How Would a New Gold Standard Work?

“Gold is money. Everything else is credit.”

–JP Morgan

May 19, 2025 — May 19, 2025 – A return to some version of a gold standard has morphed from “gold bug fever dream” to “conceivable” in the past few years. Here’s why:

Since the 1990s, when Fed chair Alan Greenspan became a global celebrity nicknamed “the Maestro” by a credulous press …

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… governments have borrowed ever-greater sums, forcing central banks to create a tsunami of new currency to keep their economies afloat. In the process, they convinced their citizens that a central banker typing “$1,000,000,000,000” and hitting “send” required bravery and judgment. It didn’t, of course, because creating currency out of thin air and handing it to money center banks is the opposite of hard and complex.

But now, finally, the consequences of unchecked credit creation are being felt. Global debt and related interest expense have risen to mind-bending levels, the super-rich are vastly richer (both in nominal terms and compared to the rest of us), and boom/bust credit cycles have become existential threats.

Why is a gold standard likely?

First, a consensus is forming that a new Bretton Woods monetary agreement is imminent. Central banks around the world are buying gold (not T-bonds, bitcoin, or oil) in anticipation.

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Second, populist (i.e., anti-elite) revolutions are sweeping the world, costing the monetary aristocracy much of their clout. As the old scams are exposed and shut down, the resulting policy vacuum will have to be filled with something.

Third, it turns out that a new gold standard was planned all along. Remember Project 2025, that massive think tank document laying out recommendations for Trump’s second term? Well, despite the “never heard of it!” denials, the US is following the script faithfully. According to the Project 2025 Tracker (yes, that’s a real thing), 42% of the document’s recommendations have already been enacted:

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As for monetary policy, Project 2025 recommends the following:

Returning the U.S. to the gold standard (commodity backed money).
Elimination of the Federal Reserve’s dual mandate of maximum employment and price stability replaced with a focus solely on price stability.
Reduce and limit Federal Reserve purchases of financial assets, including federal debt and mortgage-backed securities.
Limiting the Federal Reserve’s lender-of-last-resort function, which offers loans to banks near collapse.
Exploring alternatives to the Federal Reserve System, including elimination of the Federal Reserve and the implementation of “free banking”.

What would a gold standard look like?

Imagine a world where national currencies are simply names denoting specific weights of gold. If the dollar is defined as 1/10,000th of an ounce of gold, the gold price is $10,000/oz.

When a currency’s supply rises (thus risking inflation), holders of that currency will exchange it for gold, lowering the money supply and raising the currency’s value. Voila, inflation gone and the 1% stripped of (at least some of ) its omnipotence.

In that world, former rock star central bankers are simply bank tellers who exchange gold for dollars and dollars for gold — and that’s it. Their main job — and that of the Fed — will be a continuous, monotonous series of modest transactions. It’s really that simple.

And no one will know the central bankers’ names.

John Rubino
John Rubino’s Substack

P.S. from Andrew: Our research in the gold space has proven lucrative so far in 2025 as gold prices continue to trend higher. Gold mining stocks are also on the move, and there’s one subset of the gold space that can offer the best returns.

Your thoughts? Please send them here: addison@greyswanfraternity.com

“Gold is money. Everything else is credit.”

–JP Morgan

May 19, 2025 — May 19, 2025 – A return to some version of a gold standard has morphed from “gold bug fever dream” to “conceivable” in the past few years. Here’s why:

Since the 1990s, when Fed chair Alan Greenspan became a global celebrity nicknamed “the Maestro” by a credulous press …

Turn Your Images On

Why is a gold standard likely?

First, a consensus is forming that a new Bretton Woods monetary agreement is imminent. Central banks around the world are buying gold (not T-bonds, bitcoin, or oil) in anticipation.

