New Gold Standard

PAUL NATHAN is an exclusive contributor of articles on gold for kitco.com. With more than one million hits a day, kitco.com is the leading site for gold bugs worldwide. He wrote articles in the ’70s for the Freeman and today writes a weekly commentary and market update for hard money enthusiasts and investors at paulnathan.biz. Nathan was there at the birth of the Libertarian Party, and his mother was the first national candidate to run on the Libertarian Party ticket in 1972. Nathan began writing on monetary and economic matters in 1968 while studying under Ayn Rand and Alan Greenspan at the Foundation for the New Intellectual.

• Foreword xiiiPreface xviiPart I: Gold and the Domestic EconomyChapter 1 Why Gold? 3Gold: The King of Metals 4Gold Becomes the Standard of the World 5Too Little Gold—Or Too Much Paper? 6The “Gold Prevents Prosperity” Myth 8In Gold We Trust 10Chapter 2 The Gold Standard: A Standard for Freedom 13What Money Is 15.AndWhat Money Is Not 18The Nature of Inflation 20The Fiat Standard at Work 22The Illusion of Prosperity 23The Meaning of the Gold Standard 25Chapter 3 Why Prices Have Not Skyrocketed 27On Human Action 28Quantity versus Values 31The Quantity of Money and the Gold Standard 32Too Little Fiscal Responsibility Chasing Too Many Politicians 33Chapter 4 The Inflation/Deflation Conundrum 35The Cause of the Recent Spike in Commodities 38Chapter 5 Central Banking in the Twenty-First Century 41The Rise of Populism 42A World in Transition 45The Fed of the Twenty-First Century 48Part II: The International Gold Standard Chapter 6 The Making of an International Monetary Crisis 55  Monetary Theory: Past 57No Curb on Governments 58The Policy Makers 59The Process of Confusion 60Condemnation of Gold 61Evolution of the Theory 62Fractional Reserve Banking 63The Great Depression 65Devaluation in 1934 66Bretton Woods 67The Theory Projected 67“If at First You Don’t Succeed .” 69The SDR: As Good as Gold Again! 70Debt Amortization or Default: The False Alternative 71The Frightening Prospect of an International Debt 72Toward an International Fiat Reserve System 74Simply Repetitious 75The Real Meaning of Monetary Reform 75Chapter 7 The Death of Bretton Woods: A History Lesson 79Fixed Exchange Rates, Flexible Rules 80Export or Devalue: Institutionalizing the Devaluation Bias 82“Hot Money” Blues 84The Role of the Dollar under Bretton Woods 85Limited Gold—Unlimited Dollars: A Formula for Disaster 86Confidence versus Liquidity—A Two-Tier Tale 87Gold’s Limitations: A Blessing in Disguise 87U.S. Balance of Payments Problems 89The First Straw 89On Selling One’s Cake and Wanting It Too 89The Illusion of the Last Straw 90The High Price of Gifts 91On Domestic Dreams and International Nightmares 92Chapter 8 Who’s Protected by Protectionism? 95A Few Principles 97Enter Protectionism 98Trade between Nations 99To Protect the Balance of Trade 100To Protect Domestic Markets 102To Protect Domestic Wages 102Protectionism: The Greatest Threat to Prosperity 104The U.S. Balance of Payments Problem in Perspective 106The Protection Racket 106Part III: Returning to a Gold Standard Chapter 9 Are the Fiat and the Gold Standards Converging? 111A Monetary System Needs to Know Its Limitations 113Reduced Leverage Equals Reduced Speculation 115The Process of Convergence 116A New Day 118Chapter 10 Gold: The New Money 121Rediscovering Gold 123The International “Walk” on Gold 124Competing Monies 125Chapter 11 How Not to Advocate a Gold Standard 129The Intrinsic Worth Argument 130The Store of Value Argument 131Gold Price Predictions 132The Legal Tender Argument 133The Official Price of Gold Fetish 134The Devaluation Syndrome 137The Stop Printing Money Argument 139The Demonetization Threat 140On Context, Cause, and Effect 142Part IV: Investing in GoldChapter 12 Lessons of a Life-Long Gold Investor 147On Trading 151The Rules of the Game 152When to Be Flexible 154And When to Stick to Your Guns 156On Investing 157Shakeouts 160Turning a Disadvantage into an Advantage 163On Leverage 164When to Sell a Stock 167“Be Afraid. Be Very, Very, Afraid ” 168How to Own Gold 170Chapter 13 My Final Word on Gold 173On Bretton Woods II 173The New SDR Threat 175On QE 2 178The Banking System of a Free Society 181In Conclusion 183Recommended Reading 185Bibliography 189About the Author 191Index 197