In a recent article I pointed out that the surest path to saving the fiat dollar from destruction was to make it fully redeemable in gold at whatever that price happened to be on a certain day in the near future. Making the dollar “as good as gold” would force the government to pursue spending discipline, knowing that new spending could not be funded by printing money “out of thin air” but by cutting a like amount of current spending, raising taxes, borrowing honestly in the bond market, or some combination of these methods. In order to increase total spending without resorting to one of these methods would require that the government obtain more gold with which to back the increased spending. But what would the exchange rate of gold to dollars look like? In other words, how many dollars would one have to present in order to obtain an ounce of gold or, alternatively, how many dollars would one receive by presenting an ounce of gold?
The short and totally honest answer is “whatever the market determines the price of gold to be in dollars on the day of transition.” But surely we can lay some broad outline of the likely price or its outer limits.
The “Gold Coverage Price”
One way to do this is to calculate what I call the “Gold Coverage Price”. Simply divide the number of ounces of gold held by the treasury into the monetary base. The monetary base is also called standard money. It is comprised of commercial bank dollar reserves held in the banks’ reserve accounts at the Fed plus physical bank notes in the economy; i.e., bank vaults and elsewhere such as business tills, your wallet, cookie jar, etc. Only the Fed can create or destroy standard money. It does so via what it calls “Open Market Operations”. When the Fed buys an asset, it creates standard money. When it sells an asset, it destroys standard money.
As of October 2025, the date of the most recently released monetary statistics by the Federal Reserve Bank of St. Louis, the monetary base was $5.3019 trillion. The US Treasury has not changed its report of gold holdings for several decades nor has its holdings been audited for several decades, despite valiant efforts by congressmen such as Ron Paul. The reported amount is 261.5 million ounces of gold. There is legitimate debate about whether all of this gold is physically available, whether some has been leased or swapped, and whether official figures are complete. In the absence of definitive contrary evidence, however, we must take the published number at face value that the full 261.5 million ounces are there and can be used to redeem monetary base dollars.
Gold redeemability at $20,000 per ounce?
The math is straight forward. Divide the monetary base’s roughly five trillion dollars by the Treasury’s 261.5 million ounces to get $20,275 as the price to redeem an ounce of gold. Put another way, as the last dollar is presented to the Treasury the last ounce of gold would be handed over. Of course, it would never come to this, because somewhere after redeemability is declared the market would have confidence that such redeemability would indeed be honored or the market would lose confidence and trigger a crisis. Nevertheless, it is very likely that the dollar market price of an ounce of gold would far surpass the roughly five thousand dollar market price today.
An Historical Perspective of the Gold Coverage Price
For the purpose of illustrating the plight of the dollar I offer the following chart which shows the monetary base, treasury gold holdings, and the resultant “Gold Coverage Price” for representative years since the dollar was linked to gold at $35 per ounce at the 1944 Bretton Woods conference. (Source: World Gold Council)
Date Monetary Base ($billions) Ounces of Gold (millions) Gold Coverage Price
1945 $35,000 629.6 $56
1960 $50,700 715.3 $71
1968 $67,700 558.1 $121
1971 $81,200 414.9 $196
1998 $491,200 319.9 $1,535
2025 $5,301,900 261.5 $20,275
Note that the monetary base has increased every representative year and that, except from 1945 to 1960, the number of ounces of treasury gold has decrease every year. The result is that the “Gold Coverage Price” has gone up in all representative years. Even in 1945, the “Gold Coverage Price” was higher than the official exchange price of $35 set at Bretton Woods. Also note that in 1971, the year that President Nixon “temporarily suspended” gold redemption, the “Gold Coverage Price” was a modest (by today’s standard) $196. So devaluing the dollar to gold, instead of suspending redemption, to that amount, or somewhat less, and promising to debase the dollar no further, could have kept the US and the world on a credible gold standard.
But such was not to be. In the next twenty-seven years—1971 to 1998—the monetary base went up by a factor of six times. Then it really took off! From 1998 to the end of 2025, the monetary base went up by almost eleven times while treasury gold holdings fell by eighteen percent. As a result the “Gold Coverage Price” is thirteen times higher over that twenty-seven year period.
An Existential Crisis for the Dollar
It is clear that the government has lost all spending discipline and it would be foolish to believe that it will suddenly regain that discipline absence an external control, namely gold. This is an existential crisis for the dollar.
© Patrick Barron 2026 Website
