial Watch for documents, stating that as a non-governmental entity they were not subject to the FOIA.

  3. Jim in GA

    When the dollar finally reaches its bottom we will be faced with two options……return to a gold standard or return to the constitutional requirement for the government to issue money (not the Fed). If the choice is gold we will see a massive effort by the government to confiscate gold which could be a big problem. The other choice will put the money supply in the hands of elected officials who will be responsible to the electorate. It will also eliminate the debt based system we now have that guarantees inflation through interest on the debt.

    I think Forbes is wrong. After the collapse of the dollar we will return to the monetaty system laid out by the founding fathers, not by the Rothschilds who invented central banking for the benefit of the bankers.

    • Greg

      Thank you Jim in GA and William for the comments.
      greg

    • Robert

      Jim wrote “If the choice is gold we will see a massive effort by the government to confiscate gold which could be a big problem.” FDR, when he confiscated (or, rather, compelled sale to the government) gold tried to paint Americans holding it as “hoarders” which was truly a slander: Americans were PAID IN GOLD (paper dollars were no less than receipts for gold.) This fact would have created greater outrage except for the fact that very few had any savings at all when he issued his Executive Order- but today, any government decision to “confiscate gold” would mean Obama would have to order a seizure of gold reserves that are actually owned by the Fed- I’d like to see him try it.(not that he would dare) (That they are creative enough to try to pull the wool over everyone’s eyes was shown by “Quantitative Easing”- it really meant billions in bonuses for bankers, and near free loans to them (!).
      And, Greg, a return to the gold standard is as simple as making the little metallic “security strip” in the dollar an actual alloy of gold- or silver (or even lead). Talk about simple, honest dealing.

  4. William Ripskull

    Good article. I think this is coming too, and if the US does not back its dollars with gold, I think some other country will come along and offer a gold-backed currency that will put a bullet in the head of the dollar. If I was POTUS, I would be buying on the open market as much gold bullion as I could get my hands on, paying for it with toilet paper dollars. Think about it, with the click of a mouse, dollars are created out of thin air that can be used to purchase real gold! I would do this until the world realized what I was doing, at which point it would be too late. The US would then have the means (or at minimum a better means) to back the dollar with gold. Depending on how the gold/dollar relationship looked (I’m guessing gold would be worth a lot of dollars) you could let countries convert their dollars into gold, reducing our global debt, and at the same time stabilizing the dollar, now a gold-backed currency. There may be holes in this theory, but the bottom line is this… if I had a money printing machine I’d be using it as fast as I could to get my hands on all the precious metals I could.

    • Jim in GA

      Not a bad idea, but China, Russia, Germany and France have already done it, paying for it with our crashing dollars. They get the gold and get rid of declining dollars. The US must desperately hang onto the dollar as the world’s reserve currency as long as possible and never appear to be abandoning it. If the US were buying lots of gold the rest of the world would know it in an instant and we would crash overnight.

      • William Ripskull

        Right, but those countries have to actually earn their dollars, they can’t print them at will. Trust me, there is nobody that believes in sound money more than me, and I fully understand the implications of printing fiat money. But I’m afraid we’re at the end of our rope, and the very survival of the US is at stake. Given the number of dollars in circulation, if we ever go to a gold standard gold is going to have to be valued in the tens of thousands of dollars. So $1500 gold is a bargain today, and if you can trade fiat dollars for it to boot, all the better. This would even help drive up the price of gold in terms of dollars. Stockpiling gold will only put us in a better position in the future to deal with a gold-backed world reserve currency, and increases the likelihood that currency could be the dollar. Its about the only option that I see where the US isn’t @%^#ed in the end, resorting to default, hyperinflation, financial slavery, etc.

  5. Sam

    Dear Greg,

    Good article. However, I have a few questions.

    Under the Constitution, ownership of gold and silver coins is LEGAL, and that fiat was supposed to be convertible to gold or silver. We had gold and silver certificates (I have three), where the owner of the fiat could have paper exchanged for a like amount of gold or silver. That was the REAL gold standard (until the Congress in 1933 unconstitutionally made gold ownership illegal, then stating in 1975 that public gold ownership was at the PLEASURE of Congress).

