I recently heard a respected economist repeat one of the most irksome misconceptions about the gold standard: That the price (or value) or gold never changes, and any apparent fluctuations are actually changes in the value of the dollar. This is easily disproved by simply looking at an inflation-adjust graph of gold prices
If it were true that it represented changes in the value of the dollar adjusting for inflation should render the graph a flat line, but clearly it doesn’t. Gold standard advocates will sometimes follow up that it instead represents the more nebulous concept of confidence in the value of the dollar, which is conveniently impossible to measure with any precision, but we can still disprove it fairly easily
The reason is one of the most fundamental rules of economics: prices are a function of supply and demand. As long as gold is traded in a free market, as long as people are able to buy, sell, and mine gold the market will always effect the price of gold. Sure you can argue that confidence in the dollar sets demand for gold, and that certainly is a factor, but there are still countless other factors, including confidence in the Euro and other currencies, simple speculation, and any other reason people might want gold (such as jewelry of electronics) You would have to posit that gold is somehow magically immune to these market forces (and that only USD speculators hedge with gold futures)
Ignoring the fact that the US government only has enough to gold to secure 1 in ever 5 US dollars currently in circulation, the gold standard, a stable currency. and capitalism cannot co-exist. You must choose no more than 2. If you want a stable dollar you must maintain a stable price, and this means controlling either supply or demand. Obviously you can never control demand so that is right out, leaving only supply. With fiat currency the Federal Reserve clearly has control over the supply of money, but on a gold standard there is no way to control the supply of gold in a capitalist environment. You would not only have to remove gold from the free markets in the US, but internationally as well,
Imagine this: Currently US gold reserves stand at 8133 tons. China and Russia control a combine 5000 tons (and China has been growing their reserves in recent years) Now what would happen to the price of gold (and thus the value of the dollar, and in turn our economy) if China and Russia decided to flood the market by selling off all of their gold reserves? Gold, the dollar, and our economy would all tank.
Many gold standard advocates already fear China has a gun pointed at our economic head, moving to a gold standard would load the bullet in that gun