Plot twist your government tells you that they're offering you a gold standard you can convert your cash to a currency completely pegged to gold reserves and based on the spot price of gold but it's in the form of a cbdc My boy rolling out a government-backed gold coin last year that was an attempt to give its citizens a more stable option of their own currency the Zim dollar which was getting destroyed by inflation now these new coins they were considered legal tender that part was novel but like weTalked about previously this was an expensive experiment in a country with an average annual salary of twenty six thousand dollars the more typical annual income well that's more like seven thousand dollars so a two thousand dollar gold coin it's not really feasible as a wide scale fix if a personThere had money well they could already buy something like a Krugerrand the difference though is that Zimbabwe's own coin their own gold coin that was given a value equal to the spot price of gold and it was legal tender so the idea was that you could go to the store and youCan spend it now you can imagine the issue nobody's going to go to the grocery store and pay with a two thousand dollar gold coin what was actually happening instead is that people were still exchanging Zim dollars for USD now the US dollar it's also legal tender there a lot more stableThan the Zim dollar and it's far more divisible than a two thousand dollar gold coin so the government's goal there of reducing the Reliance on foreign currency probably didn't work out reports show that Zimbabwe issued 25 000 gold coins but the local demand for US Dollars has not decreased so now theGovernment is rolling out a gold-backed digital currency with the same goal but this route allows people to get in with a much smaller amount of Zim dollars they don't have to spend a month's worth of income or a quarter's worth of income on a single coin so this is interestingFor a few reasons but we can't really cover the topic without first saying that Zimbabwe's economy is a mess right now and the United States we wake up knowing what the price of goods are going to be priced in USD same goes for anyone in Canada the UK AustraliaGermany those are the top five countries people watch this channel from it's a little bit hard for us to relate to that I've seen reports of Zimbabwe businesses literally printing their own money they give that as some kind of future purchase coupon that bypasses the volatility of the Zim dollar that's howBad it is and to make it worse it's hard to get a hold of US Dollars you have to buy them on the street and if the currency conversion is about a thousand to one USD the money changers might charge as much as 17.50 for one USD soIt's a tough situation you might call it a corrupt situation and I'm no expert on Zimbabwe just given the background to show that for all we talk about potential issues here they are going through some of these things right now and they have been for a while Zimbabwe has been struggling with hyperinflationFor more than a decade inflation in February hit 230 percent so there's just no comparison to what we're used to here what we can look at though is the idea of a digital currency being backed by a physical asset like gold that doesn't take a whole lot of imagination to doAnd there are a few crypto projects that are currently backed by gold today now I don't know a whole lot about them but paxg pops up in the comments now and then they have their gold vaulted at the lbma tether gold that's another similar project and Perth Mint gold token theyActually have their gold backing vaulted it at the Perth Mint now there are others but again I don't really know enough about them to say a whole lot and their cryptocurrencies so it's a space that's just not very regulated and I don't know what that means in terms ofGold backing claims I assume that what they say is true but again I always assume that any crypto token has risks associated with it the same could be said about any investment stocks or anything else but cryptos at another level so the reason I bring that up isJust that we've gone from gold in your possession you having physical gold to a digital token and the promise of it being backed by Google Now to me these are very different things even if it's a one-to-one backing it still feels like a gold ETF on a blockchain I mean theDifference is in the upsides of course are that it would potentially be as stable as gold and then also that you could easily spend it so if your currency is on some kind of hyper-inflationary roller coaster it might be pretty interesting to you in Zimbabwe is definitely in that categoryNow this is a tough statement to make you can't really group all of Africa but Africa is one of the fastest growing crypto markets in the world so the introduction of a gold-based cryptocurrency well hypothetically gives a possible stability to a population it's presumably familiar with how itWorks and since the goldback digital currency will be issued by the Central Bank it will also be regulated again presumably if you live in a country not going through hyperinflation at the moment any country with a stable currency well it seems a little bit odd to switch to something that's based on aMore rapidly fluctuating value like gold think about using a gold back currency to pay a bill on any day that Jay Powell or Janet Yellen are talking it would just be weird you wouldn't know if it was going to go up or it was going to goDown it would just add one more layer of unpredictability to the cost of goods when do you go out and buy your groceries and for hats do you do it Tuesday night or do you wait until Wednesday afternoon you just don't know this is a weird situation it's alsoComplicated Zimbabwe is mixing three things they're mixing cryptocurrency gold and a central bank currency so really this is a gold-backed cbdc now hypothetically it would make paying bills easier than paying with cash and make it more stable and paying with Zim dollars but if we had something likeThis here in the United States well and I guess we do if you count things like Pax G well it would seem like something that I would want to hold as a hedge it wouldn't be something that I'd want to run out and use as a paymentOption not to mention the fact that you're trying to replace gold and dollars with something that really has no privacy so this seems like an interesting experiment the value of having a gold Peg that sets a floor on the currency it's pretty clear and stabilizing the value compared to theZim dollar also seems like a good thing so here's where I'm skeptical I don't know enough to give an informed opinion about Zimbabwe's government but I know a little bit about the United States and how the general public trusts the amount of gold being held in Fort Knox now itMight all be there but there is some skepticism about that 261 million ounces the United States hasn't had a comprehensive audit really since 1953 I guess you could say 1985 there was an audit performed as well and in 1974 Congress was allowed in to Peak andThere are audits going all the time as well we've seen them I don't doubt that but basically you have the government telling you how much gold you're holding so if you don't have a requirement for an independent audit you meaning the government really can issue as manyTokens as you'd like you simply set the value of one unit to the spot price of gold and then you issue as many as you want and at that point really you're just issuing a cbdc with the value that's pegged to gold and maybe that's better than using Zim dollars but itAlmost feels like gold is the lipstick on the pig here it's just kind of a thinly veiled cbdc with a credibility bump coming from Gold's historic performance but I could be wrong so let us know what you think would you be interested in a cbdc if that cbdc wasBacked by gold and pegged to its price I think I know what you're going to say but you might surprise me and what if it wasn't issued by the central bank would that change things let us know and while you're in the comments be sure to hitThe like button if you found any of this interesting be sure you're subscribed with notifications turned on if you'd like to see more on the topic and if you're still here thanks again for watching I always appreciate your time take care