    It would be nice if the country returned to the Constitution and the gold standard the way the Constitution intended (and this ain’t gonna happen unless Ron Paul is elected!), but I wonder if this gold standard Forbes wants is international: that is, that when China presents its dollars (which are really receipts, or IOU’s for gold), that China gets gold, whilst the American people are stuck with fiat.

    Can you or anyone else help here?

    • Greg

      Sam,
      I don’t know because there are so many ways a gold standard can be done. Anybody else have the answer? Thanks Sam for the support and question.
      Greg

      • Art Barnes

        I like real gold not what I call paper gold (the silver certificate). One, five, ten, twenty, fifty, & 100 dollar gold pieces would do the trick for the average citizen, both to be paid in gold and use it for their commerce. Let the invester class pay each other with fake paper money.

    • bob

      I do beleive that the trend is to come up with a Global currency. one that can be used without currency conversion. A global dollar that can be spent, traded, saved for wealth. A pre-taxed dollar FREE from lidigation world wide, UN sanctioned, FREE from theft by any nation, dictator, or country. A pure global dollar in silver or gold which keeps is value no matter what happens around the world.

  6. Jim

    Hi Greg,
    I wrote a comment regarding Jim Rickards from one of your previous articles. Rickards contends that just rolling over the Federal Reserves balance sheet and the interest paid to it will be enough to fund QE3, QE4, etc… therefore, Bernanke can say their ending the Q’s and now will be more vigilant against inflation. Yeah right !!! I’m a little suprised at Rickards top target for gold..30k wow!!..I’m thinking 3,000 to 5,000 gold before they intervene to remonitize it….but just a guess. My sense is that silver will be an even bigger winner than gold….what do you think???? Keep punching…your one of the few good reporters left in the mainstream.

    • Greg

      Thank you Jim,
      Rickards says his number is between 6-7 thousand bucks and ounce but it could be as high as $30,000 or more depending on how a gold standard is done.

  7. Vess

    The US dollar going back to some form of gold standard would be a very good thing – but I just can’t believe that the US government will let it happen (at all, let alone within five years).

    Yes, a gold standard will stabilize the dollar and will discourage reckless federal spending – but this is the last thing the guvmint wants. They want a cheaper dollar (so that it’s easier to pay their bills) and no restraint whatsoever. They just don’t want a dollar crash. The dollar going asymptotically to zero for a very long time would be the ideal scenario, from their point of view.

    As long as the dollar is the world’s reserve currency, and as long as the Saudis sell their oil for dollars, the rest of the world cannot avoid holding humongous amounts of US dollars. They may whine, they may try to hedge, they may devalue their own currency in sync – but hold humongous amounts of ever-depreciating US dollars they will.

    PIMCO shorting the US Treasurys is an urban legend, BTW:

    http://news.yahoo.com/s/nm/20110516/bs_nm/us_treasuries_pimco_3

    Even if some form of a gold standard is restored (which I am far from convinced that will happen within my lifetime; I’ve seen several currencies go bust and in none of the cases it resulted in a gold standard), you can bet that it will NOT mean convertibility to gold. Most likely, the currency will be pegged either to the price of gold, or to some basket of things (currencies, gold, oil, commodities), pretty much like the currency boards work. This will achieve stability and will stop inflation without actual convertibility.

    • Greg

      Vess,
      “As long as the dollar is the world’s reserve currency” The problem will ignite when the world stops trading oil in dollars and that is going to happen. I don’t know when but it will. As far as PIMCO shorting Treasuries, that is according to Rickards and I’ll go with him on that one. However, you do make some very good points in your comment. Thank you for weighing in on this one.
      Greg

      • markm

        Hey Vess and Greg,

        I don’t know anything about PIMCO–I will have to trust Greg on this one. Greg has a good track-record.

