What if the US dollar is 100% backed by gold and silver?

The US Federal Government is spending about $1.6 trillion more than they take in from taxes, which is $1600 billion. The US national debt increased by $400 billion in the last 3 months, which confirms the numbers. They are not able to fix this problem any time soon. This problem could not be fixed even if they taxed incomes at rates of 100% per year. And they are mostly just printing this money, which creates inflation, which means that prices will go up, for everything, including, and especially, for Silver and gold.

Today, in the USA, only about $3.5 billion is being spent annually on silver, (estimated at 100 million oz. x about $35/oz.) and only about $3.4 billion is being spent annually on physical gold (estimated at 2 million oz. at about $1700/oz.), for a total of only about $7 billion spent on precious metals to protect itself from inflation. But the USA has about $18 trillion of cash, savings, and short term bonds in the banking system.

So, mathematically the reality is that new money creation is about $1600 billion, out of $18,000 billion, which is an annual increase of nearly 9%, and yet only $7 billion out of $1600 billion of new money creation is being spent on precious metals, which is only 0.4%, or expressed another way, is only $1 out of every $229 dollars of newly created money being spent on silver and gold, and only $1 out of $2,571 of money in the banks is being spent on silver and gold, which is only 4% of 1%.

"What if 100% of US paper money had to be backed by all the US gold that the US government is likely to have left?"

What happens when the entire US money supply is spent on Silver and gold, over a nice, slow pace, of over an entire year. Now, think about that again. This is still well before hyperinflation really kicks in, well before people are spending their entire paychecks on silver and Gold the instant that they get paid, and well before the government starts printing new money with several more zeroes at the end of it.

So, coming back to the question, what if 100% of US money is spent on silver and gold in a year? $18 trillion, or $18,000 billion. Half for gold is $9,000 billion, spent on, say 2/3rds of world gold production of 75 million oz., would be 50 million oz. $9,000,000 million spent on 50 million oz. leads to a price of$180,000/oz. for gold. And if $9,000 billion is spent on 2/3 of world annual silver production of 700 million oz., which is 467 million oz., that would be $19,272/oz. for silver.

It's a very simple calculation $18 trillion divided by 261 million oz. of official US gold = $68,966/oz. Given the previous calculations, silver could hit a 10 to 1 ratio to gold, which would be about $7,000/oz.This is what the gold and silver prices "should" be, given the givens of honesty, and living up to the basic pledge of FDIC "government" insurance on all bank accounts.

- Jason H.

Think and Act.