Hi Ballyculter.

If you have been reading these boards for long, you might know I am a big gold standard disbeliever.

Yes, increasing money supply tends to be inflationary, but there is nothing wrong with a bit of inflation IMO. We hope and expect our incomes to inflate over time, our properties, and I know I would like to see some KXL hyperinflation. No doubt that a gold standard will reduce the amount of money, but is that a good thing? How would you see a gold standard working? Would you see it work if just the US or just Canada adopted it? If we went to the gold standard, and pegged gold at 1000/oz for the Cdn $, what would happen if the international price for gold doubled? That would mean that our Cdn $ would double versus other currencies. So when I went to sell my wheat and cattle abroad, I would be recieving less Cdn dollars, as the buyers would be buying such a valuable currency. What if the international POG went down by half? How about in a true time of crisis when the Cdn government had to borrow huge amounts of money to fight an invasion, for example? To increase money supply (which would have to happen to borrow huge amounts) a huge amount of gold would need to be purchased first. A huge cost inorder to borrow for a huge cost. Maybe I just don't understand how a modern gold standard would work.

The world went away from the gold standard for a reason, just like we went away from horse and buggy, pony express and silent movies. These things are all looked on with nostalgia, but are no longer relevant IMO. Money is the life blood of an economy and must grow with it.

BTW, where can I find the info on the agreements for central banks to sell a certain amount of gold every year? It would seem like if this is the case, they either have to buy back, or will lose their ability to quash the price. Also, what would their motive be to keep the value of gold down if they have large reserves? I prefer when the commodities I have in reserve appreciate in price. You note that some central banks have been buying lately. Is this the reason the POG is near 1000? If they stop buying, if they start selling to drive the price down, where does the POG go? I am very skeptical that there is a conspiracy to suppress the POG.

As we all seem to end our posts... JUST MY OPINION!

Cheers!