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  • What analysts are saying
    • Steve Forbes "A return to the gold standard by the United States within the next five years now seems likely, because that move would help the nation..." Human Events: "Forbes Predicts U.S. Gold Standard Within 5 Years" (5/11/2011)
    • John Embry - $100.00 (no period cited) "We haven't even really seen money start to significantly flow into hard assets... it's going to have an outsized impact on the price [of silver and gold.]... King World News (July 2011)
    • Doug Casey - $5,000 (by end of 2013) "Gold could hit $5,000 an ounce in the next couple of years, as paper currencies in the United States, Europe, and Japan drop in value..." Mineweb (03/2011)
    • Tom Fitzpatrick - $100.00 (no period cited) "While the high so far this year was at the same level as the peak in January 1980, we are not convinced that the long-term trend is over yet." Bloomberg (July 2011)
    • Hal Lehr - $2,000 (in 2011) "Gold, which reached a record on May 2, may surge a further 30 percent by [2012] as investors seek to protect themselves from 'economic uncertainty'..." Bloomberg (5/2011)
    • Peter Krauth - $250 (no period cited) "...silver prices could reach as high as $250 per ounce before the silver bull finally stops running." Commodity Online (May 2011)
    • Robert McEwen - $5,000 (by end of 2015) "Gold is a favored asset relative to equities and other assets. In times of financial stress, you have people going towards precious metals and hard assets..." CNBC (4/2011)
    • Dr. Stephen Leeb - $200 (by August 2013) "My guess is that 24 months from now, that silver coin you are holding that you bought for $35 or $40, you are going to see a $200 tag on it." King World News (August 2011)
    • John Paulson - $4,000 (in 3-5 years) "Gold prices could go as high as $4,000 an ounce over the next three to five years, as the U.S. and U.K. flood the money supply." Wall Street Journal (5/2011)
    • David Morgan - $75 (no period cited) "The next leg up [for silver] could take out the $50/oz. level after a few tries and then not look back until establishing a new nominal level of $65/oz. - $75/oz. Silver demand is growing for both industry and as an investment." The Gold Report (August 2011)
    • Jim Sinclair - $5,000 "Looking for a major upturn in gold as soon as June and targeting $5,000 as a longer term objective." Mineweb (5/2011)
    • Charles Oliver - $50 to $100 (next few years) "...the long-term story for precious metals is still very firmly intact." Reuters (May 2011)
    • Christopher Wyke - $2,000 (by 2012) "Gold has been going up for the past ten years, but we think gold is going to continue to rally over at least next five years..." Professional Advisor (3/2011)
    • Louise Yamada - $2,000 (in next year) "Gold looks fine as it is moving to a new high. Gold remains in a structural bull market that was initiated in 2002." King World News (3/2011)
    • Peter Krauth - $86.75 "An important metric to understand and watch is the silver-to-gold ratio. It tells you how many ounces of silver it takes to buy one ounce of gold..." Silver Price Forecast" (12/2/2010)
    • Mac Slavo - $50.00 "Based on just the supply/demand equations, the price of silver should continue to rise and approach its historical silver-to-gold ratio..." Silver Will Be Worth More Than Gold" (12/31/2010)

Will We Return To A Gold Standard?



Fiat money is money that has value only because of government regulation or law. The term derives from the Latin fiat, meaning "let it be done", because such money is established by government order. Where fiat money is used as currency, the term fiat currency is used. With such drastic and rapid rise in the prices of silver and gold, and the plummeting value of many fiat currencies, specifically the US Dollar, the question has been posed if a gold standard would be repeated again soon. The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold, with various meanings depending on whether gold coins, bullion or exchange with silver coins are used as the fixed mass. A look through history will show that each time fiat currencies have been adopted, the gold standard reappeared not long after. Below are summaries of historical periods of this return to gold:


1785-1861: Concerned about a proliferation of paper currency, the founding fathers of the United States reinstated the gold standard as the way to put limitation on the production and circulation of money.


1862-79: The Civil War's exorbitant cost was paid for by fiat currency referred to as Greenbacks. With the severe depression of the 1870s, gold standard was once again revived.


1880-1914: When the gold standard was in effect during this 34 year period, domestic prices were stable and there was almost no observable inflation.


1915-25: "Floating fiat currency" came into circulation, driven by the financial needs of the First World War. Since there was not sufficient gold to back the amount of paper currencies that were being printed, the fiat currency was floated for 10 years.


1926-31: Tied to the gold-convertible British pound and US dollar, the gold standard rose yet again.


1931-45: The Second World War and the subsequent Great Depression gave rise to global imbalances, which resulted in another period of floating fiat currencies.


1945-71: As determined by the Bretton Woods agreement, the world tied itself to the US dollar and the British pound. However, the pound soon collapsed due to the rush of trading pounds for gold. 1963 saw the printing and circulation of New Federal Reserve notes, which didn't promise payment in "lawful money". Once the Coinage Act of 1965 was signed, the use of silver currency came to an end. In 1968, a proclamation issued by President Johnson declared that no further Federal Reserve Silver Certificates could be converted into silver. 15 August 1971: The international gold standard came to an end, courtesy of President Nixon. This was the first time when no currency was backed by gold.


1971-73: The Smithsonian agreement established a fixed dollar standard where world currencies were linked to the US dollar, and not gold.


1973-Today: The US dollar serves as the world's currency reserve in the present system of floating currency rates, established by the Basel Accord.


Conclusion: Though the US dollar is still the world's reserve currency, high inflation rates and the instability of the dollar may soon force the world to go back to a gold standard.


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