Gold Standard:
Are there Currencies Backed by Gold?

Are there any currencies backed by gold?

If you’re here – you’re looking for answers. You know your dollar, or your euro, or your pound sterling is little more than paper (or digital) money… and you know, instinctively, that this is not a good situation for your hard-earned cash.

Why? Because gold — something with a solid, 5,000 year history of value — doesn’t back your currency. In fact, nothing does. That means your savings can lose its value like that.

Think Argentina. Or Greece. Or Cyprus.

And in a world as volatile as this one, that kind of fragility is worrisome.

Naturally, you want a backup plan. So – is there a currency out there that’s backed by gold? There’s good news and bad news.

  1. No. There’s not a single currency out there that’s on the gold standard.
  2. BUT, (and here’s the good news) — You can easily and safely create your own gold standard.

You yourself, without any government intervention, can protect your own hard-earned savings.

In this piece, we’ll show you how to do just that.

We’ll take you through a few simple, iron-clad, time-tested solutions that help ensure that your money is more than just a piece of paper.

Do You Want The Info Right Away?​

Do You Want The Most ACTIONABLE Info Right Away?

Then download our free Perfect Plan B Guide. It’s a quick-start guide on how to take matters into your own hands. On how to do yourself what complacent politicians and corrupt governments won’t.

It’s a detailed guide on how to build your own gold standard and divorce yourself from the system.

Inside you’ll learn…

No-Brainer Strategies to Ensure You Thrive No Matter What Happens Next

  • Protect your wealth against inflation and other government threats
  • Invest outside the mainstream and generate strong returns with minimal risk
  • Protect your assets and become invincible to financial crises and frivolous lawsuits
  • Legally slash your tax bill no matter if you're an employee, business owner, self-employed professional or full-time investor
  • Obtain a valuable second passport… potentially for free

Learn about these and many more strategies in our free Perfect Plan B Guide.

A Quick History of the Gold Standard

More than 5,000 years ago, people in Mesopotamia (the Fertile Crescent area) started using primitive commodity money as a means of enhancing trade for their agricultural goods. About 3,000 years ago, metal coins began circulating. By 1500 BC, Egyptians were leveraging Nubian gold to build their empire’s wealth. And by 50 BC, the Romans were issuing gold coins in the from of the aureus (which is why the periodic table’s symbol for gold is AU).

Paper money eventually was introduced, but those currencies still maintained a tight link to gold, in that the paper could be exchanged for physical gold on demand. This gave the paper “value”.

So, for more than 99.2% of human civilization, money actually meant something… right up until 1971 when Richard Nixon ended any remaining link between the dollar and gold.

Prior to that, gold had helped cement the economic growth of the United States, and had helped stabilize currency values for decades, especially by the mid-19th century, when global trade started kicking into high gear. The US Treasury Secretary Salmon Chase printed the first US paper currency in 1861, and other countries started doing the same thing. This allowed for global transactions without having to use bulky gold bullion and coins.

Trading this way worked because those countries adopted the gold standard, which, just as in ancient societies, guaranteed that the government would redeem paper money for its value in gold. Assured of other paper currencies’ value, — as it was tied to something real — trade with the US boomed.

By 1913, Congress further formalized gold and currency standards by creating the US Federal Reserve.

Then World War I broke out. In order to print enough money to pay for their military operations, many European countries left the gold standard… creating hyperinflation, which, in part, later led to the rise of Adolf Hitler and thus WWII.

Lesson learned – for a moment. Between the two wars, Europe largely went back to the gold standard.

War was over, but things weren’t going smoothly from an economic standpoint. Once the Great Depression hit in the late 1930s, Americans started hoarding their gold.

President Franklin Delano Roosevelt didn’t like that; the Federal Reserve had been raising interest rates to make the dollar more valuable, but this depleted US gold reserves. All of this combined to make life more expensive, and to make people more and more wary about cash.

So, they hoarded more gold.

FDR decided to act: In 1933, in response to a run on gold reserves, he temporarily closed the banks and forced them to surrender all their gold. During this period, he also forced Americans to exchange their gold for dollars, which created the massive precious metal reserves at Fort Knox. (Fort Knox is the common name for the United States Bullion Depository, a fortified vault building inside the United States Army post at Fort Knox, Kentucky, which is supposed to contain the majority of the US’s official gold reserves.)

