Is the gold standard being used anywhere in the world?

[Zarxrax]

Does any country out there follow the gold standard or some other sound money practice? How has it worked out for them?

[Chester Copperpot]

I dont know of any other country that uses gold standard... if any do, they are real minor countries like the Seychelles or so.. but I doubt even they...

The only other 'sound money practice' is limiting the amount of money in circulation... Panama does this sort of thing, and they do it pretty well and without having a private central bank...

[fsk]

Panama's currency is pegged to the US dollar. This means that the Federal Reserve is effectively the central bank for Panama.

As a condition for membership in the WTO and IMF, small countries must *NOT* adopt a gold standard. That's actually one of the rules.

EVERY country uses fiat debt-based money. I believe Iran is one of the few remaining holdouts.

If you want to use sound money, I'm afraid you have to develop your own underground economic system.

[beobeli]

The currency that is circulating (through wire) in the global world of finance is about 5-6 times the value of the global economy. Nobody can explain why so much should exist, but it is obvious that most of this is political money not backed by anything. Inflation and unstable currency is fact of life. Basically the world is at someone's mercy.

The gold standard is just a mechanism to limit the amount of money in the circulation. Obviously restricting currency to the size of the global economy would be another way to curtail printing money out of thin air. Such limit would place a restriction on using money as means of manipulation and control.

Learn more here:
http://www.youtube.com/watch?v=cy-fD78zyvI
http://video.google.com/videoplay?docid=497251819335380093&hl=en

[foofighter20x]

I know that in Islam, Sharia Law requires that money be based on gold.

[0zzy]

I know that in Islam, Sharia Law requires that money be based on gold.

We got the Muslim vote!

[Lexx78]

the European Central Bank has a reserve of €526 bln in total, I can't find anywhere on the net what the amount of gold there is in that number.

http://en.wikipedia.org/wiki/European_Central_Bank

but that is also a private bank just like the fed and that's what worries me here in Europe.

since the only people gained wealth from the European currency were the already wealthy, it is obvious for a lot of people in Europe that it was just to scam to centralize the banks and get more control and profit.

[fsk]

The Euro is a fiat debt-based monetary unit just like the US dollar.

[Bradley in DC]

the European Central Bank has a reserve of €526 bln in total, I can't find anywhere on the net what the amount of gold there is in that number.

http://en.wikipedia.org/wiki/European_Central_Bank

but that is also a private bank just like the fed and that's what worries me here in Europe.

since the only people gained wealth from the European currency were the already wealthy, it is obvious for a lot of people in Europe that it was just to scam to centralize the banks and get more control and profit.

You have to go to each member country's central bank.

[Bradley in DC]

Up until recently, the Swiss constitution required a backing of the Swiss franc with gold to some degree.

[Lexx78]

You have to go to each member country's central bank.

European central bank took the greatest of part gold and reserves from countries that use the Euro.

most what is left here is private banks that have accounts, and banks are still selling out gold and strangely it seems the biggest market is still jewelry.

Swiss and England have the biggest reserves of all in the EU, guess why they didn't joined using the Euro, (I think Swiss never wants an open bank policy) and what the miss of those reserves did to the course of the Euro with a lot of poor countries joining. :rolleyes:

If they would have joined, the Dollar would be 1:2 against the Euro now :)

[fsk]

Central banks sell off their gold reserves to suppress the gold price and so that people won't realize how lousy their fiat money is. The central banks are trying to discredit gold as an investment. Eventually, they will run out of gold.

[Lexx78]

well said, the deeper you dig into the financial systems of the world the dirtier it gets.

[Bradley in DC]

Central banks sell off their gold reserves to suppress the gold price and so that people won't realize how lousy their fiat money is. The central banks are trying to discredit gold as an investment. Eventually, they will run out of gold.

The central banks were selling their gold to earn money to offset their irresponsibility and meet the targets set to comply with the euro adoption regulations. The "Washington Agreement" put a limit on gold sales.

[fsk]

I read that the "Washington Agreement" arranged for gold to be sold off at a specific rate to prevent a short squeeze among people who had leased gold.

[Corydoras]

I know that in Islam, Sharia Law requires that money be based on gold.

http://en.wikipedia.org/wiki/Islamic_gold_dinar


According to Islamic law, the Islamic dinar is a specific weight of 22k gold (.917 fine) equivalent to 4.25 grams. The Islamic dirham is a specific weight of pure silver equivalent to 3.0 grams. Umar Ibn al-Khattab established the known standard relationship between them based on their weights: "7 dinars must be equivalent to 10 dirhams."

[fsk]

I don't think the "gold dinar" is legal tender anywhere, is it?

[Bradley in DC]

I read that the "Washington Agreement" arranged for gold to be sold off at a specific rate to prevent a short squeeze among people who had leased gold.

There were gold sales in the context I explained. The Agreement put a limitation on the amount of those sales.

