Former President Donald Trump has expressed admiration for the gold standard, fueling speculation about whether he might pursue policies to reestablish a gold-backed U.S. dollar. While such a move would be highly complex and unlikely, there are several theoretical paths he could explore if he were to seek a closer relationship between the U.S. dollar and gold. However, significant economic, political, and international obstacles make the return to the gold standard highly improbable.
Executive Actions and Potential Influence
If Trump were to take unilateral action, he could use executive orders on gold to influence the dollar’s relationship with gold. Previous presidents have used similar methods to alter monetary policy without congressional approval. One potential avenue would be directing the U.S. Treasury to utilize the Exchange Stabilization Fund to buy and sell gold, effectively creating a soft gold-backed currency. While this would not amount to a formal gold standard restoration, it could subtly align the value of the U.S. dollar with fluctuations in gold prices.
Another possibility would be the establishment of a gold target for the dollar. Instead of directly backing currency with gold reserves, this approach would signal that the dollar should maintain a certain value relative to gold. While this would not legally bind the Federal Reserve’s monetary policy to gold prices, it could serve as a guideline for financial markets and economic decision-making. However, without legal or institutional enforcement, such measures would likely have limited long-term impact on U.S. dollar stability and gold markets.
The Legislative Path and Congressional Hurdles
Any substantive gold standard restoration would require congressional approval, which presents significant legislative challenges. In recent years, there has been renewed interest in the idea, exemplified by the introduction of the Gold Standard Restoration Act (H.R.2435). This bill proposes pegging the U.S. dollar to a daily market price for gold and mandates that Federal Reserve Banks exchange dollars for gold at this rate.
Despite some congressional support, passing such legislation would be a difficult endeavor, particularly in a divided government. Achieving enough political backing to enact a law of this magnitude would require strong bipartisan consensus, which remains unlikely given the modern monetary policy framework that prioritizes fiat currency and flexible interest rateInterest rates are the cost of borrowing money or the reward for saving money, typically expressed as a percentage of the principal amount. When it comes to interest rate trading, … adjustments. Even if Trump were to push for the bill’s advancement, success would hinge on controlling both chambers of Congress with enough allies willing to challenge the existing financial system.
International Coordination and Institutional Barriers
For a meaningful return to the gold standard, international cooperation would be necessary. The global financial system relies on fiat currencies, and a shift back to gold-backed monetary policy would require extensive negotiations with major economies, including the Eurozone and China. Without coordination among the world’s largest financial powers, an isolated U.S. move to gold-backed currency could create monetary instability rather than strength.
Furthermore, institutional barriers complicate the feasibility of such a transition. In 1976, the International Monetary Fund (IMF) amended its Articles of Agreement to prohibit member countries from directly pegging their currencies to gold. For the U.S. to reinstate a formal gold standard, it would likely need to navigate or renegotiate these international monetary policy agreements. Given the resistance from global financial institutions, the likelihood of such coordination remains low.
Challenges and Economic Implications
The obstacles to restoring the gold-backed U.S. dollar are immense, both economically and logistically. One of the most pressing concerns is the insufficient U.S. gold reserves available to back the current money supply and national debt. The U.S. economy and federal deficit have expanded significantly since the gold standard was abandoned, and the country does not possess enough gold to support a full transition without significant economic disruption.
Additionally, returning to a gold-backed monetary system would limit the Federal Reserve’s monetary policy flexibility. Under a gold standard, monetary policy becomes rigid, restricting the government’s ability to stimulate economic growth during downturns or financial crises. The gold supply itself is subject to volatility, and tying the U.S. dollar to such fluctuations could introduce new risks into the financial system.
Moreover, shifting back to a gold-backed economy would require fundamental changes to global financial structures. Since most international transactions and reserves are based on fiat currency, a sudden change could create economic instability and undermine the U.S. dollar’s reserve currency status.
While Trump has shown interest in the gold standard, the reality of reinstating such a system presents significant challenges. Although he could take executive actions on gold policy to influence gold markets or promote a gold-linked dollar, a full gold standard restoration would require substantial congressional support and extensive international monetary coordination. The practical barriers—including insufficient gold reserves, economic rigidity, and global financial agreements—make such a shift highly unlikely.
Most economists and central bankers remain opposed to a return to the gold standard due to these challenges, reinforcing the improbability of its revival. While Trump could take steps toward linking the U.S. dollar to gold in a symbolic manner, the likelihood of a full-fledged gold-backed currency system remains exceedingly low.
Lance Jepsen is the senior personal finance writer for Guerilla Stock Trading who has spent more than 25 years covering the stock market and economics. In addition, Lance has worked as a private stock analyst for a number of high worth individuals.
