Freegold is a way to determine the value of our global currencies by using gold as the ultimate reference point. So rather than determining the value of gold by looking at it's dollar price, all currencies will be valued by their reference to gold.
Today gold is generally viewed just a commodity that is traded by mostly exchanging claims on gold rather than the gold itself. Fiat currencies are now so unstable that there is an inevitable unstoppable unwinding coming to the global currency system.
Freegold is the most stable and likely outcome of the this manifesting global situation.
At some point, possibly in the next two years, the 'gold price' will crash from people selling ETF's and other paper claims on gold while premiums on physical gold will be beyond our current comprehension due to it's value as a global reference point.
The following story, from
http://fofoa.blogspot.com
Anyway, for whatever reason, I thought to myself, "Good thing I have this new understanding. I bet you that means I'm going to run into Robert soon (the former chair of the econ department) so I can try to explain Freegold to him again. . . . . .
"So can I try to explain Freegold to you again?"
"Sure" he says. So we sit at the same table and I start talking about gold and he says to me,
"Bad idea."
"What's that?" I said.
"Going back to a gold standard" he said.
"No Rob, not a gold standard. The world is never going back to a gold standard."
So I keep talking and 3 or 4 more times he says,
"I can't understand what you are talking about if it is something other than gold backing a currency."
So I say to him,
"Okay, think of this. Imagine you buy an AM/FM radio in USD for say, 10 bucks, then go to Japan and see the same radio for 900 Yen, do you see how this radio can be priced in two currencies?"
He says,
"yeah, that's called purchasing power parity".
"Exactly! Now think of gold in terms of purchasing power parity".
So he thinks for quite some time and says to me,
"So, countries are going to settle balance of trade in real gold?"
"Yup".
"And who is going to clear these trades?"
"I'm not sure, but my best guess is the BIS."
"Do you own gold?"
"Yes, I own gold."
BIG SHOCK. He moves his chair back.
"How much?"
"I'm not going to tell you that Robert. Why don't you tell me how much you have in your retirement plan, how much your salary is, and how much debt you have?"
"Which one should I answer first?"
"Rob, I'm not going to tell you how much gold I have."
"And when did you start buying?"
"Oh, I made my first purchase back in 2005. But I started trading silver for gold about 3 weeks ago."