Turn Your Images On

As for monetary policy, Project 2025 recommends the following:

Returning the U.S. to the gold standard (commodity backed money).
Elimination of the Federal Reserve’s dual mandate of maximum employment and price stability replaced with a focus solely on price stability.
Reduce and limit Federal Reserve purchases of financial assets, including federal debt and mortgage-backed securities.
Limiting the Federal Reserve’s lender-of-last-resort function, which offers loans to banks near collapse.
Exploring alternatives to the Federal Reserve System, including elimination of the Federal Reserve and the implementation of “free banking”.

What would a gold standard look like?

Imagine a world where national currencies are simply names denoting specific weights of gold. If the dollar is defined as 1/10,000th of an ounce of gold, the gold price is $10,000/oz.

And no one will know the central bankers’ names.

John Rubino
John Rubino’s Substack

Your thoughts? Please send them here: addison@greyswanfraternity.com

Back in April, when we published what we called the Trump Great Reset Strategy, we described the grand realignment we believed President Trump and his acolytes were embarking on in three phases.

At the time, it read like a conceptual map. As the months passed, it began to feel like a set of operating instructions written in advance of turbulence.

As you can expect, any grandiose plan would get all kinds of blowback… but this year exhibited all manner of Trump Derangement Syndrome on top of the difficulty of steering a sclerotic empire clear of the rocky shores.

The “phases” were never about optimism or pessimism. They were about sequencing — how stress surfaces, how systems adapt, and what must hold before confidence can regenerate. And in the end, what do we do with our money?!

Relative to GDP, the net international investment claim on the U.S. economy was 20% in 2003. It had swollen to 65% by 2023. Practically every type of American company, bond, or real estate asset now has some degree of foreign ownership.

But it’s even worse than that. As the federal deficit has pumped up the GDP figures, and made a larger share of the economy dependent on government spending, the quality and sustainability of GDP have deteriorated. So, foreigners, to the extent they are paying attention, are accumulating claims on an economy that has been eroded by inefficient, government-directed spending and “investments.” Why should foreign creditors maintain confidence in the integrity of these paper claims? Only to the extent that their economies are even worse off. And in the case of China, that’s probably true.

As global government interest expense climbed, gold quietly followed it higher. The IIF estimates that interest costs on government debt now run at nearly $4.9 trillion annually. Over the same span, gold prices have tracked that burden almost one-for-one.

Silver has recently gone along for the ride, with even more enthusiasm.

Since early 2023, Japan’s 10-year government bond yield has risen roughly 150 basis points, touching levels not seen since the 1990s.

Over that same period, gold prices have surged about 135%, while silver is up roughly 175%. Zoom out two years, and the divergence becomes starker still: gold up 114%, silver up 178%, while the S&P 500 gained 44%.

According to the American Association of Individual Investors, the average retail investor has about a 70% allocation to stocks. That’s well over the traditional 60/40 split between stocks and bonds. Even a 60/40 allocation ignores real estate, gold, collectibles, and private assets.

A pullback in the 10% range – which is likely in any given year – will prompt investors to scream as if it’s the end of the world.

Our “panic now, avoid the rush” strategy is simple.

Take tech profits off the table, raise some cash, and focus on industry-leading companies that pay dividends. Roll those dividends up and use compounding to your overall portfolio’s advantage.

Back in April, when we published what we called the Trump Great Reset Strategy, we described the grand realignment we believed President Trump and his acolytes were embarking on in three phases.

At the time, it read like a conceptual map. As the months passed, it began to feel like a set of operating instructions written in advance of turbulence.

Silver has recently gone along for the ride, with even more enthusiasm.

Since early 2023, Japan’s 10-year government bond yield has risen roughly 150 basis points, touching levels not seen since the 1990s.

A pullback in the 10% range – which is likely in any given year – will prompt investors to scream as if it’s the end of the world.

Our “panic now, avoid the rush” strategy is simple.

Take tech profits off the table, raise some cash, and focus on industry-leading companies that pay dividends. Roll those dividends up and use compounding to your overall portfolio’s advantage.