Start Your Own Gold Standard

Although we’re based out of the United States, SchiffGold and its Chairman Peter Schiff are passionate supporters of the Swiss Gold Initiative. Our hope is that Switzerland sends a message to the world’s central bankers that people are sick and tired of having their money manipulated. We’ve been doing our best to promote the issue, and Peter has even recorded a popular video appealing to Swiss voters that you can watch here.

However – and we hate to suggest this – what happens if Switzerland does not re-embrace gold and a sound currency on November 30th? The truth is that you do not need to rely on your government and central bank to maintain a gold standard. You can start your own personal gold standard at any time by owning precious metals as part of your own savings – your personal “reserves,” as it were. Jim Rickards explains the concept very well in a recent article:

As long as you can own gold, you can put yourself on your own gold standard by converting paper money to gold. I recommend you do that to some extent. Not all in, but I recommend having 10% of your investable assets in gold for the conservative investor, and maybe 20% for the aggressive investor — no more than that.

Those are pretty high allocations relative to what people have. Most people own no gold, and all the institutions combined have an allocation to gold of about 1.5%. So even if you take the low end of this range, you’re still nowhere near 10%. In fact, institutions could not double their gold allocation even to 3%. There’s not enough gold in the world — at current prices — to satisfy that demand. So it’s got this huge upside associated with it.

Still, central banks don’t want to go to a gold standard. But if gold is a barbarous relic, if gold has no role in the monetary system, if gold is a “stupid” investment, then why do the Chinese have 5,000 tonnes? Are they stupid?

If some scenarios play out, you are going to see the price of gold go up… a lot. And it may go up a lot in a very short period of time. It’s not going to go up 10% per year for seven years and the price doubles. It’s going to chug along sideways, maybe in an upward trend, with a lot of volatility. It will have a kind of a slow grind upward… and then a spike… and then another spike… and then a super-spike. The whole thing could happen in a matter of 90 days — six months at the most.

When that happens, you’re going to have two Americas. You’re going to have an America that was not prepared. Paper savings will be wiped out; 401(k)s will be devalued; pensions, insurance and annuities will be devalued through inflation… Because remember, it’s not just the price of gold going up.”