USD on a gold standard?

Judy Shelton proposed a long bond convertible into gold recently. She obviously believes in the integrity of US gold reserves: I don’t.

Shelton is a well-known sound money advocate, and former economic advisor to President Trump. Earlier this month she set everyone buzzing with a proposal to issue a new 50-year Treasury bond redeemable in gold. If her plan is to be followed through, it would not be gold convertibility for the dollar: merely, an alternative to inflation linked TIPS.

We can argue about how things for the dollar would evolve from there and the likelihood that this would be the first step to a new gold standard for the dollar — but that is a separate debate. Anyway, dollar-centric Fed and Treasury officials would dismiss it as providing too much uncertainty to government financial obligations, because they would argue that gold is unpredictably volatile and they would not want to see a debate about its monetary role revived.

But there is a far greater problem in the background, and that is the integrity of the US Treasury’s gold reserves. Do they actually exist, and if so to what extent? And here we come back to the findings of analyst Frank Veneroso over twenty years ago.