        However, Vess always has an interesting point of view and I like reading his posts. Like Greg, he is correct much more than he is wrong.

        markm

  8. Ulysses

    Instead of saying that gold will rise to, say, $5,000 an ounce, it is more realistic to say that the fiat dollar will FALL to 1/5000-th ounce of gold. In fact, the intrinsic value of the fiat dollar has already fallen to zero like that of the proverbial wooden nickel or the stock certificate of a defunct company and it is only governmental mandate coupled with our own gullibility that keeps it afloat.

    However, the demise of the fiat dollar will be nothing to celebrate for the holders of gold because the price of everything else in dollar terms will also rise at the same time and only the original purchasing power in terms of gold will be protected, that is all.

    For whatever it may be worth …

    • markm

      Hey Ulysses,

      I agree. The MSM has coined the terminology here, but it is totally inaccurate.

      The dollar is losing value while gold is maintaining value.

      markm

    • g.johnson

      ulysses,

      you stole my thunder. i spent the bulk of my productive life working in exchange for dollars that were worth 1/35 of an ounce of gold. now i am to understand that my retirement dollar is going to be worth 1/6000?
      1/3000? how is that not inflation? how is that not blatant, in our face in front of god and everybody, in broad daylight grand larceny? larceny on a scale so mindbogglingly huge that we cannot get our heads around it?

      ok everybody out of the box. stop thinking like keynes. stop trying to make a system that can’t function in the long term work.

      the city “owns” most of the gold in the world. that is the “city” as in crown-city-london (google it)

      the city also owns the catholic church (truth) all major multinational banks, insurance companies, brokerage houses, the bar association (yep) and all major corporations including big oil.

      ok, too lazy to google it? here’s a little primer.

      http://www.conspiracyarchive.com/Commentary/Crown.htm

      here’s a little out of the box idea.

      if oil is the stuff that makes the financial world go round the we, the united state of america, are still the richest country on the planet. bakken, most people have heard of it, a huge shale oil reserve that extends up through (roughly) the dakotas into canads.
      the u.s. portion contains about twice the oil as in all of saudi arabia. that’s just openers. tri state rocky mountain. four time larger than bakken. anwr huge sweet crude deposit, gull island in the norhern tier the mother lode of sweet crude (oops, we are not supposed to know about that one, forget is said it) not to mention the gulf (virtually hundreds of wells capped and laying dormant since the 50s-60s and 70s lying in reserve and waiting for oil prices to soar so the already stinking rich can get even smellier. and there is more, but that will do for now.

      so, here is the deal. first, to make this work, gonna hafta get control of the government back into the hands of we the people. yeah right (how to be a millionaire- first, get a million dollars).
      ok, just suppose we figure out how to work that one out. next thing is all oil under the soil of united states territory reverts back to ownership of we the people.
      then. oops, forgot. we now have the technology and the contractors ready to go to bring bakken oil to market at under 20 buck a barrel.
      ok, now. we back the dollar with our own freaking oil @ 20 bucks a barrel. 20 u.s. dollars gets you one full barrel. and that price is caqpped in perpetuity.

      ok, china you got a bunch of our paper. good for you. we got your market. your wonderful new industrial revolution cant make it without the west buying your stuff. check. only you are going to have to compete because we are revving up our own industry. we are going to make our own stuff, gonna make it better and we are going to pay our workers an honest living wage to make it. ok, china, wanna have a cold war over it? we can do that. or we can link up and raise the living standards for the people of both our nations and europe and the rest of the world too. we just gotta get the bloodsucking elite out the picture and realize that it really isn’t all about money. it’s really all about people.

      new day dawns. planet earth is a pretty nice place to live again.

      goofy? well maybe, but not nearly as goofy as what we got now.

  9. Art Barnes

    Nixon devalued the dollar when he took the country off the gold standard, I’ll bet the dollar will be further devalued going back in -
    either way we lose. On another note, maybe that is why they are going to keep raising the debt ceiling because its allready known around the big boys that a gold standard is coming and we can deal with the debt by valuing the gold abnormally high and fix it then. This country, on the otherhand, never does anything before using trial balloons to see what the elite and invester class thinks about it, so, maybe that is what is going on. Either way, the powers that be know there is no way out of this debt crisis with the policies in place and business as usual. I simply don’t know, neither does Mr. Forbes, but what I do know is that whatever happens you can be the middle class will be smaller in the end. Thank you for your article and may God Bless America as we are going to need it.