In January 1934, FDR prohibited the private ownership of gold except under license, and he devalued the gold dollar by 40 percent (unilaterally increasing the price of gold from about $20 per ounce to $35 per ounce).

That, conveniently, made the reserves at Fort Knox nearly double in value.

About Gold Confiscation…

If you own gold, you should strongly consider storing it offshore. It’s completely legal and if done correctly doesn’t even need to be reported. This can protect you from confiscation, frivolous litigation and social unrest.

Our favorite ultra-safe storage facility even allows you to make and receive peer-to-peer loans backed by precious metals.

This is a great way to get liquidity without selling if you own gold or generate a safe, strong investment return on your cash.

You can learn more about this strategy inside our Perfect Plan B Guide on page 21.

You could call this the real end to the gold standard, but FDR still allowed the dollar to be somewhat tethered to gold, especially after the Depression ended. And why not? By then, the US held more gold than anyone else.

This made the dollar soar in esteem around the world: Since the dollar was pegged to gold, and the US had the most gold, other countries started judging the worth of their currencies in terms of the dollar.

That made the dollar the world’s “reserve” currency.

And it helped make the US very, very rich.

America Becomes Too Successful - and Too Indebted — and Kills the Gold Standard

In the aftermath of WWII, the US prospered as Europe and the rest of the world languished, mopping up their losses. The gold standard held, and the dollar was doing quite well.

By 1960, the US had more than $19 billion in gold reserves, which covered (via the gold standard) all the dollars around the world.

But then things started to get hairy. As the US economy grew — the Baby Boomers are the richest generation in the history of the world — Americans bought more and more global imports.

That meant other countries held more and more dollars (in exchange for those goods). An imbalance ensued, and other governments started to worry that Uncle Sam couldn’t back up all those dollars with gold.

By 1970, those fears proved true. The number of dollars held around the world tripled what the US held in gold at Fort Knox. Worse, the US economy was lagging to the point of being stagnant — hence the term “stagflation”, which described the enormous inflation the country was undergoing.

President Richard Nixon looked around, took a deep breath, and on August 15, 1971, signed the order breaking the Fed’s authority to redeem dollars with gold.

In one moment - poof — no more gold standard.

In response, other countries started printing more of their own currency. (This is generally a very bad idea that leads to inflation.)

Over the ensuing decades, the dollar has held a finger-grip as the world’s reserve currency, but thanks to Uncle Sam’s enormous $20 trillion debt and the rise of Asia, that very well could be changing over the next few decades.

So, that’s the history of the gold standard. Will it come back? Perhaps, but probably not; there’s way too much money flooding the system.

That means that paper currency is worth nothing… it’s worth the paper it’s printed on.

When one single person (in the case of the US) or just a tiny handful of people (elsewhere) can conjure trillions of dollars, euro, yen, and renminbi out of thin air… can control the lever that dominates the entire economy, that’s a scary thing.

When you control the money, you control everything

Financial markets, consumer prices, risk perceptions, investment habits, savings rates, hiring decisions, pay raises, sovereign debt, housing starts, etc.  

And in the United States, that decision, that moment, is controlled by one — out of 300 million people — one person.

This irrational, arrogant system presupposes by design that a central banker is smarter than everyone else; that markets are incapable of determining appropriate risk and value; that he is more effective at allocating our time, capital, and labor than we are.

Future historians will be dumbfounded when they see how long people allowed worthless, unbacked fiat paper to pass as money.  

In fact, it’s nothing less than extraordinary (in a negative way) that most people today happily accept a digital abstraction of paper currency controlled by a single individual as ‘valuable’.

Except… when there are hard times.

Why People STILL Return to Precious Metals During Hard Times - Gold Standard or No

Gold’s been a free agent in the market for nearly four decades now, and its price its exponentially higher than it was when FDR and Nixon started messing with it. (Gold hit one of its  all-time highs, soaring over $1,800 in 2011.)

People go back to gold again and again — every time there has been a recession, or the threat of inflation, or a big scare in the market, gold goes up. In fact, it hit that all-time high just days after the 9/11 crisis.

No matter what’s going on with the market, people know that gold is an asset with real value.

Why? For one thing, it’s scarce: You can’t, on a whim, print more of it. One single person cannot control it, the way central bankers can control the manufacturing of currency.

For another thing: It’s divisible: it can be made into large bullion bars or small coins.

