I would like to interject a little bit about gold back currencies and the possibility of going back to same. I think the figures that a few have thrown about are a little low if we were to convert back.
Depending on what number you use for outstanding US Dollars, the price per oz based on what gold we are told we have in reserve would put the price per oz somewhere between $50,000 and $80,000 per oz. Keep in mind that our gold reserves haven't been subject to a public audit. Just bear with me for the sake of argument that we have the gold we are being told.
Now let's take China. For them to back the Yuan with their gold reserves and factoring in the amount of Yuan outstanding then China would have to value it over $100,000 per oz.
Rot Roh. Now we have the most basic of problems in countries reconverting back to a gold standard. At what price do you peg gold for the conversion? There is already an arbitrage situation between two of the superpowers. Try to factor in the gold reserves of the Eurozone countries and the outstanding Euros....
This becomes a major barrier to the process. I will go out on a limb and say Bob will win his bet with Mike. Three years is not near enough time to work out this kink alone.
