Returning to gold standard?

[markj113]

We all are aware that not every gold can be dugged out from the whole world so it is not fixed the limit of the gold we can have. But i am thinking about bitcoin standard rather than gold standard as 21 million bitcoin is the maximum that can be dugged out.  

Yes but numbers are infinitly divisible so there for there is a limitless supply of bitcoin!

Adopting Gold would mean adopting monetary discipline, so for that reason alone it will never happen. We would sooner burn in the sulphurous pits of hell than live frugally.

Gold standard would be an anachronism, like those quaint Amish people with horses and buggies


Nothing to do with frugality.

Because the current system has worked out so well lol.

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[arbitrage]

This system makes (prints) money when they need it!
By this way you have constant growth of total supply.
And money losing its value over time.
In some point we will have worthless inflated paper .

[The Sceptical Chymist]

Because the current system has worked out so well lol.

And the gold standard has worked out so well, too. 

How much gold do you think there is in the ground and out of the ground.  If the population continues to rise, can the world sustain a gold standard?  I think not.

[arbitrage]

Because the current system has worked out so well lol.

And the gold standard has worked out so well, too. 

How much gold do you think there is in the ground and out of the ground.  If the population continues to rise, can the world sustain a gold standard?  I think not.

Same story is with bitcoin..block will half and it will more and more difficult to mine it.
Fiat backed to gold will have more value over time, and you can expect natural growth in every field.
People will spend more and will be happy.
 Inflation will be extremely small.

[OROBTC]

...

I am in FOFOA's "Freegold" school of thought re the yellow metal.  Do not tie gold to currency, just let gold go.

Even under a gold standard (which WOULD be better than the current one), there was currency debasement.  Debasement is a standard practice among governments, very few currencies last more than 150 - 200 years.  The most successful money/currency that I know of was the Byzantine's, they kept their gold coins in circulation for hundreds of years because they did not devalue them (until the end).

Recall that gold's best and highest use is as a Store of Value.  Currency is best used as a Medium of Exchange and an Account of Value (price).  "Triffin's Dilemma" (wiki it!), and especially "FOFOA's Dilemma" shows what happens when a currency is used for all three functions, ESPECIALLY as a reserve currency.

The current system does not work well.  A Gold Standard would be better, but not even close to a cure-all.

[arbitrage]

Maybe silver and gold coins can do better job than paper?
I also like this idea returning to gold coins..
All Precious metals can be involved.

[OROBTC]

Maybe silver and gold coins can do better job than paper?
I also like this idea returning to gold coins..
All Precious metals can be involved.

Unless they made the value of gold coins very, very high, they would not circulate.  For example, were I running the monetary system of the USA, I might make a gold coin the size of the old (pre-1933) $10 gold piece (0.48 oz of actual gold, and some copper to harden the coin) worth, say, $1000 (vs. actual gold value of about $575 or so).

A silver coin the size of a US quarter I would have it worth some $15 perhaps.  Or make it a little smaller and stamp "$10" on it.

Even doing the above (fiat value WAY above metal value) might still not be enough to prevent hoarding of such coins ("Gresham's Law": bad money chases out the good).

So, IMO, best not to use gold as "money".  Silver might work better as a "Monetary Metal".

[The Sceptical Chymist]

Maybe silver and gold coins can do better job than paper?
I also like this idea returning to gold coins..
All Precious metals can be involved.

Unless they made the value of gold coins very, very high, they would not circulate.  For example, were I running the monetary system of the USA, I might make a gold coin the size of the old (pre-1933) $10 gold piece (0.48 oz of actual gold, and some copper to harden the coin) worth, say, $1000 (vs. actual gold value of about $575 or so).

A silver coin the size of a US quarter I would have it worth some $15 perhaps.  Or make it a little smaller and stamp "$10" on it.

Even doing the above (fiat value WAY above metal value) might still not be enough to prevent hoarding of such coins ("Gresham's Law": bad money chases out the good).