And most importantly, it is universally recognized as valuable. If I take a Canadian Maple Leaf 1-oz coin into a coin shop in Vienna, I can exchange it for cash, no questions asked. If the proverbial stuff hits the fan, and my paper money becomes about as valuable as toilet paper, I can still use gold to survive.

That’s why it’s important to create your own gold standard.

How to Create your OWN Gold Standard - a Workable Plan B

In this section you’ll immediately learn the first steps for creating your OWN solid, personal gold standard

If you live, work, bank, invest, own a business, and hold your assets all in just one country, you are putting all of your eggs in one basket.

You’re making a high-stakes bet that everything is going to be OK in that one country — and in that one currency — forever.

All it would take is for the economy to tank, a natural disaster to hit, or the political system to go into turmoil and you could lose everything—your money, your assets, and possibly… even your freedom.

(Just one example: Look at what even a few years ago would have been unthinkable in the US – the rise of openly Socialist candidates in the political system. Do you think they have your best financial interests at heart? As a one leftist writer recently tweeted: “People like free stuff. You ‘pay’ for it by raising taxes on the wealthy & corps, which people also like.”)

Think it’s unlikely that the US economy could tank?

The national debt is currently $21 trillion and counting.

That’s 21 with twelve zeros.

And it’s set to go up even higher – by about $1 trillion per year by 2020.

There is no way, according to any calculator on Earth, that Uncle Sam can get out from under this. None.

And that, friends, spells eventual recession… or worse.

Then look at the geopolitical risks out there right now. I don’t care when you read this; the world is likely not a safe place for your money.

Luckily, there are a number of simple, logical steps you can take to protect yourself from these ever-present risks.

I call the collection of such steps a Perfect Plan B. The steps are all actionable, and they all make sense… no matter what is going on in the world, at home, and in the economy.

They protect you from a neighbor suing you when he trips on your garden hose and breaks his hand. (He’s a surgeon. He goes after your livelihood, since your hose just ruined his.)

They protect you from an angry ex who might be going after your assets, even decades later. (A guy in England who made millions years after his divorce was sued by his ex-wife, who claimed she deserved some of that money — again, earned after their marriage ended — … and the court made him pay her.)

They protect you from a government that might sick the IRS on you and seize your assets because you tweeted something pro-libertarian or anti-Left.

They protect you from ambulance chasing lawyers, who give up their witch hunt on you when they realize how hard it is to penetrate your financial shell.

And they protect your savings from the crazy, unpredictable ups-and-downs of the market.

They also help you to grow your money, especially in times of uncertainty. They open up a world of investment opportunities… well beyond the plain vanilla stocks-and-bonds circuit.

How To Create Your Own Gold Standard & Plan B

Download our most actionable step-by-step guide on how to create a Perfect Plan B.

It’s a detailed guide on how to build your own gold standard and divorce yourself from the system.

Inside you’ll learn…

No-Brainer Strategies to Ensure You Thrive No Matter What Happens Next

  • Protect your wealth against inflation and other government threats
  • Invest outside the mainstream and generate strong returns with minimal risk
  • Protect your assets and become invincible to financial crises and frivolous lawsuits
  • Legally slash your tax bill no matter if you're an employee, business owner, self-employed professional or full-time investor
  • Obtain a valuable second passport… potentially for free

Learn about these and many more strategies in our free Perfect Plan B Guide.

First Steps

So what are some of these steps? For one thing, as part of your Plan B, you buy some physical gold.

What kind? Good question.

Step 1 - Buy Gold and Store it Overseas

In short, it’s a good idea to have both coins and bullion.

But for asset protection purposes, for the ability to hedge against what might happen in your country, I like to send a portion of my savings overseas, to a secure storage facility, in the form of bullion bars.

It’s legal, and it keeps a portion of those cash savings safe and secure. The facility I like best is in Singapore — to me, they have the best, most well thought out security system in the world… and they also let you do peer-to-peer lending or borrowing based on gold instead of on paper (fiat) currencies.

We cover this storage facility and their precious metals based peer-to-peer lending platform in more detail  on page 21 of our Perfect Plan B Guide

Step 2 - Open a Bank Account Abroad

Buying gold is only the first step in ensuring that part of your savings hold value. You also need to diversify the currencies that you do hold.

In other words, don’t just have dollars. Or only euros. Or only Australian or Canadian dollars.

The best way to do diversify your currency holdings in a practical way — no crazy day trading here —  is to open a bank account outside your home country.

