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90 tons of the good stuff

By freeman, on December 11th, 2009

gold_barsJust had a quick look at the Reserve Bank Quarterly Bulletin yesterday.  Every three months the central bank releases a comprehensive bulletin of real and financial sector data.

Perusing the monetary statistics I was again reminded of how easily South Africa could back its note and coin in circulation with gold bullion and move toward sound money.  Eustace Davie from the Free Market Foundation has a good short piece on it here.

According to the central bank stats, SA currently has about R32 billion worth of physical bullion in reserve.  Note and coin in circulation is about R57 billion, leaving some R25 billion un-backed by bullion.  It means the Reserve Bank would have to buy just R25 billion worth of gold, costing only around 10% of its R270 billion worth of foreign exchange reserves (dollar, euro, pound).

This would amount to roughly 90 tons of gold, less than half of the recent ad-hoc purchases of gold by the Indian central bank.  Physical gold supply is getting tight but this is definitely doable.

Monetary freedom so close yet so far.

By freeman, on December 11th, 2009 | Category: Big Issues

4 Responses to “90 tons of the good stuff”

  1. ad says:
    November 4, 2010 at 22:23

    Freeman, it is Freegold that is the way forward, not a gold backed rand. A physical only gold market with no fractional reserve element or paper gold to manipulate the price. All currencies floating against it not backed by it. Gold must set the price not the paper Rand!

    An international wealth reserve asset par excellence.

    http://fofoa.blogspot.com/2008/09/freegold.html

    • freeman says:
      November 5, 2010 at 08:23

      Agreed. We can back notes and coin with gold but that would not necessarily erradicate the ability of the central bank and commercial banks to introduce new gold reserves into the banking system and then allowing commercial banks to pyramed their fraction lending scheme on top of it. We need gold to be money but also a changing in fractional banking laws and changes to the definition of a deposit from a debt to a bailment.

  2. ad says:
    November 7, 2010 at 21:03

    I dont think there is any way to circumvent new production being added as that would just create a black market for the new gold just like blood diamonds. There would not be any privately held gold mines, that would be like owning the printing press, or they would be taxed very heavily. The countries who have gold would be in a fortunate position, much like those who hold gold now as opposed to the paperbugs.

    I dont think fractional banking laws need to be changed, it is the roles of gold and currency that need to change, or more to the point, to be set free from manipulation and be allowed to assume their proper roles.

    Currencies excel at medium of exchange, gold excels as store of value and both the unit of account function. At the present moment fiat occupies all 3, but that in itself is changing is it not? Is gold not assuming the store of value function yet again? Here is a post with much greater detail…

    http://fofofoa.blogspot.com/2010/11/gold-is-not-money_05.html

    I confess these are not my insights but rather the gold and currency education I have received through the writings of
    Another, Friend of Another(FOA), FOFOA and FOFOFOA and other contributors such as Aristotle et al.