March 29, 2026 | Big Questions: Is There Enough Gold For a Gold Standard? John Rubino

Money is a complicated subject, and subscribers have lots of questions. I usually answer via email or in a post’s comments section, but some questions recur often enough to warrant a monthly Q&A post. This is the first in that series:

Question: US gold reserves are only worth a fraction of GDP. Does that mean there’s not enough gold to back the dollar in a future gold standard?

The Answer: No. There’s a gold price that makes it work.

Background: What Is A Gold Standard?

A “gold standard” is a monetary system in which a nation’s currency is backed by (or defined as) gold held by the central bank. If the amount of currency in circulation is “40% backed by gold,” that means the value of national gold reserves, at the official gold price, equals 40% of the currency in circulation.

To maintain this balance, the government promises to exchange gold and currency upon request from citizens. If the central bank is creating too much currency (which causes inflation), holders of the currency will convert it to gold, and the central bank will take the cash it receives out of circulation, thus lowering the money supply and slowing the economy. If growth is too sluggish, people will convert their gold to currency and spend it, which raises the money supply and spurs growth.

The result: sustainable growth and low or non-existent inflation.

Also note that a gold standard turns the omnipotent Federal Reserve into a bank teller window that swaps gold and currency, and otherwise stays out of our way — another reason to love the concept.

[Yes, the Great Depression happened under a gold standard. That’s a separate, very interesting subject for a future Q&A]

How Would A Gold Standard Work Today?

To back the US money supply with, let’s say, 40% gold, we simply have to calculate a gold price that balances the equation.

For example:

• M1, a narrow measure of the money supply, is about $19 trillion.
• US official gold reserves are 8,133 tonnes (or 261 million ounces), which, at today’s price, are worth $1.18 trillion.

The Math: A 40% backing of M1’s $19 trillion requires gold reserves worth $7 trillion. Dividing this requirement by the 261 million ounces of reserves yields an official price of approximately $29,000 per ounce.

Math and Politics

There are obviously some variables here. For instance, America’s Fort Knox gold vaults haven’t been audited for decades, so we don’t know how many ounces the US actually has. And the variety of money supply measures guarantees a heated debate, as interested parties pursue divergent goals. But the math itself is straightforward.

So let’s say the monetary authorities conclude that returning to a gold standard is the least bad option on a horrifying list (including but not limited to hyperinflation, bond market collapse, and energy and food supply chain disruptions), and they work out the details of a monetary reset in secrecy.

On the following Sunday night, while US markets are closed, the government announces that henceforth the dollar is just a word for, say, 1/20,000th of an ounce of gold. The official gold price, in other words, is now $20,000. And the Fed stands ready to exchange gold for dollars and vice versa on demand.

The result is a massive devaluation of the dollar and a sudden wealth realignment, as holders of government bonds and dollar bank accounts see their capital diminished while gold bugs and other commodities investors get richer.

This will cause civil unrest in many places. But remember that the other alternatives are worse. So we muddle through the turmoil and emerge at the other end with sound money and, therefore, a healthy financial system going forward.

To sum up, there’s plenty of gold for a gold standard. The government just has to price the metal correctly.

Why We’re Gold Bugs

Two things make this a compelling investment thesis.

1. A monetary reset is now inevitable. US government debt has risen to levels that make normal interest rates impossible because the resulting interest payments are debilitating (see below). But a return to zero or negative interest rates will, as we discovered earlier in this decade, cause inflation to spike to catastrophic levels.So the world’s central banks are out of palatable options, and a crisis is coming that will reshape or replace parts of the financial system.

2. The most obvious reset — a return to a gold standard — requires a much higher gold price. That makes gold (and silver, and the gold/silver miners) seem like bargains, which is why so many smart people are loading up on commodities

John Rubino March 29th, 2026

Posted In: John Rubino Substack

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