Gold: The rise of a stateless currency.

[Ralph Sir Edward]

Despite the lively discussion of gold and silver here, there is no description of what we are seeing. I will try to fill this void. Gold has become the first “stateless” currency.

Historically every currency has been issued by a State (or country, if you prefer). Even when the currency has been in the form of a measured commodity (e.g. gold, silver, copper, stones, cowry shells, ect.), there has been a State to define weight and quality, and to create acceptability (payment of taxes. . .)

What has happened recently, has been the international agreement to define Gold as a currency among all international central banks (Basel III). Furthermore, a sound and liquid currency equal to the former standard, the world’s prior reserve currency (the US dollar). This has made Gold a de facto currency, even though there is no State that either uses it, or recognizes it as a currency.

So it is, in effect, a foreign currency to everybody that one can swap one’s own currency into and out of. The fact that one cannot use it for direct purchases does not change this matter, no more so that swapping one’s home currency for another State’s currency. In both cases, one must pay a fee to swap from one to another; and only one can be directly used in a particular location. In addition, the smaller the amount swapped, the higher the fee.

When one looks at Gold in this light, it becomes clear that it is not an “investment”, merely a different currency, one that is now considered legally on par with any other currency used by central banks on an international scale, and is considered preferable to any other unbacked (fiat) currencies currently in use. Eventually the currencies will reach an equilibrium point, and the ratios will stabilize (at least to a certain point, anyways).

Will States convert back to Gold over time? Unknown. No State wants to give up inflation as a currency option, but eventually they may be dragged (kicking and screaming) into this new currency standard. (Or maybe they will outlaw the international banking regulations that made this possible.)

Not even The Shadow knows this one. . .

A final note: money (currency) as an idea has always had two heads, as a medium of exchange (I have money, you have goods; let’s swap), and a store of value ( I can buy the same goods for the same amount of money in the future as I can buy now). Fiat currencies has always been only a medium of exchange with no guarantee of store of value; this new gold “bank currency” is a store of value (gold is gold, it doesn’t change or disintegrate) with no guarantee of being a medium of exchange.

Pick one. . .

 

[Brett]

Despite the lively discussion of gold and silver here, there is no description of what we are seeing. I will try to fill this void. Gold has become the first “stateless” currency.

Historically every currency has been issued by a State (or country, if you prefer). Even when the currency has been in the form of a measured commodity (e.g. gold, silver, copper, stones, cowry shells, ect.), there has been a State to define weight and quality, and to create acceptability (payment of taxes. . .)

What has happened recently, has been the international agreement to define Gold as a currency among all international central banks (Basel III). Furthermore, a sound and liquid currency equal to the former standard, the world’s prior reserve currency (the US dollar). This has made Gold a de facto currency, even though there is no State that either uses it, or recognizes it as a currency.

So it is, in effect, a foreign currency to everybody that one can swap one’s own currency into and out of. The fact that one cannot use it for direct purchases does not change this matter, no more so that swapping one’s home currency for another State’s currency. In both cases, one must pay a fee to swap from one to another; and only one can be directly used in a particular location. In addition, the smaller the amount swapped, the higher the fee.

When one looks at Gold in this light, it becomes clear that it is not an “investment”, merely a different currency, one that is now considered legally on par with any other currency used by central banks on an international scale, and is considered preferable to any other unbacked (fiat) currencies currently in use. Eventually the currencies will reach an equilibrium point, and the ratios will stabilize (at least to a certain point, anyways).

Will States convert back to Gold over time? Unknown. No State wants to give up inflation as a currency option, but eventually they may be dragged (kicking and screaming) into this new currency standard. (Or maybe they will outlaw the international banking regulations that made this possible.)

Not even The Shadow knows this one. . .

A final note: money (currency) as an idea has always had two heads, as a medium of exchange (I have money, you have goods; let’s swap), and a store of value ( I can buy the same goods for the same amount of money in the future as I can buy now). Fiat currencies has always been only a medium of exchange with no guarantee of store of value; this new gold “bank currency” is a store of value (gold is gold, it doesn’t change or disintegrate) with no guarantee of being a medium of exchange.

Pick one. . .

LOL

(make sure you remember where you buried your gold coins !



.

Something about tariffs ...........

But what will happen when tariffs (and the TV entertainer) are gone .. ????


.

 

[easyrider]

Despite the lively discussion of gold and silver here, there is no description of what we are seeing. I will try to fill this void. Gold has become the first “stateless” currency.

Historically every currency has been issued by a State (or country, if you prefer). Even when the currency has been in the form of a measured commodity (e.g. gold, silver, copper, stones, cowry shells, ect.), there has been a State to define weight and quality, and to create acceptability (payment of taxes. . .)