  10. Edward Ulysses Cate

    Wall Street is fond of saying,
    “If you’re not at the table, you’re on the menu.”
    Personally, I’m tired of being on the menu.

    If we do not have a REAL House of Representatives that represents the majority of folks rather than the sociopathic 1%, it won’t matter whether we have a gold standard or not. What would a Fort Knox be worth if it was all gold-plated tungsten?

    Today, most of our representatives are ruling-class want-a-bees, claiming they’re bringing home the bacon to their constituents.
    Why else would you have to buy 49 to get one free?

  11. Rick

    Great article. Thank you Greg.

    • Greg

      Thank you Rick and Sarkis.
      Greg

  12. Sarkis

    The ‘Bricks’ may announce their own backed gold currency before 5 years from now. I hope we don’t wait that long to back ours. Why else would Asia, Russia, & India are massively buying gold at any dips?

    George Sorros does not seem to be worried about selling his paper gold. How would we ever know if he is trading it for the physical ones right now? He has many accounts that’s not public to anyone. I fear George Sorros with the things he is manipulating secretly- like the time he shorted silver at the recent $50 high was a secret. We found out about his silver shorts when it was down in the $30s. For that reason the fact that he is selling gold publicly is very bullish. He is selling his paper gold…he must know the GLD and SLV may not be worth much in the future.

  13. Smoothdean

    Have to disagree… My guess is not a gold standard, but a world currency and many US dollars (& Euros, etc.) will miraculously disappear in the initial exchange configuration. Everyone will get paid, but lots of smoke & mirrors going on.

    • Greg

      Thanks for weighing in Smoothdean.

      Greg

  14. david

    Frankly, I’m so angry with the people in Washington that I hope China or Russia backs their currency with gold first and cuts the dollar off at the knees. Kind of like cutting off my nose to spite my face (it’s not much of a face, good thing you can’t see it :-)) but that’s how I feel. I think those holes in DC need a good comeuppance.

    • Greg

      Thank you David, OTE and DJohnson.
      Greg

    • Art Barnes

      Those “holes” certainly need a good comeuppance, I wish we were allowed to vote for “none of the above” because a new party would instantly appear and after taking office the american people would be alot better off.

  15. OTE

    The US will NEVER go back on the gold standard unilaterally. To do so would prove the fallibility of Congress. This can’t be permitted to happen.

    The possible scenario is as the dollar falls in purchasing power, the BRIC countries decide to eliminate the USD as the global reserve currency. The probability is then that Saudi Arabia will jump on board with BRIC and bring OPEC with them.

    The new and supposedly secure reserve currency will be pegged to a basket of commodities with gold just one component. There just isn’t enough gold to back any country’s currency.

    This will force the US to play the new game. Congress will have its plausable deniability for responsibility in the need to accept the new currency standards while claiming that Congress went up against Force Majour.

    One thing to always remember that the quantity of currency is supposed to be tied to productivity and resource extraction is the primary driver of productivity. Commodities are extracted resources and have tangible value. Currency is not valuable in and of itself, but rather just a medium of exchange. Without a medium of exchange backed by tangible assets, there can be no stability to the currency’s value. No stability prompts a higher velocity of money as nobody wants to get caught holding the old maid.

    That being said, get ready for an underground economy based upon barter as the citizenry lose faith in the current economic system. Even with a new reserve currency backed by commodities, faith in the currency will be weak.

    • Denarius

      The U.S.A. is entering its presidential election cycle. Everything, and I mean
      EVERYTHING the administration does now will be totally focused on that goal.

