The benefits of using gold as money are a wide variety of things that lead to vastly increased prosperity for the people. Listed in order of what I perceive to be the most important, these are:
- Peace. War is often very expensive under a gold standard, and often unnecessary. It is said that when goods cannot cross borders, armies will. People often fight, rather than starve.
- Increased trade. When gold is used as money, especially for international trade, trade usually vastly increases. Trade is often the ultimate source of wealth, as it allows and encourages the transfer of goods from people who have excess to those who have greater need and value those goods more. Part of the reason for the growth in wealth and power in the United States which rose from nothing in the late 1500’s to win two back to back world wars, from 1914 to 1945 was that for most of the growth period of the United States, we had no trade barriers between the states, and we were on a gold standard, and had no income taxes.
- No income taxes. Income taxes serve primarily to prevent inflation, and to prevent people from challenging the monetary monopoly and power of those who have the right to print money. Without income taxes, with freedom restored, wealth among the people is vastly increased.
- Smaller government. Government is expensive and typically a burden on an economy. Governments produce nothing, and only take from the people. The primary purpose of government is to establish justice. But with a gold standard, justice is already established in trade, and there is much less of a need for government.
- With a much smaller government, there is no benefit trying to bribe the government for economic favors, because the government is in no position to dish out any such favors. A free and more level playing field for economic competition creates more fairness and thus more wealth for everyone.
- No interest rates, and dramatically reduced lending. When gold is created, and mined out of the ground, it does not come with an interest rate attached. In contrast, when paper money is lent into the economy, the interest that is attached to the money grows faster than the money supply itself, and if all the paper money were to be paid back, there would still be the interest that would need to be paid. This creates a permanent slave class out of both the government and the people, and makes the money lenders into the slave owners of everyone. So a return to using gold as money creates freedom on a nearly unthinkable scale. Freedom and trade and the use of gold as money are the bedrocks of wealth creation. Business does not need “lending” in order to happen. Stocks and bonds are competing investment classes. Businesses can be funded by issuing stock, rather than taking on debt.
- Using gold as money is the most stable economic system ever created, and this stability leads to far better economic calculations that help stimulate and facilitate long term business decisions. Long term economic planning and thinking is nearly impossible under paper money systems with wildly changing values of the underlying currency. Long term planning encourages better decisions on where to allocate wealth for investment purposes, and ultimately creates far better and more sustainable economic growth.
The words, “gold standard,” are not the right words to use, as they imply the use of “price fixing” to fix a paper money instrument to gold, and price fixing does not work, and is not compatible with basic free market processes. A “gold standard” also implies a paper money system, backed by gold. That kind of system is ripe for fraud, and is not what this paper is about. The concepts presented here imply using gold and silver coin as money, or the circulating mediums of exchange, and the use of no government issued, nor bank issued, paper money whatsoever.
As gold is used as money again, this becomes vastly increased demand for gold. As demand goes up for gold, value for gold goes up. This means that the value of gold increases in terms of nearly everything else in the economy. Ultimately and eventually, with no paper money in use, gold is not “priced” in terms of dollars, but rather, is priced in terms of what it can typically buy.
Often people wonder about this. “If there is no paper money, how would I buy or sell gold?”, or “What would I sell gold for”? These are silly questions, and not well thought out. Nobody ever ponders the questions, “How would I buy or sell dollars, or what would I sell dollars for?” There is no need to sell dollars, because dollars are what you get when you sell other goods. When gold is money, think in terms of gold as money. Gold would function as the money, and is the money. But if we are going to return to gold as money, of course, people who sell dollars for gold now, will be the ones who benefit the most from the transition as gold’s value vastly increases.
Sometimes, people ask the better question, “Yes, well, what I mean is, for small purchases, because gold is already worth a lot. I mean, how would we make change?” Yes, that is what silver is for. If you need change, you trade gold for silver. Or trade silver for copper.
Money is, at the basic, three things: A store of wealth or savings. A unit of account. And a medium of exchange. Gold’s return as money implies a vast increase as a store of value and or unit of account. Silver is used as the primary medium of exchange.
