Going back to the Gold Standard

tonedase

There has been some, maybe a little but at least some talk about the US going back to "The Gold Standard" How or would going back to the "Gold Standard" change the value of collectible gold coins and gold bullion???
thanks for every ones thoughts on this..
aps

derryb

Somewhat under discussion here

Gold coins would be worth more because gold would be worth more.

NumbersUsacom

Is this why China and Russia are stacking Gold so when the U.S. goes Gold they will already have their pile in place?

Or are they (C&R) actually leading the way back to Gold?

DoubleEagle59

Count me as one of the many who believe the US has very little gold.

The US gov't will never decide to go on the gold standard unless they are forced to when the s** t hits the fan.

Baley

A return to the Gold Standard definitely should happen and probably will.

Everyone knows that there was never any monetary or debt problems, conflict, corruption, recessions or depressions, or economic turbulance of any kind when the US was on the Gold Standard

PerryHall

<< <i>A return to the Gold Standard definitely should happen and probably will.

Everyone knows that there was never any monetary or debt problems, conflict, corruption, recessions or depressions, or economic turbulance of any kind when the US was on the Gold Standard >>



What does the gold standard have to do with corruption?

topstuf

A gold standard would revive an HONEST economy. This is why it won't happen.

With a gold standard, currency would be stable and even small interest on debt would be meaningful.
Few "schemes" that manipulate the PERCEIVED value of enterprises would survive.
With gold being a labor proxy, borrowing would be EASY for borrowers with legitimate and FEASIBLE uses for the money.
It would even the playing field and probably reduce speculation and encourage fundamental investments.

It should happen and it would drive pure waste like public pensions and entitlements into the ground.
Which would not be a pretty time for the freeloaders of any ilk.
But it would be honest.

ergo: back to first sentence.

mhammerman

"Gold coins would be worth more because gold would be worth more."

It appears that the Grand Old Party will need to embrace some of Ron Paul's campaign trademarks in order to create a united candidate ticket. Paul has split the party alliances in some fashion as his supporters are very excitable and very vocal...they love him and there's a lot of them. One of his big ideas is to use the gold standard in some form (he also wants to audit the fed but that's another topic). The party will likely include some kind of gold standard language in it's national platform for the elections.

Returning to the gold standard is very doable. There is enough gold to put a thread of PM in every bill excepting maybe the ones and fives. Alternatively, there could be something like the gold certificate of old where for each dollar in circulation, there is a percentage of the face value on deposit in an annually audited gold reserve buried under NY City somewhere but probably the "gold coin on demand" exchange feature would likely have to be excluded. It would sure stop the QE's and trillion dollar a year in national debt situation and would likely put a bit of a speed governor on the printing presses since you would have to actually have some real assets to back printing new currency.

There is of course a downside that comes to mind. Firstly, converting to a real asset backed currency would destroy the banking cartels. The cartels have developed the fractional banking system into a smoke and mirrors magic digibuks act that no one can figure out how they do it...heck, you can lose a few billion dollars on a single bad trade and still make another 120 billion digibuks in the same year; how do they do that? You can be sure the fat boys in the back room don't want to see asset backed currency. The cube dewllers know they have been set up for the fall and the fat boys have the game wired from the gov legislators to the kmart swipe fees, it's their game and their ball...for now. Any change in the status quo would seriously upset the apple cart the banksters have been building.

Look for some very interesting discussions as this issue of gold or asset backed currency comes on the national stage at the RNC over the next week. Gold coins being worth more because gold is worth more?
Well, yeah, they're made out of gold.

Hey buddy...GOT GOLD?

Got Gold

RevDrBlimber

Not in a million years unless they were forced to. Not with the derivatives trade standing at how many trillions of dollars? 62 trillions four years ago? http://en.wikipedia.org/wiki/Credit_derivative

And the value of all the gold that has been mined is just over 8 trillion, and I doubt the U.S. is anywhere near the biggest holder currently.
http://onlygold.com/TutorialPages/All_The_Gold_In_The_World.asp

JCMhouston

Unless someone is willing to comletely dismantle the current economic system I see no feasable way to do it. It's just another way for the republicans to try to scam a few more votes from the Ron Paul supporters.

Wingsrule

While I don't see it happening, it may be good for a few swing votes.

derryb

Smoke and mirrors pony show. Gold standard now would be meaningless because so little gold would be used to back each dollar. Probably couldn't even see it without a microscope.