      Given that BRIC and others morph their trade settlements from fiat money to
      commodity-backed currencies, the US can join them by offering its agricultural
      production as backing for its USD. Adding its mine and oil & gas reserves to its
      above-ground gold & silver reserves will give the greenback as much backing as
      needed. The dirty BIG secret is that, just as with OPEC, everyone will be lying
      about their reserves. OPEC members do it to get bigger production and export
      quotas. Countries will lie about commodity reserves to get better exchange
      rates to the IMF’s SDRs. Let me illustrate.

      Three bankers are being screened for the Fed chairmanship.
      The question put to them is, “How much gold is in Ft. Knox?”
      First candidate writes a scholarly paper on national gold flows.
      Second one writes a scholarly paper on auditing procedures.
      Third banker writes one line on his paper, gets up and leaves.
      The line says, “How much gold do you WANT there to be?”

      And that is how you back a currency with imaginary resources instead of the
      real commodities themselves. You know, just as for OPEC, just as with fiat.

      Plus ça change, plus c’est la même chose.

  16. DJohnson

    Ron Paul recently came out with a statement that maybe the U.S. should consider selling its gold to help repay some of the deficit. Of course, the good doctor knows that doing this would harm the value of the dollar. That, I’m sure, is not what his intentions would be. I believe he is throwing out a challenge to the Fed to prove that the U.S. even owns any of the gold that it says we own. I believe the gold is long gone. Does Dr. Paul believe it is gone too? It would bankrupt the Fed to have to buy the gold back in the marketplace. What better, quicker way to get rid of the Fed? The Fed qualifies as being “too big to save!” Any comment?

  17. Nidal

    The Monetary System for longing for Islamic money which Muslims have abandoned. What is Islamic money?
    1) Precision Metals ( Gold and Silver). In the Qur’an; Dinar is a golden coin, and Dirham is a silver coin.
    2) Commodities ( like Rice, Sugar, Dates, Salt, Wheat, Barley,etc… )

    Two interesting points about Islamic money
    1) money has an intrinsic value- value of the money is in the money- Only GOD control the supply of money not the Fed chairman
    2) inflation will be eliminated

    The International Monetary System is Rip-off system( IE Bubble economy is a result)
    There is a verse in the Qur’an repeated 3 times, verse 85 in chapters 7,11 and verse 183 in ch 26. It is as follows
    “Do not Diminish, make less the value of people things”
    In other words, don’t devalue people sweat, labor, properties, money, etc…

    It will also be best if markets control the price, no price fixing

    GOD KNOWS BEST

    • Greg

      Thank you Nidal for the comment and making some good points!
      Greg

  18. Rick

    As long as the world trading community accepts the U.S. Dollar as the reserve currency, with it’s gold backing removed in 1971, and is willing to sell their commodities and goods for Dollars, the U.S. will continue to pay it’s bills with fiat paper money. The charade will only stop when the Dollar will no longer be excepted at present value.

  19. Tom

    The US has gold reserves now that are valued at less than $400 billion. Our total (official) debt is somewhere north of $14 trillion. The US holdings are miniscule in relation to our debt and if you include the unfunded liabilities of social security and medicare, they are like a drop in the bucket. The value of gold would have to be astronomical in order for the US to back the dollar with gold. Or maybe I don’t know what I’m talking about. But things haven’t made sense to me for quite some time now.

    • Greg

      Tom,
      I think that’s why Jim Rickards says the gold value might be more than “$30,000 per ounce.” Thank you for adding your voice and perspective to this post!!
      Greg

  20. Michael G

    Hello, nice article.
    A few points I wanted to make is that a ‘gold standard’ is no longer feasible unless we have a complete re-write of monetary policy. As another person alluded to, if we have a true gold standard which is redeemable for gold, the FRNs will because seriously devalued and the physical gold ratio will increase dramatically. Gold will instantly become scarce and be hoarded by the largest players. This is pretty much the argument that FDR made when he made gold illegal.

    Another scenario is if the FRNs are redeemable for gold, just worth a set amount of gold, FRNs will disappear from circulation as well. The government will be ‘forced’ to print more of them, because economic activity will have been seriously hampered due to scarcity; thus making any ‘gold standard’ more like a ‘lead standard’ (ie, it’s only going to sink the value of said FRNs).