Sometimes, people ask, “If there is no dollar price for gold, how would we value it?” It is a slightly better question, but gold’s value would simply be in terms of what it can buy, or how much you can get for a certain amount of gold, such as one ounce.
Historically, when gold is used as money, an ounce of gold is not “a man’s suit”. That is a false standard, a canard, a deception that is often quoted, because “a man’s suit” can vary in price between about $300 to $50,000 depending on the quality of the man’s suit that you are talking about. A full suit of armor is more like the $50,000 price range. So, what is the historic value of gold, when used as money? An ounce of gold was a typical year’s salary for a clerk, or mid level manager, or about $50,000 to $100,000 in today’s money.
As gold is purely a luxury item, the value of it going up hurts nobody. In fact, it helps nearly everyone. Since “you can’t eat gold”, the gold price going up does not create starvation and lack, it actually creates plenty, because gold increases in its purchasing power, and all who have gold can actually buy more. Another way to say it is that everything else gets cheaper when gold is used as money.
This process of gold’s value changing can take place rather suddenly, and dramatically. This is a process of false paper money destruction, and real money creation. It does not destroy property, (buildings do not explode as they do in wartime) but rather, gold’s value changing would implies results such as transfers of ownership of land, companies, and other things of value. This is a process of destroying fraud.
Now that we have that established that the value of gold will dramatically increase when gold is used as money, we can describe all the good that this particular function creates.
First, the biggest contrast. When new paper money is created, it is usually created in excess, and all the value accrues only to the money printers, and this acts as an additional tax of inflation, which takes away the value from all who are holding paper money. It is a tax on savers. In contrast, when gold is used as money, and when there is a return to using gold as money, then all who are holding gold “earn money” so to speak, as the value of the gold they are holding increases. Furthermore, there is typically deflation under a gold standard, so that gold is worth more over time. Productivity increases by man result in prices lowering faster, and gold’s value increasing, so that over time, gold becomes ever more valuable. Productivity gains by mankind are directly passed on to the people.
Second, a return to using gold as money wipes out all of the impossible to pay debt that was accrued under the paper dollar system. So all who were enslaved by the banking class and their corrupt minions are literally set free and get to start over, like a bankruptcy. There are several forms of debt that cannot even be discharged under bankruptcy today, because the corruption has become so great. All of that would vanish. Taxes. Student loans. Child support. Various dubiously levied government fines or corrupt “” for things where there was no crime.
With gold’s value vastly increased, there would be a boom in the gold mining business, and a boom in gold exploration. The production of gold (and silver) typically involves production of the other minerals that gold and silver are typically found with, such as copper, zinc, lead, nickel, and a host of other minerals. Gold exploration often reveals other valuable mineral deposits such as rare earth minerals. As they like to say in the mining industry, “everything is either grown, or mined”. As they say in the game 20 questions, the first question to ask is “animal, vegetable, or mineral”. When a lot of other minerals are produced as byproducts of a mining boom, the vast resources of minerals that are increasingly needed for our modern way of life, suddenly will become vastly cheaper, and especially cheaper in terms of increasingly valuable gold.
A large part of whether a nation experiences prosperity or poverty under the use of gold as money is whether the government is helping the process or working to prevent it. It also depends on how much the government helps support free market processes, or whether the government attacks them. For example, patents are government granted monopoly grants, which greatly reward corruption and large businesses who can afford attorneys and litigation that ultimately attacks free market competition. In that sense, China embraces a form of free market enterprise that the Unites States needs, just to remain competitive.
I know that many of these concepts are new to everyone. They are new also to me in the sense that, like everyone else, I have never lived under a gold standard. So, some of these concepts have come from the last 23 years when I studied gold and gold standards, and some of these concepts have come from my own thought experiments, and some have come from my readers.
The United States began central banking, paper money, and income taxes in 1914. That system maintained a price fix of paper money to gold at $20/oz. until 1935 when it changed to $35/oz., and holding gold was mostly illegal. Then, in 1970, the last link of a price fix of paper money to gold, pegged at $35/oz., was ended, and gold ownership was legalized again. Then, the 1 oz. American Gold Eagle was first minted in 1986, as a back up, to increase national security, in the event of wild inflation. (Thanks largely to the efforts of Ron Paul on the U.S. Gold Commission.)