Baley

Agree with all of the above; however! a basket of hard and soft commodities to back a currency is a decent idea, picture the monetary unit's value pegged to a composite of gold to be sure, but also oil, wheat, corn, sugar, coffee, bacon, lettuce, tomato, and of course, frozen concentrated orange juice (the Real Gold)

that might work

you'd have maybe a gram of gold, a pound of copper, a ton of steel, etc in the index, whatever the ratios, it'd be proportional, and market-based.

that's a lot better plan to check the runaway QE/treasurey/fed/money printing/ keystroke funny business than a simple outdated gold standard which actually NEVER worked well

piecesofme

So would milk, corn, bag of Doritos, Frosted Flakes, water, Gatorade, Gasoline, Diesel, Automobiles, Homes (I hope you get the idea by now) cost more or less than it does now if we were on a Gold Standard? (rhetorical question trying to explain why it'll never happen again)

jmski52

Using a basket of commodities to represent the value of 1 dollar? If a dollar isn't convertible into SOMETHING, how would you prove it's worth? Such a system would be more complicated. If there were a sugar shortage and a surplus of wheat, can you tell me how to figure what the cost of a new lawnmower would be at the hardware store?

I contend that gold and silver would work as well as any other system we've had, and it would limit the creation of money for political purposes, which is exactly what we have going on right now.

And no, it wouldn't eliminate the ups & downs in the business cycle - those pesky times when overspending, overborrowing and living beyond your means gets corrected instead of rewarded.

Justacommeman

Zero chance. MJ

mhammerman

Well, for the purposes of discussion...

The main argument against returning to the gold standard is that "It would remove the Central Bank's ability to ofset demand shocks by varying interest rates." When we realize that interest rates from the gov. to banks is essentially 0 and interest rates paid to consumers by banks are not far from that so one would beg "What interest rates were they going to need to be able to vary since we are at about 0% coming and going?"

"Not in a million years unless they were forced to."

Look at the actual "Official world gold holdings of the United States" estimated to be about 8133.5 tons or about 2.6 billion oz. so say those Oz's are worth about 4.2 trillion dollars @ 1600/oz.
There is about 925 billion dollars in estimated physical currency-actual USD printed and alive today. Add that with the reserves that can be converted to currency and you get about 2.1 trillion of total available USD.

So, one would say that there's about $2 in gold already owned by our gov for every $1 of actual money available for circulation that's printed by our gov. To say that there is not enough gold to back our money is not necessarily true looking at it from this point of view.

Consider that the gold we have (8,133.5 tons) was once used to back our currency. The gold certificates were actually redeemable in gold coin, on demand, so there was indeed enough gold to cover the currency at one time. Then, in 1933, the gov decided that they would take the gold and issue money that was no longer backed in goldbut there were still silver certificates. They kept the gold, all of the gold that was in circulation and all of the gold that was backing paper in circulation...gone, stuck in a vault with a new owner (not you). Maybe it would be nice to have the gold returned in the form of a hard asset backing our circulating currency. And, since the gold is said to still be there...

One of the parts of the returning to the gold standard discussion is of course the question: "How much gold do we have?" That's where the discussion to audit the fe deral reserve begins to have significance. It will be very interesting over the next week to see what kinds of op ed pieces are published about this question (if any) because it will be a big topic at the RNC convention starting on Tuesday. But then, people probably don't care at the cube farmer level, this is an issue for politicos but...it's about the money.

Just thinking out loud

cohodk

Gold standard= LOL


Sorry to disappoint.

Justacommeman

I have virtually zero confidence in our elected officials on either side of the aisle with VERY few exceptions. I trust they will always cheat, lie and steal. This is why a gold standard would mean squat in the end. Different shell game. Our governments job is to lull the people to sleep and complacency while they shuffle the deck and deal from the bottom. They actually do this relatively well.

MJ

piecesofme

Look at the actual "Official world gold holdings of the United States" estimated to be about 8133.5 tons or about 2.6 billion oz. so say those Oz's are worth about 4.2 trillion dollars @ 1600/oz.
There is about 925 billion dollars in estimated physical currency-actual USD printed and alive today. Add that with the reserves that can be converted to currency and you get about 2.1 trillion of total available USD.


Not to mince your figures stated, but are those 2.6 billion oz's physical or part physical and part paper?
I don't know, I'm asking...because itf it's the latter that is not "actual". Again, I'm not arguing, just trying to understand better what is being said. tia

mhammerman

This report notes 286 mil oz and I saw another report that had the same number.
This report of US treas holdings


This report is talking about all the gold we have secured.
Ft Knox and Treas holdings
I've got another report stating that it is 8133.5 tons in total holdings and that's about the same number reported here but that's total holdings for us and other govs. So for further discussions we should remain conservative and use the lower amount of 286 million actual physical in-hand oz. of US gold on hand for the record. It's late so I'll do the conversions vs. cash on hand in the morning.

jmski52

We're so much more sophisticated than we were before 1913. I mean, why would anyone ever feel the need to hold something physical that everyone acknowledges its worth without question - instead of putting everything they own into an account that might not even exist, in a firm that might not exist, in a financial system that might not exist the next morning?

Such small-minded thinking.

piecesofme

lol jmski52...that was my kind of sarcasm!

WinPitcher

The central bank owns all the gold.

derryb

not all of it.

tonedase

Hi and good afternoon
thanks for all the comments...some I understood and some I did not... IMO I do not think it will happen because simply there are not enough people who understand the complexity of the switch over, and I include myself in the lack of complete understanding...
have a great rest of the Sunday...its raining so I cannot play golf
sk

mhammerman

OK, recalculating...Wish I hadn't started this but we're going to finish it.

