What would it take to back the dollar with gold again?
The US dollar is backed by nothing. If it was still backed by gold, the price of gold would be a lot, lot higher!
That is why the Federal Reserve can create trillions of dollars out of thin air with not much more than a few simple computer keystrokes. There is nothing to restrain them in this act of legal counterfeiting.
In fact, the US dollar hasn’t been backed by anything at all in over 50 years. And we’re beginning to pay for it.
But suppose anyway, with all that money printing, what would the gold price have to be to back up the dollar? The answer is it would have to be much, much higher. Here are a couple of ways to look at it thanks to calculations in a Eurasia Review article called The Great Gold Rush: Central Banks in a Frenzy.
It would take a gold price of $8,800 per ounce to back all the outstanding US currency with gold.
That is about 5 times today’s gold price.
But we’re only getting started. Gold would have to be about $32,000 if all the money the Fed has created were backed by gold.
That is almost 18 times today’s gold price.
That’s far enough. Backing total US bank deposits or backing total US credit market debt, government, and commercial would require gold prices so high, we don’t even want to mention them. Suffice it to say that backing the dollar to any meaningful extent would require an explosive move-up in gold prices.
Today’s global currency and monetary situation are more precarious than ever. The article says, “Record gold purchases by central banks are a red flag regarding the stability of our current monetary system. When central banks embrace gold, it is an indicator that they are losing trust in the current system.”
Today none of the world’s currencies are backed by gold – or anything else. That is why it is best not to rely on any of them and to back your own wealth with gold of your own.
To learn more about the developing showdown between unbacked paper and digital currencies and gold, the enduring money of the ages, speak with a Republic Monetary Exchange precious metals specialist today.