While this article starts out with the promise of peace, there is no peace when you are being attacked by enemies. There are enemies of a return to using gold as money. These enemies today have nearly unlimited financing, because they print the money. And they do, indeed, use this money to attack their enemies, the advocates of using gold as money.
Here is an explanation for why a “partial gold backing” for paper money currency would not work: From my prior article: https://revealingfraud.com/2019/09/silver-gold/m3-is-up-to-20-trillion/
These days, there is more and more talk of a “partially gold backed currency”. This is silly. Let’s say the U.S. government backed up 10% of the currency with gold. If the government backed up M3, that would work out to one ounce of gold for every $7,662 worth of currency. Would anyone ever convert currency for gold at that price, when everyone can buy gold at around $1500 in the market? Of course not. People go with the lowest price available.
Besides, there is another big problem.
Let’s say the gold price runs up over $7,700, and the government price is now the new low price in the market. And let’s say people start converting paper money to gold, in order to sell gold to the market at $8000 or so. Well, the new lower 10% backing all quickly gets spoken for, during a run away gold price, because there suddenly become quick profit incentives to do that. (See, price fixing does not work.) The backing would only be available for the first 10% of people who converted, and then the gold would run out. And then the gold price could be off to the races again, with nothing to stop it, and the rest of the currency would then have no gold backing whatsoever. Just as if a bank ran out of money in a bank run.
So any discussion of a partial gold backing is just discussions by people who are woefully ignorant of basic long division and basic economic thought. Also note, in none of these types of discussions do they ever suggest what the gold “offer” price would be in any “partial gold backing” scenario.
The primary lie against using gold as money is that “Under the gold standard, there is not enough money for trade”. As I have shown, this is a lie for numerous reasons. The primary reason is that if gold is simply valued 10% higher by all the people of the world, this creates 10% more money among all who hold gold, all simultaneously. And there is almost no upper limit on how high gold can be revalued by people. Eventually, too many people would be attracted to doing activities like gold mining and gold detecting, such as in the gold rush of California. In that event, people grow wealthier faster simply by feeding those working too hard mining. My own ancestors in my family’s journals tell the story of serving soup at the mining camps for $1 per bowl to those miners, who made, on average, $1 per day. Ultimately, gold’s value is determined by people. If a part of the world runs short on gold, those people simply need to value gold more than the rest of the world did, or more than other people, and gold will naturally flow to them, similar to national governments that devalue a currency today. It works like this, even now. If you value gold more than other people, you will tend to want to buy gold, and you use gold as savings, and you benefit from holding more gold, and gold is “flowing” to you, and you grow rich in terms of gold, simply by buying it.
One last bit of advice for governments under a gold standard. The history of gold being used as money in the USA shows that gold price fixing does not work. The history of economics shows that price fixing does not work, and is actually now illegal, and is the opposite of free market forces. A government, or very wealthy person or entity such as a large corporation, simply needs to do three simple things to prevent always losing under a bi metallic gold and silver coin standard.
1. Do not fix the price of gold to silver.
2. Maintain a price spread when buying and selling gold or silver, like a bullion dealer.
3. Try to maintain a balance in value between the gold and silver that is held. IE, if silver’s value drops, then accumulate more silver, and if gold’s value drops, then accumulate more gold.
These decisions needs to be made swiftly, in response to changing market conditions, and are wholly inappropriate to delegate to a slow acting deliberative body, such as congress. They don’t even need to be made by a person, but rather, a computer program could do it.
I have long thought that the world would somehow transition back to using gold as money for a variety of reasons, including Bible prophecy.
Prophecy teaches that there will be a world government in the time of the end. A primary feature of world governments throughout history are the use of gold as money, and a vastly increased trade zone, facilitated by an empire that establishes peace and prosecutes criminals that would interfere with trade.
Consider the following scriptures:
Revelation 3:18 I counsel you to buy from me gold refined in the fire, so you can become rich; and white clothes to wear, so you can cover your shameful nakedness; and salve to put on your eyes, so you can see.
