So what would this do to the price of gold? Would governments try to force people to turn their gold it at a price they decide is “fair”?
If any major country adopts a gold standard, people would start using it at the expense of any fiat currency. This would greatly diminish the ability of the US government to fund its operations through debt and inflation of its currency. It would cause a major reduction in the size of the US military and other nations would naturally rush to fill the power vacuum that results.
Cynically, I would also suggest that once this currency became entrenched, the issuing government could start to debase it, to its own advantage.
As long as one major economy links its currency to gold, the US government will not be able to effectively outlaw gold as a currency because the demand from a growing, major economic region will still be strong. It is interesting to see as China is opening up the gold market to individuals, EU countries have sought to restrict gold purchases and the use of cash.
Visit any jewelry store in Hong Kong and you will quickly see what the mainland’s standard currency is. :)