Does the USA have a Gold reserve?
The US does have a gold reserve. The main reserves are held at Fort Knox but there is even more gold, mostly owned by other countries, stored in the basement of the New York Federal Reserve Bank (Think Die Hard 3). The United States Bullion Depository, often known as Fort Knox, is a fortified vault building located adjacent to Fort Knox, Kentucky, used to store a large portion of United States official gold reserves and occasionally other precious items belonging or entrusted to the federal government. The United States Bullion Depository holds 4,578 metric tons (5046 tons) of gold bullion (147.2 million oz. troy). This is roughly 2.5% of all the gold ever refined throughout human history. Even so, the depository is second in the United States to the Federal Reserve Bank of New York's underground vault in Manhattan, which holds 7,000 metric tons (7716 tons) of gold bullion (225.1 million oz. troy), some of it in trust for foreign nations, central banks and official international organizations. Source: Wikipedia According to the US Mint, the Government does still have a gold reserve stored mostly in Fort Knox in Kentucky, but there is some in New York and Colorado too. Some facts from their site:    That last point is an interesting one. They are basically saying, yes we have it, and no you can't see it. Some conspiracy buffs claim no one has been allowed in there to audit how much they have in over 50 years leading them to speculate that they are bluffing. Although the dollar is no longer tied to the gold standard, throwing that much gold into the market would definitely add fuel the volatility of the finance world, which already has it's share of volatility and isn't hungry for more.The impact on the price of the dollar would be quite complicated and hard to predict. The United States is no longer on a gold standard, and the value of its currency is solely founded on the productivity of its economy. So I don't think there's any practical reason for the United States government to explicitly sell off a lot of gold to force the price to crash. In fact I would expect that the price of gold has very little interest for the Fed, or anyone else in a position of economic power in the government. I believe that we still have large reserves of it, but I have no idea what they are intended for, aside from being a relic of the gold standard. Best guess is that they'll be held on to just in case of an international trend back towards the gold standard, although that is unlikely on any time frame we would care about.
Gold is a good investment when central bank money printers can’t take their thumbs off the print button. Over the last 3 years the US Federal Reserve printed a ton of dollars to bail out banks and to purchase US federal debt.  Maybe I should exchange my dollars for euros? The European Central Bank (ECB) is following the FED plan and printing money to buy Greek, Italian, and now Spanish bonds.  This, indirectly, is a bailout of French and German banks. Maybe I should exchange my euros for yen? The Bank Of Japan (Japan’s central bank) is determined not to let the yen rise against other currencies so they too are printing money to keep the yen weak. Maybe I should exchange my yen for swiss francs? The Swiss National Bank (Switzerland’s central bank) is also determined not to let the franc rise against other currencies so they too are printing money. You quickly begin to realize that your options are dwindling for places to put your money where the government central bank isn’t working hard to dilute your savings. Physical gold is also a good investment for several other situations:  What situations would lead to a drop in gold prices? What are the alternatives? Silver has traditionally been used more as money than gold.  Silver is usually used for day-to-day purchases while gold is used for savings. The gold standard didn't work because of the following process:  * Start with 10oz of Gold. * Deposit in Bank A * Bank lends out 9 oz of Gold Certificates * Gold certificates deposited in Bank B * Bank B lends out 8oz of Gold Certificates * etc.  Now at the end of all this we have a lot of gold certificates.  This is called the [Money Multiplier](http://en.wikipedia.org/wiki/Money_multiplier) effect.  What if someone wants to take their gold certificates and buy a boat made in Europe?  Well.  If they spend 5 gold certificates on that boat then the certificates land in the European bank who requests gold to be shipped from America to pay for it.    Suddenly America's bank reserves collapse and there is a very sharp credit contraction as all the banks stop lending because they are out of reserves that back their gold certificates.  If the person had actual coins he was using to buy the boat, only his consumption would be reduced and it wouldn't cause damage throughout the whole financial system.  So basically wherever you have fractional reserve banking, gold backed monetary systems will fail.  Anywhere you criticize fractional reserve banking your theory will be basically ignored because criticizing banking gets you nowhere in economics career-wise.  Praising derivatives and all sorts of hair-brained financial innovations will win you awards and prizes and guest appearances on CNBC though. Been following ZH (less these days) for about a decade now, and rarely do they have good stuff with even that 10% being too gracious. I would peg it at about .5-1%. The USA should have collapsed oh about 30 times now, with gold being the world currency and all our ID's being imprinted on our arms, but hey maybe this time is the charm with Trump. As an American living in Canada, you don't get it.  The USA wants all of us expats to pay taxes twice. No other country but one does that.   If the USA would follow the rest of the world and not tax profits again after being taxed abroad, these companies wouldn't leave.  We could be having a better conversation here, but it's meaningless buzzwords of patriotism and boycotting.   Burger King will have growth and profit internationally. It makes more sense for them to focus on that. If they end up with 20% of their profit from the USA, why would they pay 120% taxes?  