Money is ultimately a construct of trust. For centuries, that trust was placed not in politicians, but in the physical reality of metal. The gold standard acted as a governor on the engine of global finance, providing a tangible limit to government excess.
Today, that governor has been removed. Understanding the gold standard is essential for grasping why our current currency behaves the way it does—and why its purchasing power continues to erode.
Price Stability
Money supply was naturally constrained, keeping long-term inflation negligible.
Fiscal Check
Governments could not print their way out of debt. Deficits had to be financed by taxes or borrowing.
Predictability
Fixed exchange rates reduced chaos in international trade, fostering investment.
Gold Standard vs. Fiat System
| Feature | Gold Standard | Fiat Currency System |
|---|---|---|
| Backing | Intrinsic: Physical reserves. | Extrinsic: Government decree. |
| Supply | Geological: Limited by mining. | Political: Unlimited discretion. |
| Inflation | Low: Inherent stability. | High: Prone to devaluation. |
| Discipline | Mandatory: Restrains debt. | Optional: Encourages deficits. |
The Case for a Personal Gold Standard
While a return to a government gold standard is unlikely in the near term, individuals are not bound by government policy.
By allocating a portion of your portfolio to physical precious metals, you institute a personal gold standard—recapturing the stability that modern central banking has abandoned.
Restore Your Financial Discipline
Don't wait for the government to fix the money. Fix your own money with gold.