[jon_perez]

Central banks sell off their gold reserves to suppress the gold price and so that people won't realize how lousy their fiat money is. The central banks are trying to discredit gold as an investment. Eventually, they will run out of gold.The central banks don't have to "artificially" (as if they are stupid enough to think they could profit by going against market forces) drive down the price of gold. The fact that owning gold does not pay interest and actually incurs storage cost is enough to douse cold water on the idea of holding gold during non-inflationary times.

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Ooops... looks like the troll is "disrupting the debate" again...

Fsk, you can call me a troll anytime if you let me call you a conspiracy fruitcake. ;)

[planetaryjim]

Dear Friends of Gold as Money,

Yes, there is a place where the gold standard is used. On the web. There are digital gold currencies now available, used at tens of thousands of shops, and involving economic activity to the tune of billions of dollars worth of gold each year, with upwards of two million users worldwide. I refer to e-gold, Pecunix, GoldMoney, e-Bullion, e-Dinar, eCache, and the Phoenix Dollar. Several of these currencies also offer silver variations.

Malaysia's prime minister, some years back, announced his view that the Islamic countries should conduct international trade in the Islamic gold dinar. There is an organization, Murabitun.org, which promotes the dinar and dirham. Since about 1992 they have minted both coins. See also the Islamic Mint. The same individuals are behind the e-dinar.com site. I know one of them, fairly well, through telephone calls and e-mails. His name is Zeno Dahinden. One of his associates Yahya Cattanach is also known to me, though more vaguely. There is an old Julian Dibbell essay pubished in Wired magazine back in 2002 which includes some information about Dahinden, Cattanach, and e-dinar.

I reviewed the e-dinar a bit in my essay on the industry:
http://indomitus.net/2004status.html#edinar

Regards,

Jim
http://www.golightspeed.com/
http://www.vertoro.com/blog.htm

[sidcrowe]

I thought you Americans were using that...oh wait, the Liberty Dollar got raided :'(

[fsk]

Currencies like e-Gold and e-Dinar are not accessible to people living in the USA. These "alternate currencies" are guilty of "facilitating money laundering" and are therefore extremely difficult to use.

The e-Gold vendors based in the USA are periodically raided by the IRS and FBI.

The e-Gold vendors based outside the USA have problems for US citizens, because there are restrictions on US citizens moving money in and out of the country.

The only gold or silver investment I would trust is physical metal in my possession.

[jon_perez]

Of course, the problem with holding physical commodity is that it is very awkward to trade with it.

Abstract trading facilitates "coincidence of trade" in much the same way abstract money arose to facilitate the "coincidence of wants". It's magical and depends on faith, true. But without it, you don't get to participate in the global marketplace either.

[Bradley in DC]

Currencies like e-Gold and e-Dinar are not accessible to people living in the USA.

Of course they are. Same with GoldMoney.com.

You're right to look at the question more broadly: there is a functioning "clunky jewelry" gold standard in use in much of south and east Asia. With the lack of an open, honest and accessible banking system for many people, many choose to keep their savings (and trade) with gold.

[fsk]

Of course, the problem with holding physical commodity is that it is very awkward to trade with it.


The only reason it is awkward to trade physical gold and silver is due to taxes and government regulations.

If all the taxes and regulations affecting gold and silver dealers were repealed, you would find a very liquid market for gold and silver developing.

[ghemminger]

Considering jewery, what is the cheapest way to accumulate gold and silver?

[mordechai]

Swiss law used to require a 40% gold backing for the Swiss franc.

But, what happened is the Swiss Constitution was changed, and now it is also backed only by debt. However the Swiss Banks (because the Swiss have no "Central Bank" ie private bank with public powers like the Fed) all have enormous gold reserves, although I've heard they have begun liquidating as of late.

[vis-à-vis]

Considering jewery, what is the cheapest way to accumulate gold and silver?

Go to a numismatic shop and start buying bullion. A good shop will only charge you like $0.50 premium over spot rate for silver. Never had enough money to buy gold. :(

http://xb9.xanga.com/f33c2a0263335159707856/m120058068.jpg

[fsk]

You can also buy gold and silver bullion online. I heard that apmex is the best, but do your research before buying.

[jon_perez]

The only reason it is awkward to trade physical gold and silver is due to taxes and government regulations.You said that "the only gold or silver investment I would trust is physical metal in my possession".

You certainly can't participate in the online economy using "physical metal in your possession" and that's why I consider it awkward, unless you meant physical metal "in your [virtual] possession" but held by other entities such as e-gold...

[fsk]

As a long-term investment, physical metal in my possession is the only way I would go.

To trade online, you're pretty much forced to use the standard banking system. If you immediately trade your Federal Reserve Notes for hard assets, you aren't losing too much ground to inflation.

I recall that eBay used to allow auctions to be conducted in E-Gold, and they stopped when pressured by the government.

[jon_perez]

I recall that eBay used to allow auctions to be conducted in E-Gold, and they stopped when pressured by the government.Well, see now, you wouldn't find me defending such moves by the government... assuming your recall is accurate, of course.