It can be difficult to grasp that under a gold standard there is no “price” of gold. We’re used to gold being expressed in dollars but what if a dollar was gold? What if you wanted to buy wheat or steel with gold? If dollars were gold these things would be valued not in dollars but in terms of gold. We wouldn’t care about the price of gold; we would instead want to know how much our gold could buy. The price of goods, commodities and services would all be valued in relation to gold and a “dollar” would simply be another word for a specified amount of gold.

Gold is always worth what it can buy. To ask what the price of gold is in terms of dollars is redundant under a gold standard. If a dollar were defined as, let’s say 1/2000th of an ounce of gold, we would then need to know how much of any given commodity 1/2000th of an ounce, or a dollar of gold would buy. Under a gold standard that would be determined by the marketplace—as it was for centuries. Only under a dollar standard has the “price” of gold become an issue. Why? The dollar depreciates. Since we went off the gold standard the dollar has experienced an almost 100% devaluation. In 1913 an ounce of gold could be bought for...