The Price Of Gold If The U.S. Was Still On The Gold Standard
Tuesday, February 7, 2017 at 06:23PM
The U.S. was on a bi-metal or gold standard up until the "Nixon Shock" of 1971.
What would the value of gold per ounce need to be today to backstop the amount of U.S. currency currently in circulation?
While it is a purely hypothetical exercise, the answer is meaningful and may surprise you .
As most of you know, while the U.S. monetary system is based on paper money backed by the full faith and credit of the federal government. That is, U.S currency is no longer valued in, backed by, nor officially convertible into gold.
Yet through much of American history, the United States was on a metallic standard of one variety or another. See Wikipedia's History of the U.S. Dollar. The first devaluation of the U.S. dollar was a result of the Coinage Act of 1834. This Act changed the 15:1 ratio of silver to gold to a 16:1 ratio by reducing the weight of the nation's gold coinage. The value in gold of the U.S. dollar was thus reduced by 6%.
An interesting read from Michael Fitzsimmons
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