Daniel 11:43 He [antichrist] shall have power over the treasures of gold and silver, and over all the precious things of Egypt; also the Libyans and Ethiopians shall follow at his heels.
Zechariah 14 A day of the Lord is coming, Jerusalem, when your possessions will be plundered and divided up within your very walls.
2 I will gather all the nations to Jerusalem to fight against it; the city will be captured, the houses ransacked, and the women raped. Half of the city will go into exile, but the rest of the people will not be taken from the city. 3 Then the Lord will go out and fight against those nations, as he fights on a day of battle. 4 On that day his feet will stand on the Mount of Olives, east of Jerusalem, and the Mount of Olives will be split in two from east to west, forming a great valley, with half of the mountain moving north and half moving south. 5 You will flee by my mountain valley, for it will extend to Azel. You will flee as you fled from the earthquake[a] in the days of Uzziah king of Judah. Then the Lord my God will come, and all the holy ones with him.
6 On that day there will be neither sunlight nor cold, frosty darkness. 7 It will be a unique day—a day known only to the Lord—with no distinction between day and night. When evening comes, there will be light.
8 On that day living water will flow out from Jerusalem, half of it east to the Dead Sea and half of it west to the Mediterranean Sea, in summer and in winter.
9 The Lord will be king over the whole earth. On that day there will be one Lord, and his name the only name.
10 The whole land, from Geba to Rimmon, south of Jerusalem, will become like the Arabah. But Jerusalem will be raised up high from the Benjamin Gate to the site of the First Gate, to the Corner Gate, and from the Tower of Hananel to the royal winepresses, and will remain in its place. 11 It will be inhabited; never again will it be destroyed. Jerusalem will be secure.
12 This is the plague with which the Lord will strike all the nations that fought against Jerusalem: Their flesh will rot while they are still standing on their feet, their eyes will rot in their sockets, and their tongues will rot in their mouths. 13 On that day people will be stricken by the Lord with great panic. They will seize each other by the hand and attack one another. 14 Judah too will fight at Jerusalem. The wealth of all the surrounding nations will be collected—great quantities of gold and silver and clothing. 15 A similar plague will strike the horses and mules, the camels and donkeys, and all the animals in those camps.
16 Then the survivors from all the nations that have attacked Jerusalem will go up year after year to worship the King, the Lord Almighty, and to celebrate the Festival of Tabernacles. 17 If any of the peoples of the earth do not go up to Jerusalem to worship the King, the Lord Almighty, they will have no rain. 18 If the Egyptian people do not go up and take part, they will have no rain. The Lord[b] will bring on them the plague he inflicts on the nations that do not go up to celebrate the Festival of Tabernacles. 19 This will be the punishment of Egypt and the punishment of all the nations that do not go up to celebrate the Festival of Tabernacles.
20 On that day holy to the Lord will be inscribed on the bells of the horses, and the cooking pots in the Lord’s house will be like the sacred bowls in front of the altar. 21 Every pot in Jerusalem and Judah will be holy to the Lord Almighty, and all who come to sacrifice will take some of the pots and cook in them. And on that day there will no longer be a Canaanite[c] in the house of the Lord Almighty.
Ezekiel 38 The word of the Lord came to me: 2 “Son of man, set your face against Gog, of the land of Magog, the chief prince of[a] Meshek and Tubal; prophesy against him 3 and say: ‘This is what the Sovereign Lord says: I am against you, Gog, chief prince of[b] Meshek and Tubal. 4 I will turn you around, put hooks in your jaws and bring you out with your whole army—your horses, your horsemen fully armed, and a great horde with large and small shields, all of them brandishing their swords. 5 Persia, Cush[c] and Put will be with them, all with shields and helmets, 6 also Gomer with all its troops, and Beth Togarmah from the far north with all its troops—the many nations with you.
7 “‘Get ready; be prepared, you and all the hordes gathered about you, and take command of them. 8 After many days you will be called to arms. In future years you will invade a land that has recovered from war, whose people were gathered from many nations to the mountains of Israel, which had long been desolate. They had been brought out from the nations, and now all of them live in safety. 9 You and all your troops and the many nations with you will go up, advancing like a storm; you will be like a cloud covering the land.
