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Gold rush? Why gold standard glitters for some in GOP.

Backers of a gold standard – a view popular with many tea party advocates – see a gold-backed currency as a way to rein in government spending and minimize the role of the Federal Reserve.

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An employee of Tanaka Kikinzoku Jewerly K.K. shows a gold bar at her jewelry store in Tokyo in 2003.

Issei Kato/REUTERS

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Interrupting “Bonanza,” one of the most popular TV shows in the nation, President Richard Nixon in 1971 told the country he was “temporarily” ending the link between gold and the US dollar.  

Since then the value of the dollar has “floated,” depending on the state of the economy and Federal Reserve policy.

Now, at least two out of seven major Republican candidates have said they support returning to a “gold standard” which would require the US to backup every dollar with gold stored in Fort Knox or the New York Federal Reserve.

Backers of a gold standard – a view popular with many tea party advocates – see a gold-backed currency as a way to rein in government spending and minimize the role of the Federal Reserve. Traditional economists consider the concept a bad idea, arguing it would hamstring the ability of policymakers to respond to changing economic times.

The most vocal pro-gold-standard candidate is Ron Paul, now running third in Iowa polls. It is one of his signature issues. “We need honest money, a gold standard and not paper money out of the Federal Reserve system,” said Mr. Paul at a debate in Ames, Iowa in August.

Newt Gingrich, running second in Iowa, says he is in favor of “hard money with a very limited Federal Reserve.” He also said he favors a dollar that is “good as gold.”

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