Obviously it's not quite as simple as that, but you get the general idea. The last thing our politicians want is us talking about eliminating double taxation. Just as you can't be tried for the same crime twice, you should not be taxed twice. When BK pays local taxes in whatever country they're in, whether it's lower or higher than the US is irrelevant. Taxes have been paid. End of story. Doesn't matter if it's a lower rate or creative accounting. It's done. "Excellent question, though any why question can be challenging to answer because it depends on the financial products in question.  At least, I haven't seen many target date retirement funds that include a high percent of foreign stocks, so below explains the ones I've seen which are primarily US stocks. The United States (before the last twenty years) has been seen as a country of stability.  This is not true anymore, and it's difficult for my generation to understand because we grew up in the U.S.A being challenged (and tend to think that China and India have always been powers), but when we read investors, like Benjamin Graham (who had significant influence with Warren Buffett), we can see this bias - the U.S.A to them is stable, and other countries are ""risky.""  Again, with the national debt and the political game in our current time, it does not feel this way.  But that bias is often reflect in financial instruments. The US Dollar is still the reserve currency, though it's influence is declining and I would expect it to decline.  Contrary to my view (because I could be wrong here) is Mish, who argues that no one wants to have the reserve currency because having a reserve currency brings disadvantages (see here: Bogus Threats to US Reserve Currency Status: No Country Really Wants It!; I present this to show that my view could be wrong). Finally, there tends to be the ""go with what you know.""  Many of these funds are managed by U.S. citizens, so they tend to have a U.S. bias and feel more comfortable investing their money ""at home"" (in fact a famous mutual fund manager, Peter Lynch, had a similar mentality - buy the company behind the stock and what company do we tend to know best?  The ones around us.). One final note, I'm not saying this mentality is correct, just what the attitude is like.  I think you may find that younger mutual fund managers tend to include more foreign stocks, as they've seen that different world." "[There's about 10 trillion in gold](http://en.wikipedia.org/wiki/Gold_reserve) and about [2.8 trillion of US cash](http://visualeconomics.creditloan.com/the-value-of-united-states-currency-in-circulation/) in the world. Neither of these is anywhere large enough to be used for all the transactions in the world. For example, about [4 trillion a **day**](http://en.wikipedia.org/wiki/Foreign_exchange_market) changes hands in the currency markets alone - if that were required to be cash or gold it would be impossible to do so, and you'd suffer from more poorly priced goods since markets could not adjust as quickly, so vendors would charge more premium to handle the risk.  Yes, there is not (and has not been) enough cash in circulation to run the world economy. There is also vastly too little gold, unless you want to strangle commerce due to not being enough money to trade.   &gt; ""posing as the money supply""  All money is debt, and always has been. Money is a placeholder that you can trade for goods *later* meaning someone owes you a thing. The value of that money is the debt they (or society) owes you for something you already did to get that money. So there is no posing, just most don't understand money, how it originated, why it exists, or why it works. They never ask the question ""how does money come into existance"".  &gt; Does defaulting on ones debt create inflation since that money is still in the system and not being paid off?   Probably not much. Loans are made expecting some default, so the interest others pay on their loans helps offset the defaulted ones. If loans become riskier, the interest demanded increases, so the lender still (if they do their risk analysis well and no external events break their expectations) makes money.  When you pay off a debt, that money, as you're paying it, is likely being lent in other loans, so paying it off does not do much. If you could pay off about 100 trillion in debt into the US economy in one payment you might break some things :)" Money is no longer backed by gold. It's backed by the faith and credit of the issuing government. A new country,say, will first trade goods for dollars or other currency, so its ownership of gold is irrelevant. Its currency will trade at a value based on supply/demand for that currency. If it's an unstable currency, inflating too quickly, the exchange rate will reflect that as well.  More than that your question kind of mixes a number of issues, loosely related. First is the gold question, second, the question of currency exchange rates and they are derived, with an example of a new country. Both interesting, but distinct processes. "Monetary policy has always been in play. The Romans frequently debased (that is, increased the alloy/base metal ratio) their coinage and the U.S. went off the gold standard numerous times, especially during wars. Really the gold standard was only adhered to when it was convenient, so historically it did not play the role that Austrians wish it would. Basically just because gold was historically used as currency does not mean that it controlled the money supply. For example, most sovereign transactions were simply recorded by symbolic ""money things.""* And even if the gold standard did automatically protect the value of money, inflation is a hell of a lot better than deflation anyway. You want to reward people for putting their money to work, not sticking it in a mattress.  *For further information on the history of gold currency and money in general, see section 2 of this article from the LSE: http://www.sciencedirect.com/science/article/pii/S0176268098000159"