This is a good idea for a number of reasons, many of which we talk about in this banking article. For one thing, many foreign bank accounts allow you to hold multiple currencies, thereby immediately getting  you out of your one and only currency, which solves part of the “all your eggs in one basket” problem.

The Hong Kong Dollar is the perfect currency for this…

Since 1983, the Hong Kong dollar (HKD) has been “pegged” to the US dollar at 7.8, +/- a very narrow range.

This means that, for US dollar investors, you could deposit US dollars at a bank in Hong Kong, and then convert those US dollars into Hong Kong dollars (and back) at minimal cost.

Holding Hong Kong dollars makes a lot of sense.

If the US dollar goes through a period of strength, the Hong Kong dollar will mirror that strength.

But if there’s ever a major loss of confidence in the US economy and the US dollar starts to depreciate rapidly, the Hong Kong Monetary Authority (country’s central bank) could simply “de-peg” and let the Hong Kong dollar appreciate versus US dollar — thereby preserving the purchasing power of your savings.

So, holding Hong Kong dollars gives you ALL of the benefits of holding US dollars, but with free downside protection in the event of any major US financial catastrophe.

Although you can hold your savings in the Hong Kong dollar in many banks around the world, we recommend you open an account in Hong Kong itself – USD-to-HKD currency conversion fees are minimal there.

You can download our Ultimate Offshore Banking Guide for everything you need to open an ultra-safe Offshore Bank Account.

Inside you’ll learn:

  • How to open an ultra-safe Offshore Bank Account in Hong Kong (Our #1 banking destination)
  • How to ensure you pick the SAFEST bank (Some offshore banks could end up even riskier than your domestic bank...)
  • How the United States & European banking systems compare to the offshore world.
  • And much, much more in this comprehensive 123-page PDF

You can learn more in our in-depth article about offshore banking here.

There’s another big reason for opening an account overseas:, It puts part of your cash into a banking system that is much more solid than the one you’re entangled in.

Few people ever give much thought to the safety and security of their bank.

And why should they? After all, banks go out of their way to instill an overwhelming sense of confidence that they’re rock solid.

They spend spectacular amounts of money on ornate lobbies in giant buildings with marbled floors and buy the naming rights to football stadiums.

The unfortunate reality, however, is that many banks in the United States, Europe and the rest of the world are in bad shape.

Most Western banks have very little cash on hand. When you log on and see you have $10,000 in your savings account, that doesn’t mean the bank actually has that ten grand in a vault with your name on it.

Far from it. Instead, it holds only a tiny fraction of your money. That’s why the name describing the Western banking system is “fractional reserve.”

Back in the day when banking referred to the actual “banco” (bench) where transactions took place, bankers would actually hold your money. Maybe they’d invest a tiny bit of it to make a little profit, but your money, by and large, stayed safe. You paid them for this safety, and it worked out well for both parties.

These days, though, banks take most of your money and run with it… sending it into very bad ideas that they deign to call investments. Remember the toxic derivatives scandal — you know, the one that caused the 2008/2009 financial collapse?   Most Western banks are earnestly engaged in subprime and other toxic loan packages even to this day.

Is your bank solvent?

That’s right –  not even a decade after these risky loans nearly brought down the entire global economy, subprime is back. In fact, it was the fastest growing “asset” among American banks.

Over the last twelve months, the subprime volume among US banks doubled, and it’s on pace to double again this year.

Of course, they don’t call it ‘subprime’ anymore. Now it’s called “non-QM”, meaning “non-qualified mortgage”.

But it’s exactly the same thing – they’re irresponsibly lending your money to borrowers who don’t qualify for a conventional loan because of their pitiful credit and inability to make a down payment.

If you want to see some concrete numbers, and figure out whether your bank is anywhere close to solvent, see our Offshore Banking article (with a link to our Ultimate Offshore Banking Guide) here.

Bottom line: Most Western banks are not solvent. Not even close. If there’s a major crisis, your money is at grave risk.

Hong Kong and Singapore, in contrast, are known for their solid, highly solvent banking systems. (We have a comprehensive guide to banking jurisdictions — and specific banks we recommend — that you can find more about here.)
So you can create your own gold standard, if you will, by putting part of your cash somewhere much safer, more solvent, and less scandalous.

But how do you even open a bank account abroad? Our Perfect Plan B Guide  shows you, step-by-step.
We also answer frequently asked questions about opening an account abroad.

