Inside Money : Shall we return to the gold old days?

Photo / Thinkstock

World Bank president Robert Zoellick has set the gold-bugs alight with his, slightly overhyped, call for a return to the Gold Standard - those good old days when you could rock up to a bank and exchange your dollar for a fleck of yellow metal.

Check out some of the reaction to Zoellick's statement and you'll see that people still get excited about the Gold Standard, in a misty-eyed kind of way.

A number of commentators pointed out that Zoellick wasn't actually calling for a reinstatement of the Gold Standard of yore, but a rethink of the current currency system which is showing signs of stress.

In its analysis The Economist, for example, says Zoellick's statement "mostly consists of laying out the weaknesses of the global monetary system and proposing sensible reforms for it" - with the gold comment a bit of a throwaway line.

According to The Economist, its fantasy to believe that gold can fill the monetary void.

"The world will simply have to fumble its way forward on the reserve currency issue, perhaps focusing first on the development of regional reserve currencies," it says.

This week in the Financial Times, Martin Wolf, also does a good job on the Gold Standard explaining its many technical flaws as well as its attractions.

But his final point is the killer. People, Wolf says, no longer believe that the price of gold is immutable.

"That faith has perished," Wolf says. "Moreover, everybody knows it has perished. So whenever the economy was in difficulty, the only question would be how soon the gold price would be changed or the link abandoned."

But with the gold price now breaching US$1400 per troy ounce it's clear many still believe the metal remains a solid 'store of value'.

And much of that stored value is physically stored at the Federal Reserve Bank of New York, which published this fabulous document in 2008.

As well as revealing the bank's vault held about 20 per cent of the world's monetary gold, the NY Fed flyer packed full of trivia.

Did you know, for example, that gold-stackers wear "strong, yet lightweight, magnesium shoe covers" to prevent ingot injuries?

Don't get into a shooting match, either, with the bank's special uniformed police officers because: "Twice a year, each federal officer must qualify with a handgun, shotgun and rifle at the Bank's firing range. Although the minimum requirement is a marksman's score, most qualify as experts."

But check out the photo on page 11 for a glimpse into the mundane reality of monetary gold. Some guy with a clipboard and two serious-looking ladies (is that Michelle Obama on the right?) have the final word on the store's value. They're there to ensure that we're not just worshiping painted bricks; that the gold is good.