What has happened recently, has been the international agreement to define Gold as a currency among all international central banks (Basel III). Furthermore, a sound and liquid currency equal to the former standard, the world’s prior reserve currency (the US dollar). This has made Gold a de facto currency, even though there is no State that either uses it, or recognizes it as a currency.

So it is, in effect, a foreign currency to everybody that one can swap one’s own currency into and out of. The fact that one cannot use it for direct purchases does not change this matter, no more so that swapping one’s home currency for another State’s currency. In both cases, one must pay a fee to swap from one to another; and only one can be directly used in a particular location. In addition, the smaller the amount swapped, the higher the fee.

When one looks at Gold in this light, it becomes clear that it is not an “investment”, merely a different currency, one that is now considered legally on par with any other currency used by central banks on an international scale, and is considered preferable to any other unbacked (fiat) currencies currently in use. Eventually the currencies will reach an equilibrium point, and the ratios will stabilize (at least to a certain point, anyways).

Will States convert back to Gold over time? Unknown. No State wants to give up inflation as a currency option, but eventually they may be dragged (kicking and screaming) into this new currency standard. (Or maybe they will outlaw the international banking regulations that made this possible.)

Not even The Shadow knows this one. . .

A final note: money (currency) as an idea has always had two heads, as a medium of exchange (I have money, you have goods; let’s swap), and a store of value ( I can buy the same goods for the same amount of money in the future as I can buy now). Fiat currencies has always been only a medium of exchange with no guarantee of store of value; this new gold “bank currency” is a store of value (gold is gold, it doesn’t change or disintegrate) with no guarantee of being a medium of exchange.

Pick one. . .

A bunch of States recognize gold and silver as currency. Idaho and Utah are a couple. I think you can walk in and pay your property tax with gold or silver. It's something I heard. I wonder if anyone has. Like I have my uncles gold tooth to help with the prperty tax, lol.

Bill

 

[gravityrules]

Despite the lively discussion of gold and silver here, there is no description of what we are seeing. I will try to fill this void. Gold has become the first “stateless” currency.

Historically every currency has been issued by a State (or country, if you prefer). Even when the currency has been in the form of a measured commodity (e.g. gold, silver, copper, stones, cowry shells, ect.), there has been a State to define weight and quality, and to create acceptability (payment of taxes. . .)

What has happened recently, has been the international agreement to define Gold as a currency among all international central banks (Basel III). Furthermore, a sound and liquid currency equal to the former standard, the world’s prior reserve currency (the US dollar). This has made Gold a de facto currency, even though there is no State that either uses it, or recognizes it as a currency.

So it is, in effect, a foreign currency to everybody that one can swap one’s own currency into and out of. The fact that one cannot use it for direct purchases does not change this matter, no more so that swapping one’s home currency for another State’s currency. In both cases, one must pay a fee to swap from one to another; and only one can be directly used in a particular location. In addition, the smaller the amount swapped, the higher the fee.

When one looks at Gold in this light, it becomes clear that it is not an “investment”, merely a different currency, one that is now considered legally on par with any other currency used by central banks on an international scale, and is considered preferable to any other unbacked (fiat) currencies currently in use. Eventually the currencies will reach an equilibrium point, and the ratios will stabilize (at least to a certain point, anyways).

Will States convert back to Gold over time? Unknown. No State wants to give up inflation as a currency option, but eventually they may be dragged (kicking and screaming) into this new currency standard. (Or maybe they will outlaw the international banking regulations that made this possible.)

Not even The Shadow knows this one. . .

A final note: money (currency) as an idea has always had two heads, as a medium of exchange (I have money, you have goods; let’s swap), and a store of value ( I can buy the same goods for the same amount of money in the future as I can buy now). Fiat currencies has always been only a medium of exchange with no guarantee of store of value; this new gold “bank currency” is a store of value (gold is gold, it doesn’t change or disintegrate) with no guarantee of being a medium of exchange.

Pick one. . .

Appreciate the perspective. I don't understand why we have a few who continue to act like trolls anytime PMs are mentioned. Denial, deflection, derision ... make your own decision about PM ownership but denying recent PM appreciation is just gaslighting.

 

[n42]

This is worth pointing out:

Gold and HQLA: Correcting Misleading Online Information​

There have been inaccurate reports online that gold will be reclassified as Tier 1 HQLA (High Quality Liquid Asset) under Basel III as of July 1, 2025. This information is not correct.

Gold and HQLA: Correcting Misleading Online Information

There have been inaccurate reports online that gold will be reclassified as Tier 1 HQLA (High Quality Liquid Asset) under Basel III as of July 1, 2025. This information is not correct. Read more here.

www.lbma.org.uk

 

[jabberwocky]

Okay, I’ll bite on this one as there is a lot of confusion about central banks and how gold fits into the equation.

First, please tell me what an “international central bank” is.

