Originally Posted by OrangeOkie
What would be the effect on gold prices if the US returned to the gold and silver standard for our money?


The official exchange rate of dollars to troy ounces of gold would have to be set high enough so that there would be enough dollars to run our nearly 15 trillion dollar economy. Say we needed 10 trillion gold backed dollars, which is about the current money supply.

U.S. gold holdings peaked during World War II at 649.6 million troy ounces (now just 147.2 million troy ounces), but assuming we could magically get back to the peak holdings, each ounce would need to represent $15,394 dollars. Today gold opened at $1,734, so you would have to devalue the dollar to 11.3 cents in order to base it on gold. That would do wonders for our exports, but gas would be over $30 a gallon. Of course, if you have gold dental crowns and bridges the gold in your mouth would be worth more than your life is many back alleys.