So, IMO, best not to use gold as "money".  Silver might work better as a "Monetary Metal".

And how would this help anything?  We've already come off a precious metal standard and we've already been in a position where Gresham's Law has been violated.  It isn't going to happen.  We are moving so far away from a gold standard it's not even funny.  Look at the success of bitcoin, which is backed by nothing and need not be backed by anything.  We don't need money to be backed by metal.

[arbitrage]

But how to overcome all this?
Fiat is very inflations, gold coins can be manipulated with weight.
Fiat backed by gold is old fashion..
Bitcoin to take lead?
Maybe we all going to use co2 as payment model?

[OROBTC]

Maybe silver and gold coins can do better job than paper?
I also like this idea returning to gold coins..
All Precious metals can be involved.

Unless they made the value of gold coins very, very high, they would not circulate.  For example, were I running the monetary system of the USA, I might make a gold coin the size of the old (pre-1933) $10 gold piece (0.48 oz of actual gold, and some copper to harden the coin) worth, say, $1000 (vs. actual gold value of about $575 or so).

A silver coin the size of a US quarter I would have it worth some $15 perhaps.  Or make it a little smaller and stamp "$10" on it.

Even doing the above (fiat value WAY above metal value) might still not be enough to prevent hoarding of such coins ("Gresham's Law": bad money chases out the good).

So, IMO, best not to use gold as "money".  Silver might work better as a "Monetary Metal".

And how would this help anything?  We've already come off a precious metal standard and we've already been in a position where Gresham's Law has been violated.  It isn't going to happen.  We are moving so far away from a gold standard it's not even funny.  Look at the success of bitcoin, which is backed by nothing and need not be backed by anything.  We don't need money to be backed by metal.

The Pharmacist

Hey, I basically AGREE with you, a Gold Standard (or even Silver) is not that good, see second post (#25) of mine above.  I think that "letting gold go", merely allowing it to its best role of Store of Value is the way to go.

A Gold Standard (or PM coins) is a less satisfactory solution, but better than the one we have now.  I quite agree: "We don't need money to be backed by metal."  Indeed, Bitcoin is a great example, touché!

fofoa.blogspot.com has it all, but it is a HUGE amount of information and logical argument laying out the case of a huge revaluation of gold coming....

[Drekavac]

https://www.youtube.com/watch?v=a7GJb0kufQI

This video is best explanation..

[yefi]

Adopting Gold would mean adopting monetary discipline, so for that reason alone it will never happen. We would sooner burn in the sulphurous pits of hell than live frugally.

Gold standard would be an anachronism, like those quaint Amish people with horses and buggies


Nothing to do with frugality.

Why how noble of us that the only reason we refuse to adopt it is its outdatedness, and that its frugality, we would in fact be more than happy to impose. We surely are the greatest civilisation this earth has known.

[MatTheCat]

Because the current system has worked out so well lol.

And the gold standard has worked out so well, too.  

How much gold do you think there is in the ground and out of the ground.  If the population continues to rise, can the world sustain a gold standard?  I think not.

As long as modern technological civilisation persists, we shall never again run about with a purse full of gold sovs, or silver shillings, and be exchanging them amongst ourselves for goods n services.

With that said, I could see a situation where gold may be used as a form of backing for a global currency, into which different nations 'buy a stake in', depending on what level of commodites they can pledge, with gold being a very natural choice.

China are currently the worlds biggest producer of gold and also the world's biggest importer of gold. The worlds #2 economic power is accumulating gold for a reason.

Whilst current economic pressures are deflationary, and the markets may be allowed to deflate and crash for a period of time, ultimately the only way that governments will be able to deal with their soveriegn debt and allow the system to keep functioning is to have great big devaluation event, whereby the the market is flooded with newly created currency (or the newly created currency that has already been created is unleashed from the dams of financial institutions balance sheets), which provides the liquidity for debt obligations to be met and for the system to keep on operating, albeit with a massive loss of value or purchasing power for those holding Fiat and/or government debt. During that brief period where the economy isn't quite moving and investing in equities isn't giving returns, but whilst the market also loses confidence in the value of government debt and fiat currency, is when Capital will all flow into commodities, and especially so, flow into gold.



