Isn't the USA the largest sovereign holder of gold?
As such, whilst the US$ may well falter under such a scenario, the US's official holdings of gold will more than make up for this.
In 1999, the USA held 24.2% of the world's known gold reserves (8132 tonnes).
In July 2003, this was 8,134.7 tonnes. This was equivalent to 57% of its total foreign reserves.
With 32,151 troy ounces in each tonne of gold, that makes for 261,538,739.7 ounces (or 261.54M ounces).
Expressed @$4,500 per troy ounce, makes for US$1,176,924,328,650 or US$1,177 billion in currency terms.
At the end of 2Q03, US current dollar GDP was US$10,793.9 billion.
So, on a straight line extrapolation, with no interposing of timelines, changes in currency values, no changes in, or to, inflation, such a move in gold prices would translate to 16.5% direct gold backing for the US economy, and for the US$.
In contrast to this, the current value of US soveriegn gold holdings (at July 2003) was US$97,292,411,280, or US$97.3 billion. Adjusted, this equated to ~1.0% direct gold backing for the US economy, and for the US$.
So, far from collapsing, would not a rise of this magnitude in the gold price also trabnslate to a direct and increasing concentration of economic power in the hands of the US and eventually in the US$ (which, irrespective of any forced adjustments would essentially become a de-facto gold backed currency).
Just some food for thought in an otherwise ever evolvivng debate.
