‘He who holds the gold makes the rules’ is a saying that holds more truth than a surface reading indicates. It is not simply a statement that those who are rich get to make up the rules through the influence their money buys.
No part of this saying indicates the amount of gold being held. This is not about the amount of wealth one possesses, but rather the way in which it is held. What difference to the rules does the way money is held make, and why does it allow one to ‘make’ the rules?
One of the most significant aspects of the currency we use is that it’s value is based upon our faith in the government that has issued it. The government has the authority to regulate, change, manipulate, revalue that currency at will. There are only two constraints that prevent them doing this beyond a certain limit. One is that if they abuse the currency excessively, people will lose faith in it, leaving it with little or no value. The other is that there are other alternatives for people to use as their money. There are other fiat currencies, subject to the whims of other governments, and there there are the metallic currencies – gold, and to a lesser extent, silver.
Storing your money in gold moves it beyond the easy reach of the government to manipulate. As value is moved out of a currency and into gold, the capacity of a government to print money and pull value from the economy is reduced.
If people hold the gold, the government governs at their pleasure; the people have the capacity to devalue the government’s currency. If the government holds the gold, we, conversely, serve them. He who holds the gold, makes the rules.