Looks like we're talking about 286 million ounces in the treas. so at $1600/oz that yields about 457.6 billion dollars, about half of the value of the 925 billion physical dollars reported to be moving around. So I guess the dollar could be funded at about 50% of its face value. So, it doesn't look like we could totally fund our currency with our gold holdings but even fractionally funding our currency would likely make a huge difference in how business is done. Note that we're talking about a gold backed currency and not a gold backed economy.

There, done.

RevDrBlimber

The right person to comment here would be a credentialled economist; the subject is way too complex for basic conjecture. What about the U.S. debt to China? Wouldn't those trillions have to be paid off first with our debts to other countries before we contemplate a gold or silver (much more doable IMO) backed currency?

bronco2078

What I'd rather see is call in all the dollars and for every 20 you hand in you get a 1 new dollar which is a silver certificate or 1$ in silver coins. All government bills are certificates, either silver or gold . Local Banks can issue their own currency as they see fit and its treated like real bills i.e. 90 day notes that are sold at a discount and redeemed at face value on or after the maturity date.



Open the mints to free coinage of silver and gold again while you are at it. The precious metal hoards that are in bar or round or jewelry form can or will enter the money stream that way and the money supply will expand.

RevDrBlimber

But seriously, Bronco, what percentage of the U.S. populace do you seriously think would be able to understand the concept of silver as money? We have enough trouble already trying to educate people about the difference between values of all the 90%, 40% and non-silver coins.

derryb

"The gold standard forced the government to responsibly confront irresponsible fiscal policy."

cohodk

The gold standard meant that people born in 1830 lived their entire lives without an increase in their standard of living. Blech!!!

derryb

<< <i>The gold standard meant that people born in 1830 lived their entire lives without an increase in their standard of living. Blech!!! >>


only if they were too lazy to make a better life for themselves. Gold standard had no quality of life affect on those that chose to make opportunity work for them.

DrBuster

<< <i>

<< <i>The gold standard meant that people born in 1830 lived their entire lives without an increase in their standard of living. Blech!!! >>


only if they were too lazy to make a better life for themselves. Gold standard had no affect on those that chose to make opportunity work for them. >>



And it's not like having a few acres, some horses, some cows, some chickens, etc your whole life was a bad thing back then.

cohodk

<< <i>

<< <i>The gold standard meant that people born in 1830 lived their entire lives without an increase in their standard of living. Blech!!! >>


only if they were too lazy to make a better life for themselves. Gold standard had no quality of life affect on those that chose to make opportunity work for them. >>




Kinda sounds like the same a todays "no gold standard".

derryb

Gold Standard To Be Reinstated Through The Back Door

roadrunner

<< <i>Gold Standard To Be Reinstated Through The Back Door >>



Yeah, that makes sense. With CB's holding gold ever since 1971, it's clear the back door has always been open. CB's went through great pains during the past 15 years
to keep the gold price low and/or manageable (ie annual EU gold sales, selling 1/2 of Britain's gold, gold carry trade, etc.). The author is mistaken in stating that Britain
went back on the gold standard in 1925. They did not, nor did anyone else. The gold standard was never restored to it's full rigor after 1914. Any so-called gold standard
in effect from 1919-1934 was a shell of its former self. The last true/workable gold standard existed in the 1900-1906 period.

The 1981 gold commission actually came out with a finding to re-evaluate a gold standard down the road should inflation/dollar weakening continue to be a problem.
Of course that was never done despite numerous cracks showing up after 1986. The gold commission goes down with all the other famous "commissions" that were more for show
than go. Has there ever been a major federal govt commission of the past 50 yrs that actually identified/solved a problem & then helped to institute the measures to correct it?

Agree there will be no formal 1900 style gold standard ever again. But the back door will remain open for many years to come.


The gold standard meant that people born in 1830 lived their entire lives without an increase in their standard of living. Blech!!!

Seems like you're stating that we need constant price and/or monetary inflation to keep on raising living standards. Didn't living standards change dramatically from 1800 (or 1830) to 1906 when zero monetary/price inflation occurred? Still, I find it hard to believe that there were no major social or industrial inventions/changes from 1830-1890 that improved people's lives....even with a net zero change in the cost of living. Hmm, trains, steam engines, shipping, rifle and pistol technology, mining technology, dams with power stations, the crapper & sanitary plumbing, building materials technology, wider spread electricity - light bulbs and electric motors, the iron horse, bicycles, clothing improvements, more plentiful & increased choice of foods, the cotton gin, toothbrushes, running/piped water, etc., etc. Yeah, just like the dark ages. The 1830's to 1860's were no doubt tuff times...which had little to do with or without a gold standard. The 19th century industrial revolution that transformed America happenend on a working gold standard. What major empires of the last 3,000 years built themselves up on a paper/imaginery monetary standard? I can't think of any. The next major empire will be no different.