10 “‘This is what the Sovereign Lord says: On that day thoughts will come into your mind and you will devise an evil scheme. 11 You will say, “I will invade a land of unwalled villages; I will attack a peaceful and unsuspecting people—all of them living without walls and without gates and bars. 12 I will plunder and loot and turn my hand against the resettled ruins and the people gathered from the nations, rich in livestock and goods, living at the center of the land.[d]” 13 Sheba and Dedan and the merchants of Tarshish and all her villages[e] will say to you, “Have you come to plunder? Have you gathered your hordes to loot, to carry off silver and gold, to take away livestock and goods and to seize much plunder?”’
14 “Therefore, son of man, prophesy and say to Gog: ‘This is what the Sovereign Lord says: In that day, when my people Israel are living in safety, will you not take notice of it? 15 You will come from your place in the far north, you and many nations with you, all of them riding on horses, a great horde, a mighty army. 16 You will advance against my people Israel like a cloud that covers the land. In days to come, Gog, I will bring you against my land, so that the nations may know me when I am proved holy through you before their eyes.
17 “‘This is what the Sovereign Lord says: You are the one I spoke of in former days by my servants the prophets of Israel. At that time they prophesied for years that I would bring you against them. 18 This is what will happen in that day: When Gog attacks the land of Israel, my hot anger will be aroused, declares the Sovereign Lord. 19 In my zeal and fiery wrath I declare that at that time there shall be a great earthquake in the land of Israel. 20 The fish in the sea, the birds in the sky, the beasts of the field, every creature that moves along the ground, and all the people on the face of the earth will tremble at my presence. The mountains will be overturned, the cliffs will crumble and every wall will fall to the ground. 21 I will summon a sword against Gog on all my mountains, declares the Sovereign Lord. Every man’s sword will be against his brother. 22 I will execute judgment on him with plague and bloodshed; I will pour down torrents of rain, hailstones and burning sulfur on him and on his troops and on the many nations with him. 23 And so I will show my greatness and my holiness, and I will make myself known in the sight of many nations. Then they will know that I am the Lord.’
Ultimately, in the coming 7 year tribulation, there is a money system that is NOT based on gold. It might begin as an electronic currency system backed by gold, just as all fraudulent paper money systems begin as systems backed by gold. After all, the antichrist controls all the gold of Egypt, or the world, according to Daniel.
Revelation 13:16 He causes all, both small and great, rich and poor, free and slave, to receive a mark on their right hand or on their foreheads, 17 and that no one may buy or sell except one who has [g]the mark or the name of the beast, or the number of his name.18 Here is wisdom. Let him who has understanding calculate the number of the beast, for it is the number of a man: His number is 666.
It appears to me that the world needs one last try at using gold as money, to really condemn those people who rush back to join the anti gold system of the mark of the beast.
Finally, the end times, as described by Jesus are described as a time of economic normalcy, which, as a student of history, implies a gold standard. Today, we are living in economic chaos. Paper money systems, historically, have very short lives. It is rather amazing that the US paper money has survived for 51 years now, after leaving the gold standard in 1970. These verses imply economic stability and wealth:
Matt 24:14 And this gospel of the kingdom will be preached in the whole world as a testimony to all nations, and then the end will come.
Matt 24:36 “But about that day or hour no one knows, not even the angels in heaven, nor the Son,[f] but only the Father. 37 As it was in the days of Noah, so it will be at the coming of the Son of Man. 38 For in the days before the flood, people were eating and drinking, marrying and giving in marriage, up to the day Noah entered the ark; 39 and they knew nothing about what would happen until the flood came and took them all away. That is how it will be at the coming of the Son of Man. 40 Two men will be in the field; one will be taken and the other left. 41 Two women will be grinding with a hand mill; one will be taken and the other left.
As they say, wealth leads to complacency. Gold leads to wealth, because gold IS the very definition of wealth.
Ultimately, God is in control of the fulfillment of Bible Prophecy. We are merely witnesses to how things will turn out, and these are only my educated guesses on what will happen.