What Would It Take to Back the Dollar with Gold?

Chart of the Week #70

We’ve written quite a bit about gold this week (catch up here, and here), and for good reason—the precious metal just broke above $4,000 per ounce, marking yet another historic milestone in its relentless climb.

As I write this, gold is up about 54% year-to-date—putting it among the top-performing assets of 2025. Not bad for a “barbarous relic,” as the critics like to call it.

If you’re anything like me, moments like this make you pause and wonder—what would the price of gold look like if the U.S. ever moved even partway back to a gold standard?

So to wrap up the week, I wanted to share this chart with you—it shows the gold price needed to back different U.S. money supplies, from M0 (physical cash) to M1 and M2, which also include savings accounts and time deposits.

As you can see, backing just M0—the narrowest measure of money, which includes physical cash in circulation and reserves held by banks at the Fed—could push gold past $22,000 per ounce. M1 would require $68,827, and M2 a staggering $79,699.

This just goes to show that while the final long-term price would depend on the level of backing—say, 20% versus 100%—even a partial move by the U.S. government to restore monetary credibility would send gold prices soaring.

Sounds great, right? Well, sure—if you already own gold. But such a move would almost certainly require a sharp dollar devaluation first.

And yes, this also means anyone not holding gold and other “real assets”—like silver, natural resources, and commodities—would see a sharp drop in their standard of living.

Now, personally, I’m not banking on a full return to the gold standard anytime soon, but I can easily see the U.S. taking incremental steps to stabilize the system and rebuild confidence in a devalued dollar after Trump’s Reset by gradually moving back toward gold.

Have a great rest of the weekend!

Lau