Below is an infographic that attempts to explain the case for the re-monetization of gold.
The basic points are as follows:
1. The debt/GDP of the G20 in aggregate will soon be over 1
2. Central bank reserves of US dollars are declining, while gold reserves are rising. This suggests gold may be used to repay the debt.
3. External government debt (the amount of government bonds held outside the country) is a key statistic, as high external debt has long been a catalyst for currency devaluation and bond market chaos -- and governments have less control over how foreign debt holders will respond.
4. Using just the US and the Federal Reserve has an example, if the US wishes to pay of its 5.557 trillion in external debt with its 287 million ounces of gold, the gold price will need to be near $20,000 per ounce.
5. A sign this trend is underway is that the ECB has begun re-valuing its gold periodically on a marked-to-market basis. As a result gold has become a bigger part of the ECB's balance sheet, in spite of no real increase in the number of ounces it holds.
6. The big wild card here is a new international monetary agreement that would make it official and require countries to pay some or all of their debt in gold. Such an agreement could also involve large portions of the debt being cancelled, as well as regulations on how much gold banks must hold. One such regulation that is coming into place now is Basel III