If the government were to?

Question

If the government was to start using gold and silver again instead of the dollar. They would obviously use coins but what would my gold and silver bars be worth?

Answer 1

Well, the government sort of already does, that is why they still keep the vaults at Fort Knox (and a few other places) still stocked.

The problem is that there is a solidly finite quantity of gold, but our economic activity far surpasses the value it would represent. The US holds one of the worlds largest reserves, very few other places has such a stash as we do. But the value of that gold is a drop in a bucket compared to the aggregate worth of all that we do in a given year.

Take the case of oil. We ship (mostly electronically) nearly trillions of dollars abroad for oil, and we are the third largest oil producing nation! If we were to peg the value of our dollar on gold, say starting this last January, then in May, or perhaps before, the vaults would be empty. Then what? We have a similar problem with various manufactured goods in China. Between China and Saudi Arabia (plus Kuwait and the other neighbors), we've been dumping a lot of dollars. If it were based on gold, well, maybe the vaults would be empty in February.

Still, we have made investments in those oil fields and factories. Part of what is produced there is actually ours, just the name of the nation of origin changes. But they have lots of supporting competitors, so not all we buy abroad is paying ourselves, yet some is.

The US is pretty pathetic, at times, in selling to consumers elsewhere. Part of that is myopic laziness, part of it is culture. Globalization is helping to level the playing field, however, but we still have to do better than Far Eastern or European technologies than we have in recent years. The Japan/South Korea/Taiwan/Mainland China complex against European Union, and we sit between them as a clumsy clod. If we fix that picture, we fix the value of our currency, because it is worth what our industriousness makes it worth. And that is worth far more than mountainous piles of shiny metal sitting around in a vault.

Answer 2

The government isn't going to do this.  Your silver and gold will continue to be worth what the world values them at.

Answer 3

It's hard to answer such a hypothetical question as it leads to many doors.

But most likely, the demand for gold/silver would go up and therefore price would go up...

Not sure if there is enough gold bullion to be able to do such a thing though...even if it is hypothetical