[quote=urbanrealtor]Since we don’t currently have a gold or silver standard, what is the importance of gold in long term government storage?[/quote]
The view of many economists (and probably Ben Bernanke) is that there is no need to have gold in the vault. Others would counter that having all this gold helps provide credibility (and stability) to the dollar. If there was a serious dollar crisis, the fed could always use the gold to help shore up the dollar. Think of it as an insurance policy, you don’t really need it, until you need it.
There’s another possible explanation, because it’s there. Openly selling it could be too disruptive to the markets. It would be hard to estimate what reaction the markets would have to an announcement that the fed was selling all it’s gold. So, no one wants to chance the reaction from selling it all. (Although presumably you could sell it off slowly and quietly and I think that’s what Ron Paul thinks has happened.)
Personally, I think it’s a combination of reasons. But as far as I know, there isn’t an overwhelming reason to have that gold in the vault since we don’t back our dollars with it.
