Should the US Treasury issue Gold-denomiated Bonds?

[jwoodie]

Could the issuance of gold-denominated bonds be a way for the US Government to reduce its borrowing costs? The idea would be to issue bonds valued at the current price of gold and redeemable in the same amount of gold at the end of the term (e.g., 10 years) With this security it would seem that a lower interest rate would have to be paid, and the value of the Government's gold reserves would be maintained.

How much of a discounted interest rate would investors accept in return for the guaranteed preservation of their capital? For example if the going bond rate was 4%, would investors accept a 2% rate on gold-backed bonds? I think I would. What is your opinion?

 

[Crepitus]

Could the issuance of gold-denominated bonds be a way for the US Government to reduce its borrowing costs? The idea would be to issue bonds valued at the current price of gold and redeemable in the same amount of gold at the end of the term (e.g., 10 years) With this security it would seem that a lower interest rate would have to be paid, and the value of the Government's gold reserves would be maintained.

How much of a discounted interest rate would investors accept in return for the guaranteed preservation of their capital? For example if the going bond rate was 4%, would investors accept a 2% rate on gold-backed bonds? I think I would. What is your opinion?

What an incredibly stupid idea.

 

[Toddsterpatriot]

Could the issuance of gold-denominated bonds be a way for the US Government to reduce its borrowing costs? The idea would be to issue bonds valued at the current price of gold and redeemable in the same amount of gold at the end of the term (e.g., 10 years) With this security it would seem that a lower interest rate would have to be paid, and the value of the Government's gold reserves would be maintained.

How much of a discounted interest rate would investors accept in return for the guaranteed preservation of their capital? For example if the going bond rate was 4%, would investors accept a 2% rate on gold-backed bonds? I think I would. What is your opinion?

The idea would be to issue bonds valued at the current price of gold and redeemable in the same amount of gold at the end of the term (e.g., 10 years)

Issue a $24,000 (10 oz.) bond today redeemable for 10 oz. of gold in your hand in 10 years?
Or the dollar value of 10 oz. of gold?

How much of a discounted interest rate would investors accept in return for the guaranteed preservation of their capital?

Why do you assume 10 oz. of gold will have preserved their capital?

 

[jwoodie]

The idea would be to issue bonds valued at the current price of gold and redeemable in the same amount of gold at the end of the term (e.g., 10 years)

Issue a $24,000 (10 oz.) bond today redeemable for 10 oz. of gold in your hand in 10 years?
Or the dollar value of 10 oz. of gold?

Investors' choice. I assume most would take the dollar value rather than have to store the gold.

How much of a discounted interest rate would investors accept in return for the guaranteed preservation of their capital?

Why do you assume 10 oz. of gold will have preserved their capital?

I assume that a limited commodity like gold will preserve its value better than unlimited fiat currency.

Which would you choose: A gold-denominated 10 year bond at 2% APR, or a dollar-denominated bond at 4% APR?

 

[Toddsterpatriot]

Investors' choice. I assume most would take the dollar value rather than have to store the gold.

I assume that a limited commodity like gold will preserve its value better than unlimited fiat currency.

Which would you choose: A gold-denominated 10 year bond at 2% APR, or a dollar-denominated bond at 4% APR?

I assume that a limited commodity like gold will preserve its value better than unlimited fiat currency.

Sometimes it does, sometimes it doesn't.

A dollar-denominated bond at 4% APR.