Hm. Something there isn't adding up. If the US bought 35,000 tons of gold it would have 35,000 + 8,133 = 43,133 tons of gold.
That's not even close to half of 171,300. I think Bloomberg screwed up. But I'm going to table that topic for now and proceed as if there were no flaw in the numbers.
The truth is that neither of the scenarios Bloomberg describes would happen. What *would* happen if there were a decision to return to the gold standard is that the dollar would be dropped - but not, of course, until the government had attempted to sell as much debt as it possibly could. After all, the debt would only have to be repaid in OLD dollars, and it's easy enough to print those since nothing backs them.
A new currency (which might still be called a "dollar") would then be issued, backed by the 8,133 tons of gold the nation has in its reserves.
There's no telling how many of these new dollars the country might issue. If it issued a large number - anything even close to the number of dollars in circulation today - they would each be worth a miniscule amount of gold. Otherwise, each new dollar could be worth a lot, or even a small fortune, as they would each be redeemable for quite a bit of gold.
Only time will tell. One thing I *can* predict with pretty good certainty however, is that anyone hoping to convert their "old" dollars into these "new" dollars will be sorely disappointed. The time to do that is NOW, when the new dollars don't even exist and the old dollars are still thought to be worth a lot more in terms of gold than they will be later on.
The math is simple: The U.S. has enough gold to back less than 20 percent of the dollars. So it would need gold's price to rise more than 4-fold from current levels. That's a $7,038/oz increase, to $8,798/oz. At that price, the 8,133 tons of gold could back its $2.3 trillion in circulating cash.
So, *if* the gold standard is restored to the country, that's what to expect of its price.
I don't know why Bloomberg didn't explain this in its video. I have to figure they didn't want to scare people.
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