Problems with a Gold Standard and foreign trade?

[John_James]

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@shivan

When foreigners want to buy goods from Switzerland they have to buy gold from the world market to give to the swiss.

Maybe. Any individual person could trade for anything they wanted.

When the swiss want to buy goods from abroad they will have to sell some of their gold on the world market to get foreign pieces of paper to pay for the goods.

Maybe. But again, any individual person could trade for anything they wanted. Part of the good thing about gold is you can take it pretty much anywhere in the world and it will be accepted. If you have a stingy seller, you may have to go through an intermediary and exchange your gold for the local currency first, but that wouldn’t be difficult. There is always someone willing to accept gold. That’s part of the reason people who talk about a gold standard are inclined to believe that’s the way the market would go…because gold is already universally recognized as money.

In reality the exchange between goldbacked swiss franc and foreign currencies will be the same as the gold price.

Basically. Supposing of course that the “Swiss franc” remains a completely honest fiduciary medium.

My question is then what would happen if the price of gold suddenly surges? I know this happens with foreign currencies as well. But since a) gold surges probably have bigger magnitude (gold up 400% over 10 years) and b) there is no central bank to print money would a gold surge not prove very problematic for competiveness of a country on a gold standard?

A gold “surge” in terms of what?

Prices of that country´s products might suddenly explode in terms of foreign currency? I know that having a strong currency has its advantages since one can buy more inputs from abroad etc. but a very sudden rise gives no time for such adjustments?

Again, a “sudden rise” in terms of what? Because of what?