This forum seems a bit quiet, but there is actually quite a bit of interesting things happening in the world right now with respect to gold. I wrote an article a few months ago which the Administrator has agreed to let me share here. I would love some feedback on how GAULT compares to Freegold. Is it the same thing? Is it essentially the same thing?
I'll quote the pertinent bits:
More (and all reference links):...
GAULT (Gold As Unpegged Legal Tender)
In 2011, Rep. Ron Paul introduced the Free Competition in Currencies Act of 2011 (FCiCA). It is a page long bill that would have removed sales and capital gains taxes on gold and silver coin (whether minted by the US Mint, foreign mints or possibly private domestic mints) and removed the legal tender monopoly from the Federal Reserve Note dollar. It would have allowed Joe Public to freely convert gold and silver coin with the dollar at market rates for the weight and purity of the coin(s). It would have given Joe Public and Joe Vendor the option to conduct transactions in dollars or the market equivalent value in gold/silver coin. It would not have imposed any obligations on Joe Public or Joe Vendor - they have free choice to conduct transactions in the medium of their choice.
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Real World GAULT Example
Recently, there have been a number of countries that have begun dual currency experiments. El Salvador famously made Bitcoin legal tender in September 2021. Central African Republic gave Bitcoin legal tender status in April 2022, but they have since rescinded it. Dominica made TRON (another cryptocurrency) legal tender in October 2022. St. Maarten has politicians advocating for giving TRON legal tender status there as well.
But perhaps the most interesting experiment to date has occurred in Zimbabwe. Zimbabwe has been embroiled in a battle with hyperinflation. In March 2020, they legalised the use of foreign currency for local transactions. This led to the population abandoning the local currency in favor of the US dollar. In 2022, Zimbabwe:But Zimbabwe also did something quite extroardinary in October 2022 when they announced the issue of a new gold coin from their national mint that would also receive legal tender status and retain a market rate for it's bullion value (ie. it was not issued a nominal face value). This is essentially what the Free Competition in Currencies Act aimed to achieve.... enacted legislation to entrench the multi-currency system, which makes both the United States and Zimbabwe dollars legal tender for all local transactions for the duration of the National Development Strategy 1 (NDS1), the country's medium-term economic blueprint, which runs until 2025.
The issuance of the gold coins was a success:The IMF has pressured Zimbabwe to end the gold coin experiment, but Zimbabwe has indicated that they want to continue the program:...
The Monetary Policy Committee and the RBZ never viewed gold coins as a silver bullet, but a necessary intervention at the time. It was an idea mooted to contain and reverse the accelerated depreciation of the local currency.
The product worked, as we had imagined it would. Immediately after introduction, gold coins drew away attention from the United States dollar. In our books, the effect was very impactful.
Gold was seen as the best product to contain local currency volatilities, as it offered a viable alternative to the United States dollar.
...As of the last report I have seen, Zimbabwe has sold 31,866 gold coins in different denominations through March 10. Zimbabwe is now planning to roll out a digital gold backed token (gold backed crypto coin) much like what Texas is considering in order to allow more of it's poor population to be able to buy smaller denominations of gold....
Reserve Bank of Zimbabwe governor, John Mangudya, believes that gold coins are an alternative foreign currency investment to dissuade traders, investors and other economic players from holding and hoarding forex for speculative purposes.
The International Monetary Fund has cautioned Zimbabwe against gold coins, but Mangudya insists on continuing to issue the assets, which are hedged against movements in the international spot gold price.
“Use of gold coins for mopping excess liquidity is particularly important in the dual currency environ where the public has a choice of holding both the dollar and local currency,” said Mangudya this week.
Zimbabwe has sold about 11 000 gold coins, with 35% of these taken up by individual investors and the balance by corporates.
Against this backdrop, the Zimbabwean central bank says it will not discontinue the gold coins “until such time when there is a high preference” by Zimbabweans “to hold domestic currency-denominated” assets.
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By all accounts, the creation of GAULT has been a positive development for the country in it's fight against hyperinflation with it's fiat currency.
Gold As Unpegged Legal Tender
There are actually two different ideas expressed there, but with essentially the same effect. The FCICA would have removed legal tender laws allowing gold (and silver) to compete with central bank fiat on an even legal/tax footing. Zimbabwe just gave their gold coin legal tender status to compete with the US dollar and the local central bank fiat. Zimbabwe has actually gone a lot further since I wrote that article - extending the multi-currency regime to 2030 and creating a "ZiG" gold backed digital token (tokens are claims to weights of gold held by the central bank) for which they are building out infrastructure for the people to conduct gold transactions in commerce using digital gold "ZiG" bank accounts. I've been watching this story unfold for months and it's fascinating.
Is this essentially what FOFOA meant by Freegold, or was he advocating something different?