Severe swings in the DOW/GOLD ratio occur on roughly 35-40 year cycles. We had our last peak at the height of the NASDAQ bubble in 2000 at around 43. Since then it corrected heavily down to around 6 in 2011, and has bounced back currently to around 16, but looks as though it is ripe to resume its trend back down towards single digits, or even sub single digits in the near future.

Looking more closely at the last cycle, DOW/GOLD peaked in 1966 at 28. Then during the Nixon Shock, as Richard Nixon suspended the gold window and ultimately abolished the Bretton Woods USD-GOLD global currency system, in order that the US government could deficit spend in order to prevent another deflationary economic collapse occurring during a Republican presidents watch, the DOW/GOLD crashed down to just 3 in 1976, but rallied back up to 9 in 1977, before resuming its trend and bottoming out at 1 in 1980. When Gold was worth around $800 per Oz, and a share of the Dow cost also around $800.

Looking at the current state of the DOW/GOLD chart, it looks to me, that the technicals are setting up to have the exact same thing happen once again, all whilst we have fundamental stories of China accumulating the yellow shiny metal stuff, hands over fist (and under reporting what they have)....

...erm so yeah....keep a fucking eye on gold! Gold seems to be rallying and breaking out now, but I suspect that equities are about to rally, and gold could either retest it's bottom or even go on and put in a new final bottom. But when gold moves up, as history has demonstrated, it will move relatively fast.

[Meuh6879]

Will this help now when we have economic disaster?

Gold is the only actual value that it can do a monetary reset.
thaht's why all countries want buy gold (or retrieve it from other country).

monetary reset is already plan.

[ahpku]

Adopting Gold would mean adopting monetary discipline, so for that reason alone it will never happen. We would sooner burn in the sulphurous pits of hell than live frugally.

Gold standard would be an anachronism, like those quaint Amish people with horses and buggies


Nothing to do with frugality.

Why how noble of us that the only reason we refuse to adopt it is its outdatedness, and that its frugality, we would in fact be more than happy to impose. We surely are the greatest civilisation this earth has known.

Dissatisfied with the state of humankind, feeling like civilization is a bit subpar?

[yefi]

Dissatisfied with the state of humankind, feeling like civilization is a bit subpar?

I look on with glee to the day we are reduced to dust.

Heh, j/k.

[ahpku]

...

Adopting Gold would mean adopting monetary discipline, so for that reason alone it will never happen. We would sooner burn in the sulphurous pits of hell than live frugally.

Gold standard would be an anachronism, like those quaint Amish people with horses and buggies


Nothing to do with frugality.

Because the current system has worked out so well lol.

I take it life didn't work out for you?
This, ofc, is all due to the fact that mankind abandoned the gold standard, nothing to do with you personally, correct?

[BellaBitBit]

Moving to a decentralized monetary system like Bitcoin would making moving to the gold standard irrelevant.  Gold is still relevant now as a safe haven against the dollar but if Bitcoin takes over gold will be a novelty.

[DonQuijote]

Will this help now when we have economic disaster?

Gold is the only actual value that it can do a monetary reset.
thaht's why all countries want buy gold (or retrieve it from other country).

monetary reset is already plan.

Do you know any ranking of gold reserves by country?

[OROBTC]

Will this help now when we have economic disaster?

Gold is the only actual value that it can do a monetary reset.
thaht's why all countries want buy gold (or retrieve it from other country).

monetary reset is already plan.

Do you know any ranking of gold reserves by country?

The top 40 countries with the largest gold (2015) reserves are here:

https://en.wikipedia.org/wiki/Gold_reserve

Source: World Gold Council.

Note that some of those gold reserves may be double-counted or otherwise in error.  China, for example, is rumored to have much higher reserves (in secret) than is accounted for on this list.