Thursday, July 8, 2010

Gold Backing and the Fractional Reserve

In a recent post, Sackerson writes:

There is something like 100 ounces of gold "on paper" for every ounce of gold you can hold in your hand. I now often see online comments recommending the possession of physical gold because of concerns over delivery on all those paper promises.

A hundred ounces of gold on paper for every ounce you can hold in your hand. It sounds almost like fractional-reserve banking.

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