Here’s an interesting little calculation of how many dollars the Fed would have to charge for an ounce of its gold reserve in order to cover all of M1. (M1 is the narrowest definition of money, which includes cash and bank checking accounts.)
- In 1960 the Fed owned 506 million ounces of gold and M1 stood at $140 billion. So the Fed could “cover” its gold reserves at $277 per ounce.
- In August 2014 the Fed owned 261 million ounces of gold, slightly more than half of what it owned in 1960, and M1 stood at $2,856 billion. So today the Fed would have to charge just under $11,000 per ounce in order to buy back all of M1 and not run out of gold.