Could the issuance of gold-denominated bonds be a way for the US Government to reduce its borrowing costs? The idea would be to issue bonds valued at the current price of gold and redeemable in the same amount of gold at the end of the term (e.g., 10 years) With this security it would seem that a lower interest rate would have to be paid, and the value of the Government's gold reserves would be maintained.
How much of a discounted interest rate would investors accept in return for the guaranteed preservation of their capital? For example if the going bond rate was 4%, would investors accept a 2% rate on gold-backed bonds? I think I would. What is your opinion?
How much of a discounted interest rate would investors accept in return for the guaranteed preservation of their capital? For example if the going bond rate was 4%, would investors accept a 2% rate on gold-backed bonds? I think I would. What is your opinion?