The ‘Remonetization’ of Gold

Much ado is being made of the so called ‘remonetization’ of Gold; the U.S. Republican Party even has a ‘plank’ in its ‘platform’ calling for an ‘investigation’ of a possible re-introduction of Gold to the U.S. monetary ‘system’… bah, humbug.

This so called ‘remonetization’ is a pack of lies; you can no more ‘remonetize’ Gold than you can ‘rehydrate’ water… nor ‘demonetize’ Gold or ‘dehydrate’ water. J.P Morgan knew exactly what he was saying; “Gold is money, everything else is credit.”

Reality is that various countries over the years ‘went off Gold’ and had to ‘go back on Gold’ after their economy was humiliated. Now the whole world has to start to ‘go back on Gold’… but there is a big difference between a single country inflating like mad… and the whole world doing so. There are no ‘rich cousins’ left to bail out the poor losers. The whole world is now a looser.

Mind you, enemies of Gold are fighting even this fake ‘remonetization’ tooth and nail; the first ‘tooth’ being that hoary old Gold myth, Gold Myth Number One… that there is not enough Gold to allow us to go ‘back to the Gold standard’.… This myth has resurfaced innumerable times, in the belief that if the lie is big enough and repeated often enough, people will start to believe it.

In reality, there is plenty of Gold, far more than needed to run a world wide Gold standard. Gold has the highest stock to flow ratio by far of any commodity, or any other precious metal, except Silver.

Stock to flows is a measure of how much exists in usable form, vs. how much new stock is acquired (mined) in one year. For Gold this is eighty years…! It would take eighty years of mining to double the current stock. Silver is a close second… but for all other metals, grains, crude oil etc. the stock to flows is measured in days or at best weeks, not years.

This is a fact… and the only reason that Gold and Silver have such huge stocks is because they are money, thus they are hoarded… and have been hoarded for thousands of years. Other commodities are simply used up, and accumulating a multi-year hoard is not only unnecessary, but would prove very expensive as well. Such huge supplies of any commodity -except money- would drive its price close to zero, making a huge hoard virtually worthless.

Another fact is that the British Empire ran the Gold standard during the nineteenth century on 150 to 200 tons of Gold. This number can be found in the records of the Bank of England. By comparison, there are at least 160,000 tons of Gold available today… far more than would be necessary to run a Gold standard.

The next fact is that today Gold is valued far too low… vs. Fiat currencies… and market forces will quickly establish the true value –or more correctly purchasing power- of Gold, if market forces are allowed to act and not hindered by government interference.

Finally, be clear that the Gold Standard Institute does not suggest that we go back to the Gold Standard as it was practiced in the nineteenth century; while this Gold Standard was infinitely better than the monetary ‘system’ we have today, it was far from ideal. TGSI proposes that the world adopt an Unadulterated Gold Standard, one that does not have the (ultimately fatal) flaws of the Classical Gold Standard.

Rudy J. Fritsch, Editor in Chief

The Gold Standard Institute

About Rudy Fritsch

I was born in Hungary in 1947, and fled Socialist tyranny during the Hungarian Revolution of 1956. My family had lived through WWII and the consequent Hungarian hyperinflation, thus I have intimate experience with financial destruction. My Dad used Gold to buy our way out of Hungary. Paper money was as good as toilet paper. Later in life, during my studies of Austrian economics, I came to realize that only Gold could solve the Global Financial Crisis (which should be called the Global Monetary Crisis), just as Gold solved our otherwise insoluble problem of getting out of Communist Hungary.
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