    The only way to ‘get back to gold’ is to do just that; use gold (and silver) as actual tender. The dollar won’t have a ‘value’ per se, but just a defined amount of PM weight, as it was originally designed.

    • Greg

      Michael G,
      Thank you for making your points here!!
      Greg

  21. jerry

    I think of the US balance sheet….Assets -Gold …Liabilities -US Treasuries Net worth- minus 13.6 Trillion …..Now unilaterally announce you will revalue your gold to $50,000 and now your balance sheet has a net worth of 0….Then back all debt with gold…Too straightforward?

    • Greg

      Jerry,
      I think some version of that is exactly what a gold standard will be. Thank you.
      Greg

  22. Bob

    The dollar is base on oil control. If oil price is high the dollars get cleared out of the system faster? If oil gets high high America oil fields will pump pump. It hurts the little people but that’s the price you pay for a dollar backed by oil control. Oil is what you spend your gold on and everything that oil gives us. Grow food somebody always needs it’s. PEACE LOL

    • Greg

      Thank you Bob and IKB.
      Greg

  23. Hoppe

    A return to gold? It will never happen. Look what has happened to Libya, one of the few countries with a very large stock of gold to back their currency, where the central bank is not privately owned, but owned by the government. With their financial strength, they are seen as a threat to the World Bank and the IMF
    Interesting that these “rag tag rebels’ had already set up a private central bank months ago, that will clear payments through the

    • Robert

      You make a very good point. It has been written that Khadaffi’s real sin was refusing to accept dollars for his oil, and nothing to do with civil rights. This is an offense that the fiat-spewing nations( NATO might be more appropriately named NABO (North Atlantic Bankers Organization) cannot tolerate- a morally-justified rebel force must be created, and one with a compliant central bank. With NATO bombers and fighters running amok, his gold reserves really are at risk. But imagine, as I suggested earlier, that the currency itself actually had literal value, through a gold (or silver) alloy based “security thread. This is what as known as power in the people’s hands. Anaethma to government, but something that a heroic people may come to demand.
      Not that I would hold Khadaffi up as any sort of hero, but a lesson in protecting the nation’s wealth.

  24. george

    Great article Greg….Are they counting all the “off” the books trillions when they calculate the value of U$D per oz of gold? I’m thinking that its likely to be more inthe $30K-$50K per oz range. all dollars and bond divided by gold in oz in fort knox. At current value of $1500, news says about $300 Billion in gld there. I think I heard China has $3 Trillion in U$Ds. just to pay them gold would have to be 15,000 an oz right? So if you count all the U$Ds in all the banks in the world, what is gold worth per oz in U$D? Interesting calculation

    • Greg

      Thank you George. I think the price of AU and AG relative to all the actual dollars both digital and paper is astronomical. Thank you for the comment!
      Greg

  25. Kevin

    The only thing that is guaranteed is that US women will eventually lose their unappreciated special rights. The poor weak men that depend on them will also suffer because of this. And no, the US cannot go back to the gold standard. Once the US collapses, which it will, the new countries that form may be able to go onto the gold standard, but I am sure the UN, et all will prevent that….

    • Greg

      Kevin,
      I really don’t understand this comment as far as the U.S. women losing their “unappreciated special rights.” And yes the U.S. will go onto a gold standard of some kind. It will be a necessity.
      Greg

  26. Alex Nemchenko

    I first became aware of our monetary debacle about 12 years ago. I was in a tight financial situation when I asked myself how does the dollar come into existence, who were these hard working people that were so willing to lend us money. I did extensive research and found out that this all started on New Years Eve in 1913, when the banker’s lobbyist pushed through the Federal Reserve System, which was put together under extreme secrecy on Jekyll Island in the southern tip of Georgia. I have read numerous books, articles and internet sites on the topic of fiat money. It is mind boggling what the FRS has done and how little most people even know what’s been going on in the last 98 years.

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