Do these still have any economic significance in the monetary system? Is the Treasury gradually selling off its precious metal stockpile to the public, in the form of bullion coins?
What about other countries? Do any of them maintain gold reserves, and do they function in their montetary systems?
A lot of countries still maintain gold reserves (list can be found here, at the very bottom of the page), although AFAIK none of the convertible currencies is still gold-backed in the sense of a central bank obligation to give out gold for currency.
Many central banks have started selling their reserves, because they don’t play the role they used to any more. The only remaining relict is coinage of gold coins in many nations, but those are intended for collectors, not circulation. Nonetheless central bank gold is still important in gold trade.
My friend’s parents had some old money (1920’s IIRC) framed on their wall as art. The money looked very similar to today’s money but written on the note was a bit to the effect that it was redeemable for silver (and/or gold…I forget). I thought that was kinda cool.
Of course, money today still works largely the same way even if it isn’t written on the note. Just go out and buy some gold and you’ll get the going rate (try the commodities market for this). I guess the real difference is the federal government isn’t compelled to hand over some gold just because you demand it.
I believe governments are selling some of their reserves but they have to do it slowly or else they’d crash the market by dumping a huge pile of gold. I believe (but am not certain) that most governments still like to hold on to some gold since even though it doesn’t officially back the currency anymore it still represents a hard item that could be used to prop-up a failing currency to some extent.
As for going off the gold standard realize that the US economy is worth FAR more than the gold we possess. I don’t think we could be on a gold standard today even if we wanted to. The US simply possesses nowhere near enough gold to back every dollar that is out there.
I have, in my hands, a US $1 Silver Certificate, series 1957. I believe these were still issued up to the money reform in 1963? The US will no longer redeem gold and silver certificates for metals, IIRC.
I think silver certificate redemption was halted in 1968.
I’m not an expert in the field, but from what I’ve heard gold reserves aren’t in very high esteem any more because they don’t yield interest gains. The value of some nation’s gold reserves are billions of dollars - open those monies to the market, and the central bank (and thus the national treasury) can earn some cash.
In the years before the euro, when regulations required every country to fulfil certain conditions (national debt not higher than 60 per cent of the GDP, and the like) in order to get admission to the Monetary Union, many European central banks sold gold in order to earn their public coffers some extra cash. There was a lot of trickery, in all the applicant nations.
Another reason to not have your currency backed by gold is that your currency will fluctuate with the market… so, for the longest time the U.S. had gold brokers buying and selling to maintainits value… and then Nixon, under some encouragment, got us off of the gold standard…
There is a crucial difference. With a gold-backed currency, the money is being issued by someone who owns the gold and is promising to hand it over. With fiat currency, the money is just being put out there with no promises. The only value it has for purchasing gold or any other use is how much other people accept it.
Well, that’s true with gold too…it’s just less obvious.
Again, there is a difference. Currency is symbolic; its value is derived from the economic health of the government that issued it. Gold, on the other hand, is a commodity not a symbol. So while its price may fluctuate it has a value independent of context.
According to the United States Treasury, they stopped EXCHANGING them for silver on July 24, 1968.
Here is the skinny on United States Gold Certificates
Cartooniverse
I would respectfully disagree. Nothing has any intrinsic value, outside of context. If you’re alone on a desert island, gold would have no value to you, while food and water would have high value.
Sorry, but I have to stand by my original point. Gold is gold; it always will be, regardless of how useful or desirable people find it. Currency on the other hand is paper; its status as currency is completely dependent on outside factors. If those outside factors change, currency loses all value (ignoring whatever token value it has as paper).
I don’t think a gold standard necessarily means that every single dollar in circulation had to be backed by an equal amount of gold.
[WAG] I think, under the gold standard, the government had to accomplish two things with its gold reserve. First, they had to have enough gold on hand to meet the needs of banks, who in turn kept enough to pay the small number of people who actually came demanded gold for paper notes. To the extent that people needed to carry $10 or $20–large sums in those days–I suppose most people preferred paper money. Gold was heavy, noisy, and susceptible to being lost. Second, they had to have enough gold on hand to be able to sell off gold when the commodity price went up, so as to be able to control the price and keep it at $20/oz, or whatever the official rate was.
If you substitute gold for “it” in your last sentence it applies equally. Gold is not valuable because of some law of nature, gold is only valuable because people ascribe value to it. The same holds for paper currency. Paper currency only holds its value because people are willing to believe that other people will also hold it to be valuable in the future. Context is everything. As **Northern Piper **has pointed out, one cannot eat gold, and in a certain context it is easy to imagine food being far more valuable as a currency than gold.