Gold was also used as the world reserve currency up through most of the 20 th century; the United States used the gold standard until 1971 when President Nixon discontinued it. The second time was the final run-up at the end of the 1970s, culminating in the famous spike to $850 per troy ounce, swiftly followed with a near two-decade bear market. Other precious metals could be used to set a monetary standard; silver standards were common in the 1800s.
Even backing 40% of the US monetary base the price of gold would need to be $3,898 per ounce. Selected technical market reports may also be posted on the MGI Securities website and davidchapman.com.The materials contained herein are protected by copyright, trademark and other forms of proprietary rights and are owned or controlled by MGI Securities or the party credited as the provider of the information.MGI SECURIITES is a member of the Canadian Investor Protection Fund ('CIPF') and the Investment Industry Regulatory Organization of Canada ('IIROC').All rights reserved. Last week COTW noted that the US monetary base had broken out of an 18 to 20 month sideways pattern. Units: Billions of Dollars, Seasonally Adjusted Frequency: Biweekly, Ending Wednesday Notes: Updates of this series will be ceased on December 19, 2019. In October 2008, the US public debt stood at $10.7 trillion. A recent screen-shot of the U.S. debt clock which is rapidly closing in on $20 trillion. If the US were to use the gold to back the US monetary base, the gold price would have to be $9,745 per ounce. The nation's debt is now over $26.2 trillion ballooning towards $30 trillion through the end of this year into 2021. From that date onward, aside from some sales in 1975 and 1978, the US official gold reserves have remained steady. This report is not to be construed as an offer or solicitation to buy or sell any security. This is a change of -2.87% from last month and 52.74% from one year ago.The US Monetary Base measures the overall total circulation of money that is throughout the United States through various sources like the federal reserve, banks, and consumers. The monetary base roughly matches the size of the Federal Reserve balance sheet, which indicates the level of new money creation required to prevent debt deflation. Prior to 2008, this metric had steadily increased over time. The monetary base roughly matches the size of the Federal Reserve balance sheet, which indicates the level of new money creation required to prevent debt deflation. Two peak periods can be observed in the above chart when the value of the gold reserves exceeded that of the US monetary base. Monthly, Not Seasonally Adjusted. This interactive chart shows the ratio of the gold price to the St. Louis Adjusted Monetary Base back to 1918. Dow to Silver Ratio. Information may be available to MGI Securities that is not reflected in this report. The sharp rise in the US monetary base since 2008 has coincided with the quantitative easing (QE) programs of first QE1 then QE2.QE2 ended in June 2011. For most of the 182 years between 1789 and 1971, the United States embraced the principle of a dollar linked to gold — at first, at $20.67/oz., and then, after 1933, $35/oz. This is a change of -2.87% from last month and 52.74% from one year ago. The 5-year average annual shortfall based on GAAP has been $5.2 trillion. Previous gold bull markets ended when this ratio crossed over the 4.8 level.Backlinks from other websites are the lifeblood of our site and a primary source of new traffic.If you use our chart images on your site or blog, we ask that you provide attribution via a link back to this page. In the normal course of its business, MGI Securities may provide financial advisory services for issuers. For advanced charting, view our full-featured Interested users can access the not seasonally adjusted version of this series from the H.3 release, BOGMBASEW. Gold vs. the U.S. Dollar . And if US citizens decided to also cash in their savings accounts, then that figure drops to 3.5%. All material presented in this document may not be reproduced in whole or in part, or further published or distributed or referred to in any manner whatsoever, nor may the information, opinions or conclusions contained in it be referred to without in each case the prior express written consent of MGI Securities Inc. The monetary base includes both cash in circulation and that held in bank reserves. For more information, see our Please select an option below and 'Save' your preferences.You can update your cookie preferences at any time from the 'Cookies' link in the footer. Gold is also closely correlated to the US debt. In other words, the ratio of cash in circulation plus the value of all publically held checking/savings accounts to the official US gold reserves is 28.5 to 1. The chart below shows that correlation. This flow of gold reversed its course beginning in the late 1950s until the gold window was closed – and Dollars were no longer swapped for Gold Bullion – on August 15th 1971. The monetary base includes both cash in circulation and that held in bank reserves.