All that glitters: The return of the gold standard?

ELON Musk and the omniscient Department of Government Efficiency (DOGE) have been thinking about visiting the legendary Bullion vault of the United States.

The government department known as DOGE, not to be confused with the cryptocurrency of homonymous moniker endorsed by the billionaire Musk himself when founded and largely of utility by charitable organisations, stated its intent unequivocally as to why it needed to visit the sanctimonious haunt. And that is to audit the US Treasury’s main bullion depository.

President Donald Trump supported this move. Or stated differently, DOGE is a full expression of an elaborately complex and sophisticated political objective. As part of an eminently changing global context, Senator Rand Paul and his like-minded colleagues lent empathy to the president’s inquisitive imprimatur.

The sublimely prevalent understanding, with specific or somewhat imprecise detail, derives from the doubts fueled in no small measure by conspiratorial or even patriotic postulates. Are the sovereign gold bars still housed in the famous vaults sentimentally named after the legendary Henry Knox, who was chief of artillery during the American Revolutionary War?

The bullion in the repository was last audited in 1950, followed by a partial viewing of one of the 20 vaults in 1974. The US state that gave the world the famous Kentucky Fried Chicken therefore, is destined to be the host venue of DOGE’s battery of accountants and their Artificial Intelligence bots.

DOGE comes in highly recommended. They have since maligned the work of the most feared USAID, the country’s main regime change agency and its global henchmen. Poor USAID! They were not punished for changing regimes, nor for distorting the reality of millions of people and creating the deceptive worldview for which the mess the world is in is predicated. Not at all.

The recurring penchant to effectuate a regime change agenda everywhere in the world results from the primordial instincts of hegemons. For the sustenance of US hegemony, there shall always be regime change, at some place or another and for one reason or another.

The USAID lot that got the guillotine were ostensibly serving the inscrutable agenda of the deep state and their deputies, a faceless cohort which did not pay fealty to Trump. As for the regime change agenda, Trump only wants to regain the mandate that was inadvertently awarded to the unelected and promptly return it to the elected representatives of the people.

Trump’s approach to an asphyxiating debt, budget deficit, declining industrial prowess and endless conflicts that debilitate the fiscus is characterised by negotiating the end of these conflicts, promoting domestic industry and reciprocating on perceptions of unfair treatment in trade.

But the one that trumps them all, no pun intended, is the auditing of the bullion in the repository for no other purpose than to revalue it. Currently valued in the Treasury balance sheet at $40 per troy ounce, Trump is confident that the current $11.47 billion net value of 8134 tonnes will soon be revised to $860bn if computed at present market value per troy ounce.

This revision will potentially change the US debt servicing capability for the better and, as a consequence, the political fortunes of the Donald as he carves himself and his face into the heights of Mount Rushmore.

If historical records are anything to go by, countries that became empires achieved that status by accumulating surplus. The US is an exception. It ascended to the claim through leveraging debt. A lot of it. It only fell on Trump to liquidate the debt and end this misadventure, a monumental task indeed.

Gold would have continued to be an index and reliable standard measure for currencies. But France couldn’t wait to trigger the events that facilitated the sudden and tragic end to the standard. They complained that the US simply printed dollars as an exorbitant privilege and bought valuable French assets with them. In 1971, having amassed large quantities of US dollars, they sent two of their naval ships full of such dollars to demand that they be exchanged for gold as inscripted on the face value of the dollar.

President Nixon was alarmed. Realising that the French demand would diminish American bullion stockpiles, he announced on August 15, 1971, that the convertibility of dollars to gold had been suspended. The French ships returned on empty hulls, and the Americans exited the gold standard.

All these roads tend to lead to South Africa, the country that is credited for having contributed 50% of the gold that is currently in global circulation. At the zenith of its production heyday, the Witwatersrand Basin was responsible for 1000 tonnes per annum, accounting for more than 70% of global production.

There is nothing in the Rainbow Nation fiction that suggests an economy or legacy of prosperity steeped in gold. Neither is it reflected in our collective cultural predilections. In fact, the country’s apostles of fiat, the inscrutable Reserve Bank, ostensibly proceeds from the principle that that which they do not own or control in monopolistic quantities is not worth focusing on. And so, the watchers of our tower of money, our wizards of oz, just happen to prefer cash.

It would contribute to an interesting discourse on how our opaque Tower of Babel could be made more transparent, a feat only accomplished by Toto the Cairn Terrier in the Wizard of Oz, and shine light on the 800 private shareholders who hold sway over the aspirations of 62 million people. As they determine not to amass gold, so do they control the extent of the pauperization of millions of South Africans.

Also, gold contributes a significant share to and the valuation of South Africa’s balance sheet, against which the country’s GDP Purchasing Power Parity is computed. The greater it is, the greater the calculus that determines our sovereign standing among the community of nations.

If this hypothesis is correct, how much gold is the country amassing year-on-year in order to lay a foundational basis for our common prosperity? China provides a reliable example. The ruling party of that modern miracle proceeded from the premise that in order to lift the quality of the lives of its people, the state itself must be rich first. Only a wealthy state can lift 800 million people out of poverty.

And while our exchequer bureaucrats tarry and prevaricate, the Zama Zamas, buoyed by their indomitable sense of nationalism and deep philosophical underpinnings, know the answer to the question of the survival of nationhood, efficient preservation and allocation of sovereign wealth and the continuity of state for the prosperity of its people. It seems somewhat obvious that the State and the Reserve Bank need to conference with the Zama Zama leadership.

While at it, is South Africa’s gold still kept in the royal bullion depository of the Bank of England? If so, why? India has already fetched all its gold from the island, whilst Germany has resolved to collect the balance of what remains in those vaults.

Our esteemed Governor of the Reserve Bank may not have heard. But it is worth retelling that the Bolivarian Republic of Venezuela also had faith in the generosity of the British in keeping other people’s refined bullion. When the Venezuelans came knocking, asking for their precious metal in 2019, the British flatly refused.

As the world gears up for a re-set where gold will be standard, there is a chance that those who determine the speed of our prosperity will ensure that South Africa is woefully unprepared.

* Ambassador Bheki Gila is a Barrister-at-Law. The views expressed here are his own.

** The views expressed here do not reflect those of the Sunday Independent, Independent Media, or IOL.