What would happen if the world returned to the gold standard?

I'm not sure either.

With the crooks running the banks we could have $16 an ounce gold backing several quintillion dollars in assets. Math just doesn't work the same in banking as it does in 2nd grade arithmetic class.

As long as people think the dollar has value it really does because all value like all beauty exists only in the eye of the beholder.

I just worry that it might not be long until even sextillion dollars won't buy groceries.

 

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https://content.time.com/time/subscriber/article/0,33009,840572,00.html

 

Interesting article -- and from 1965 !!

Here's the rub. DeGaulle and others can moan about "exorbitant privilege" but at the end of the day you have to be willing to lose gold and/or run current account deficits (capital account surpluses) if you are going to be the global financial reserve currency. France was NEVER willing to do that -- nor able to, either.

The works I have cited seem to indict French monetary policy for being way too tight....in other words, France was supposed to lose gold and weaken the franc by running a loose monetary policy in the late-1920's....instead, they did the opposite.

 

They know that their fellow CB's aren't selling and will be buying. They can't buy stocks or bonds or BitCoin...so they buy gold.

They want something that is going higher. Gold is.

I have said for YEARS that we can hit $3,000 by 2030 (even sooner) and $5,000 by 2035.

Starting from a base of ~ $1,400 you can make a case for a 3-5 fold increase or $5,000-$7,000. Even if you take the post-2011 low of about $1,050 you still come up with $4,000 as very doable.

Again...if you are into gold coins, especially the larger ones, grab them NOW. You do not want to be creating a thread here at CT in a few years asking if anybody thinks gold will break below $3K so you can buy a Saint or Eagle at a spot price 10% cheaper.

It's 20% cheaper now. Pull the trigger on something so if it goes higher in a straight line, you're covered. If it corrects sharply downward (IMO, unlikely) , then buy more.

 

If you’re interested in medium to long term return on investment, SP500 is likely to outperform gold. See the pic below. Short-term investment in anything is a fool’s game except for professionals who are in the game daily, and many of them get burned badly. You hear about the successful ones because of “survivor effect” … the losers are silent and usually don’t make the news. Many of the successful ones were just lucky.

Both stocks and gold rise with inflation. Real question to ask is which is likely to rise faster than inflation over the medium/long term. The pic answers that. Most of my gold coins have most of their value in numismatic value, not melt value. I consider coin collecting to be a hobby where there is a good chance I won’t lose too much. That said, if one is going to invest in gold per se, best way is certified coins bought just above melt value. Authenticity is unlikely to be questioned, and expensive assays are unlikely to be demanded at sell time.

If you are a survivalist, best to buy easily recognized, small, uncertified silver coins near melt price ... like worn U.S. dimes. You won’t want to spend an ounce of gold for a pound of corn after the apocalypse when a few silver dimes will do.

Cal

 

Going on the gold standard is impossible. Unless you are going to set the value at a million dollars and ounce or more, there is not enough of it to back the currency. This is all based on the commodity theory of money which invalid. If the value of a dollar is pegged at less than it official value in gold, people will redeem the dollars for gold.

The gold standard didn't work all that well during its "gold age," which was during the late Victorian era and early 1900s. All it did was limit that amount of money in circulation, but that may or may not be a good thing. If there is too little money for the economy, you will start a recession or depression.

 

Not likely....almost without exception.

If you had the next 30 years of returns...rolling time periods (to eliminate timing bias)....I would guess that stocks would win 27 or 28 times AT LEAST and maybe even 29 or 30 times. On a shorter basis -- rolling 20 year or even 10-year periods -- stocks would probably win 85-90% or more of the time.

Gold or any PM or commodity simply can't match real participation and growth in a growing economy with a dividend yield to boot. It's like 2 sprinters in a 100-meter race and one of them starts 20 meters ahead.

Speculation is not the same thing as short-term investing. Even short-term stock investors, if long over enough periods, would do OK.

Agreed.

Again....this is a HOBBY we do for enjoyment, not investment returns. If someone wants to take advantage of a doubling in the price of gold the next 10 years, then pure bullion or even numimsatics at a low-premium to gold (i.e., MS-63 or MS-65 generic gold coins like Saints) should do OK. May lag or outperform, but will keep you in the ballgame.

 

Why speculate on something that will never happen? Seems like a waste.

 

I had to read the rest of the post to understand what you meant to say here. It sounded like you were saying "almost without exception, it's unlikely".

Seems to me more like two people on an escalator, one of them holds firmly onto the rail, the other one climbs ahead as though it were a stair. Both get further than the folks dithering at the ground-floor entrance, but the climber comes out on top, even if he occasionally stops for a rest.

 

Yeah, you can tell I didn't major in English.

I felt it was UNDERSTATING to say that gold would not match the S&P 500. It's virtually a CERTAINTY.

Even if you went back to the 1960's -- with the 1970's rise ahead of you -- I don't think gold can beat the S&P 500 in a majority of time periods unless it's a very short-time period. 30-year rolling periods starting in the 1960's and equities still win most of the time (and that's with gold going up 20-fold in 8 years).

I'll see if I can find the actual numbers.

I like that !!

 

Not sure but I think the cent coin would be gone. So save your Pennie’s