The Gold Standard is Misleading

It is important if, with me, you expect that the world will in time have to adopt some sort of gold standard. The phrase �the gold standard� is misleading, there are many different ways in which one can structure a gold standard, or simply use gold as a reference of value, as suggested for example by Robert Zoellick in 2010. But given any resumption of a gold-based system, the most powerful countries will be the countries that have the gold.

What is the best way to consider gold as a measure of relative economic power? One approach sometimes used is a measurement of the percentage of a nation�s reserves that is held in gold. The U.S. is in good shape, then, because it has 70% of its reserves in gold, whereas China has only 1% of its reserves in gold. But that, I submit, is a misleading measure.
We don�t need a foreign currency, because we print dollars. So at least as long as the dollar retains its central measuring role in international transactions it isn�t surprising the U.S. doesn�t hold in reserve a lot of euros or pounds. We hold gold and we can produce dollars at will so we don�t really need foreign currency reserves.

If you want to measure gold as a potential future backing for the economy, though, you need something more germane, and for this purpose one might consider the gold-to-GDP ratio.
The ratio for the U.S. is now approximately 3%. For China, it�s at 0.7%. But that raises the issue of whether the Chinese are lying about their reserves. And clearly they are.

- Source, James Rickards via Alpha Hunter:

http://allaboutalpha.com/blog/2013/08/20/alpha-hunter-james-rickard-on-gold-and-the-u-s-dollar/