Thanks for a constructive post. I suppose they could, but I suspect that there are good reasons as to why the coal and steel miners do it this way. Possibly to create some certainty in future projections? Also, leveling the other side of the ledger in terms of Broad Money Growth would not be a simple turning of a dial considering that financial transactions often do not happen overnight (banks making contracts that settle 30-60-90 days later). I suspect if the miners demanded it that way it would have to be done that way and then the RBA would be chacing it's tail constantly to counteract the banking sector that has already done its certain amount of expansion for the near future.
Well, the coal and iron ore miners aren't trading their commodities on the London bullion market so they basically have to use fixed-price contracts. One of the benefits of the London market is that someone who wants to trade X weight of gold and is prepared to deal at "market price" can do it at the fix and the transaction is transparent to both parties - the fix is a snapshot of what everybody agrees the "market price" was at a particular moment in time. The fix is priced in USD, GBP and EUR so the exchange rates are know as well and the RBA could just run down their USD/GBP/EUR reserves by settling the trade in those currencies (or at least do a back-to-back Print 'n' Pay series of trades where they print AUD at whatever the exchange rate was between the AUD and USD/GBP/EUR at the time).
While that is certainly a good system for traders I don't think it would be an absolute deal breaker for this idea to work.
An interesting discussion. Just as an aside, although it is not really comparable: In order to end the hyperinflation in Germany 1923, they introduced a new currency (replacing the old one, swapping 1000000000000 : 1). Since there were no gold reserves, they put a mortgage on the land - farmland, industrial areas etc. There are many ways to back a currency, you just have to be creative Of course I can not participate in the discussion about the political details, but ... either I missed it, or you are not talking about the in-ground gold, but the mined gold. It may sound naive, but one might consider the possibility to really declare in-ground gold as a gold reserve. According to reports found with a quick websearch ( http://minerals.usgs.gov/minerals/pubs/commodity/gold/mcs-2009-gold.pdf ) this would be 6000 tons for Australia....
We are talking about basically restricting the export of mined gold to the open market by the government buying up a set target of the total mined gold. Declaring in ground gold as a reserve would not be feasible. Not knowing what mining costs will be next year let alone in 5 years would make it impossible to be able to use the gold as a security of any sort.
They say that if you don't hold it you don't own it. Exploration is a necessity as without it the stated JORC resources would only be speculative.