James -- If/When the US confiscates gold from everyone, they'll have to revalue it much higher than it is now, or even when it's $5,000 oz. -- in order to make it have any relevance at all in backing the currency. Remember, all the gold mined in the world since the beginning of time is estimated to currently be no more valuable than around half our $17 trillion national debt.
To have any meaningful impact when pegged to the hundreds or thousands of trillions of dollars in circulation, they'll have to raise the price of gold to many multiples of whatever price it might be by then -- which means they'll be devaluing the dollar spectacularly, without benefit to those who had been holding physical gold for just that eventuality.
The 100-to-1 paper-to-gold ratio might also move up to 1,000-to-1, depending on what the Chinese and Russians end up doing. Without some measure of gold backing, the US dollar would drop like a stone when valued in terms of the Yuan, sending import prices through the roof and possibly setting the stage for a US manufacturing comeback as US workers trade places with the Chinese as the world's source for cheap labor.
This is hopefully just wild speculation on my part, but it sure looks like it could be the direction we're headed. |