For example – Is it legal? (Yes!) How much can you store abroad before you have to tell Uncle Sam, if you’re a US citizen? What are the IRS’s reporting requirements? We go into detailed answers on all of these questions in our Perfect Plan B guide.

Step 3 - Do what Warren Buffett Does - Know When to Hold ‘Em

One of the most prudent things you can do to hedge against market volatility right now (mid-2018) is to stay out of the market… and hold CASH.

There are a few ways to do this, but first, let’s take a quick look at why you want to hold cash as part of your gold standard strategy:

Stock markets around the world are also near all-time highs, or at least multi-decade highs– including the United States, Germany, UK, Japan, etc.

And there’s no shortage of companies, including some very prominent brand names, that perennially lose money, go deeper into debt, and fail to generate enough revenue to even be able to afford their interest payments.

Yet, even those stock prices are near record highs.

There’s so much that defies basic common sense.

Recently, we discussed that Warren Buffett, the most successful investor in modern history, is NOT buying in this market.

In fact, he’s selling… and stockpiling a mountain of cash that he’ll deploy when markets turn the other direction.

Buffett knows that markets always move up and down in cycles.

‘Up cycles’ are precisely the time to sell– when everything is irrationally expensive.

And ‘down cycles’ are the time to buy– after a major crash or correction.

This strategy is simple and effective: buy cheap. Sell expensive.

This current up cycle has lasted almost ten years. And with all of these record high asset prices, we’re overdue for a major correction.

As Buffett wrote in his most recent annual report, “history is on our side. . .”

Once markets finally do correct, there will be some incredibly high-quality, trophy assets available to purchase for bargain prices… the sort of legendary investments that can create lasting, lifelong wealth.

And you can wait patiently by parking your cash in a handful of safe assets, preserving your wealth — and even generating a solid return — while you wait for the monster opportunities that are coming.

For example, I’ve written extensively about holding cash in very short-term Treasury Bills. That’s what I’m personally doing.

While a bank pays 0.02% interest, T-bills pay around 2%, 100x as much.

Buffett has parked over $100 billion in short-term T-bills.

Another solid idea is holding a small portion of your savings, at home, in a safe. I personally hold a few months’ worth of expenses in my home safe. This gives me great liquidity, as well as a backup plan if banks go into crisis.

Steps like these are simple. They make sense, no matter what happens. (In what universe is it a bad idea to have some cash on hand? Or to diversify your money out of one single currency? They’re both good ideas, whether the economy is in euphoria or dire straits.)

They’re also highly actionable, meaning you can do many of them right from your computer.

Most of all, they’re effective… helping to protect (and grow) what you’ve worked so hard to make and save.

Do You Want The Most ACTIONABLE Info Right Away?​

Then download our free Perfect Plan B Guide. It’s a quick-start guide on how to take matters into your own hands. On how to do yourself what complacent politicians and corrupt governments won’t.

It’s a detailed guide on how to build your own gold standard and divorce yourself from the system.

Inside you’ll learn…

No-Brainer Strategies to Ensure You Thrive No Matter What Happens Next

  • Protect your wealth against inflation and other government threats
  • Invest outside the mainstream and make up to 12% with minimal risk
  • Protect your assets and become invincible to financial crises and frivolous lawsuits
  • Legally slash your tax bill no matter if you're an employee, business owner, self-employed professional or full-time investor
  • Obtain a valuable second passport… potentially for free

Learn about these and many more strategies in our free Perfect Plan B Guide.

Why a Solid Plan B is so important to your Financial Freedom

A lot of armchair finance experts talk about reducing personal debt, increasing savings, and investing in retirement accounts.

These are all good things, but they’re nowhere near enough if you’re truly invested in your financial freedom.

Financial freedom is about much more than being debt-free. And diversifying is about much more than just balancing your stock and bond portfolio.

True diversification is international.

It gets you out of the market volatility of index funds.

It protects and helps your money grow.

And in a financial or other type of crisis, it helps ensure you have choices.

That’s why my team and I spent months putting together our Perfect Plan B Guide. I’ve personally followed these steps to ensure that my assets — and myself — can withstand whatever craziness the markets — and life in general — throw at me.

For more on how to truly diversify, protect and grow your money… and to get step-by-step details on creating your own personal gold standard to protect your cash, download Sovereign Man’s FREE Perfect Plan B guide, here.

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