ABSTRACT  400 words

                                

On the 8th June 2022, Reuters broke the story that a deposit of 31 million metric tonnes of gold ore had been found in Uganda with extractable pure gold estimated to gross 320,000 metric tonnes, worth $12 trillion USD at current market prices.1 According to the World Gold Council, the global gold reserves are estimated to be around 205,238 metric tonnes with a value of $10.8 trillion USD.2

If the new gold deposits were released onto the global gold markets the price of gold would plummet.3 Only if the new gold can be ‘quarantined’, or isolated from the rest of gold in the marketplace, can the global value of all the existing gold be maintained.

One solution could be to sequester some or all of this new-found gold for banknotes that comprise a return to the Gold Standard 4 by incorporating a thin disc of pure gold into each banknote. The banknotes would thereby be transformed from documents that have fiat value, authorised by government regulation via seigniorage, into containers that protect and authenticate measures of gold perceived to have ‘real’ value. These banknotes would be in high demand because of the added value of authentication bestowed upon the gold they contain. In 2021, the value of USA dollars in circulation was $2 trillion.5  The new gold deposits would be sufficient to replace all the US dollars in circulation eight times over.6

Only a very tiny fraction of the potential number of banknotes would actually have to be printed, however, to give credence to the concept that this new gold has been removed from the existing gold market, for the purpose of making these new banknotes.

The art of making thin gold foil goes back 5000 years to the Egyptians.  What is proposed here is a disc of pure gold, 10 microns thick and 45 mm in diameter, to be incorporated into plastic substrates, such as the Guardian™ made by CLC Secure and Safeguard® by De La Rue. This paper proposes to explore some of the challenges and opportunities, as well as the possible consequences to fiat currencies of such a return to the Gold Standard.



                                                                          NOTES

1. Reuters is the news and media division of Thomson Reuters, the world’s largest multimedia news provider. The news about Uganda’s a deposit of 31 million tonnes of gold ore, with extractable pure gold estimated to gross 320,000 tonnes, was reported by Reuters at 2.41 pm on the afternoon of the 8th June 2022.

The link is: https://www.reuters.com/article/uganda-gold-idUSKBN2NP17M

The same day the Microsoft Network also reported the news, quoting The Citizen, the link is:
https://www.msn.com/en-xl/africa/africa-top-stories/uganda-announces-discovery-of-huge-gold-deposits/ar-AAYdOsQ

The Citizen story be seen on their website at:
 https://www.thecitizen.co.tz/tanzania/news/east-africa-news/uganda-announces-discovery-of-huge-gold-deposits-3842400  and other news networks also reported the news over the following days, such as Mining Review Africa on the 29th June 2022.
Including additional details: “Tan Chun Chi, the general manager of Wagagai gold mining company, says that the investment has reached US $60 million. He explains that they have been lagging behind in the construction due to the lack of the two licenses. The company has recently obtained a gold production license in March this year and has a 21-year lease to mine gold in the country and expect to double their speed because they expect to begin gold production by July 2023”. “Solomon Muyita spokesperson from the Ministry of Energy and Mineral Development said a “Chinese-run firm, Wagagai, which picked its name from the highest peak of Mt Elgon, expects to mine and start refining at least 5,000 kilogrammes of gold a day”.
https://www.miningreview.com/news/uganda-discovers-gold-deposits-worth-12-trillion-usd/  














2. The volume of global above-ground gold reserves is estimated to be around 205,238 metric tonnes according to the World Gold Council (End-2021), which equates to a cube 22 meters on all sides. The Market Capitalization of the World’s gold is currently about $10.747 trillion US dollars. The gold discovered in Uganda equates to a second cube of gold approximately 24.7 meters on all sides worth $12 trillion, if valued at the market price; however, adding this vast quantity of gold into the market would radically affect the price, not only of this new gold, but all of the existing  gold, all over the World: the  price of gold would plummet. https://companiesmarketcap.com/gold/marketcap/

3. Adding 320K tonnes to the existing 205K tonnes of gold would cause a ‘Reverse Goldfinger Effect’ decimating the price of gold across the World.
https://www.gold-eagle.com/article/gold-and-reverse-goldfinger-effect

4. Under the classical gold standard, there was a direct link between the currency in circulation and gold because anyone could exchange the currency for its gold value on demand. This limited the amount of currency in circulation. All international surplus and deficits were settled in gold. After World War II, the United States of America emerged as the new political and economic superpower. The Bretton Woods Agreement was signed wherein, the dollar would remain fixed to gold at $35 an ounce while currencies of participating nations, which included Britain, France, Germany etc. agreed to an adjustable fixed exchange rate to the dollar. In August 1971, President Nixon announced the end of the Bretton Woods agreement and declared the non-convertibility of US dollars into gold. This meant that there would be no international conversion of dollars to gold and the end of the gold exchange standard. https://www.alphainvesco.com/blog/gold-standard-abandoned/

After which, the US currency in circulation rose from $59 Billion (August 1971) to $2.28 Trillion (October 2022). https://fred.stlouisfed.org/series/CURRCIR and in the same time period the price of gold went from $35 an ounce to over $2,000 an ounce (8th March 2022). https://www.bullionbypost.co.uk/gold-price/year/ounces/USD/

5. The Federal Reserve website shows that the value of US currency in circulation was $2 trillion in 2021, (80% of the value being in $100 dollar bills), whilst the total quantity of notes was 53.2 billion banknotes, of which 17.7 billion were $100 bills. https://www.federalreserve.gov/paymentsystems/coin_data.htm

6 . One metric tonne of gold equals 32,150.75 troy ounces (oz t) in gold mass.
https://www.traditionaloven.com/metal/precious-metals/gold/convert-tonne-metric-t-of-gold-to-troy-ounce-tr-oz-gold.html
Therefore 320,000 metric tonnes x 32,150.75 = 10.288 billion troy ounces. If each banknote contained 100th of 1 troy ounce, the total number of banknotes that could be produced would be 1 trillion notes with a total value of $18 trillion dollars at the current price of gold. (Wednesday 16th November 2022).
https://www.bullionbypost.co.uk/gold-price/year/ounces/USD/


A Manifesto for a Return to the Gold Standard