Furthermore, I’m not aware of any central banks that are subject to Basel III. It is international commercial banks that are subject to the Basel accords, respective central banks (and in some cases the national regulators/supervisors) in various countries apply the Basel standards to the commercial banks they oversee by creating standards.

Central banks can create money and don’t risk insolvency (of course they can debase their currency). They are not required to hold capital buffers or meet liquidity coverage ratios themselves.

I’m definitely not anti-gold (quite the opposite), but let’s not try to let Basel III seem bigger than it is.

 

[easyrider]

One thing for sure is gold has always had a stable consistent value everywhere. Gold prices are pretty much the same in all markets . Physical gold prices are never shorted making it a very reliable store of wealth.

Bill

 

[Carolinian]

Despite the lively discussion of gold and silver here, there is no description of what we are seeing. I will try to fill this void. Gold has become the first “stateless” currency.

Historically every currency has been issued by a State (or country, if you prefer). Even when the currency has been in the form of a measured commodity (e.g. gold, silver, copper, stones, cowry shells, ect.), there has been a State to define weight and quality, and to create acceptability (payment of taxes. . .)

What has happened recently, has been the international agreement to define Gold as a currency among all international central banks (Basel III). Furthermore, a sound and liquid currency equal to the former standard, the world’s prior reserve currency (the US dollar). This has made Gold a de facto currency, even though there is no State that either uses it, or recognizes it as a currency.

So it is, in effect, a foreign currency to everybody that one can swap one’s own currency into and out of. The fact that one cannot use it for direct purchases does not change this matter, no more so that swapping one’s home currency for another State’s currency. In both cases, one must pay a fee to swap from one to another; and only one can be directly used in a particular location. In addition, the smaller the amount swapped, the higher the fee.

When one looks at Gold in this light, it becomes clear that it is not an “investment”, merely a different currency, one that is now considered legally on par with any other currency used by central banks on an international scale, and is considered preferable to any other unbacked (fiat) currencies currently in use. Eventually the currencies will reach an equilibrium point, and the ratios will stabilize (at least to a certain point, anyways).

Will States convert back to Gold over time? Unknown. No State wants to give up inflation as a currency option, but eventually they may be dragged (kicking and screaming) into this new currency standard. (Or maybe they will outlaw the international banking regulations that made this possible.)

Not even The Shadow knows this one. . .

A final note: money (currency) as an idea has always had two heads, as a medium of exchange (I have money, you have goods; let’s swap), and a store of value ( I can buy the same goods for the same amount of money in the future as I can buy now). Fiat currencies has always been only a medium of exchange with no guarantee of store of value; this new gold “bank currency” is a store of value (gold is gold, it doesn’t change or disintegrate) with no guarantee of being a medium of exchange.

Pick one. . .

Gold has been money since ancient times. The US Constitution defines "money" as gold and silver coins.

 

[Carolinian]

The world's central banks have been quietly and gradually dumping all fiat currencies for several years now, and buying gold. The chart below shows foreign central bank reserves held in gold versus held in US dollars: When a foreign central bank holds gold instead of treasuries, they forego the interest on the treasuries, but obviously they still think gold is more secure and a better deal.

 

[emeryjre]

The world's central banks have been quietly and gradually dumping all fiat currencies for several years now, and buying gold. The chart below shows foreign central bank reserves held in gold versus held in US dollars: When a foreign central bank holds gold instead of treasuries, they forego the interest on the treasuries, but obviously they still think gold is more secure and a better deal.

Which central banks does this chart measure
You have a habit of bringing in some small country central bank that has little impact in the World Trade and monetary system
Try to get us to believe it is a significant shift in the world economic patterns

 

[Carolinian]

Which central banks does this chart measure
You have a habit of bringing in some small country central bank that has little impact in the World Trade and monetary system
Try to get us to believe it is a significant shift in the world economic patterns

This is a sum total of all central banks compiled by Visual Capitalist.

Official gold holdings of the world's central banks are published periodically, so this data is not that hard to obtain. In some cases it might not show all of it because it may be acquired officially for some purpose other than reserves and would not show up. For example, export reports for gold going to China often show more gold than is being reported as acquired for reserves, and may be officially acquired in the name of some government entity that does not report holdings, like the military.

Some of those I have seen mentioned include China, Saudi Arabia, Turkey, Poland, the Czech Republic, and India. Those reports I have read other places, not connected to this chart, and are just the ones I have seen reports on.

Central banks are the whales in the gold market. They buy by the ton, not the ounce. Their buying or selling is what really moves the market, and they have been on a buying spree in recent years. In fact, last year saw the highest gold purchases by central banks ever.

These days, the debt bombs of most major currency issuers are downsides to holding fiat currency reserves. However, dumping any of them too fast could cause a run on a currency, which is in nobody's interest. One remembers what Germany's world war I debt led to in 1923 and what the UK's Napoleonic Wars debt almost caused about a century earlier.