Golden Asteroid Might Yet Have a Place in the Western Financial System

By Chris Powell

The Gold Anti-Trust Action Committee (GATA) may have been too hasty in endorsing a Space Daily report — GATA reference — concluding that asteroid gold mining would never prove viable, particularly regarding the asteroid Psyche. Psyche — formally designated 16 Psyche and located in the main asteroid belt between Mars and Jupiter — is believed to hold vast quantities of metal, including potentially gold, and NASA's Psyche spacecraft, launched in October 2023, is on course to reach and study the asteroid by 2029. Space Daily argued that reaching the asteroid, extracting metal, and transporting any meaningful quantity back to Earth would be prohibitively expensive. Furthermore, the publication suggested that even if it could be accomplished, the resulting surge in supply would crash the price of gold to zero.

But does the metal actually need to be brought back to Earth to be integrated into the global financial system?

The Limestone Standard of Yap

Economists of a certain generation may remember the story of the monetary system used on the South Pacific island of Yap, which essentially operated on what could be described as a limestone standard. Gold was scarce around Yap, but limestone was available on neighboring islands, and the islanders adapted accordingly. They fashioned money from round limestone slabs with holes carved through the center. The largest coins were extremely difficult to transport, so ownership was sometimes determined by community consensus.

According to the well-known account, a vessel transporting an enormous limestone coin from a nearby island to Yap was caught in a storm, and the valuable cargo was lost overboard. However, everyone knew the coin existed and, although unrecoverable, rested on the ocean floor nearby. The coin was credited to the individual who had purchased it, and over time it continued to be traded and reassigned to new owners.

The economist Milton Friedman reportedly drew a parallel between this Yap tradition and the gold standard of more advanced civilizations: gold served as the foundation of international monetary reserves, yet it rarely physically moved out of central bank vaults — particularly those of the Bank of England and the Federal Reserve Bank of New York. Friedman explored this comparison in his 1991 essay "The Island of Stone Money," which has since become a frequently cited reference in discussions of monetary theory.

Friedman's Flawed Metaphor

Friedman's comparison to Yap's limestone standard was imperfect, however. While gold in the modern Western financial system seldom moved, it remained accessible and could be transferred — at least originally. Indeed, gold is now moving at a notable pace from Western vaults to Eastern ones, a trend reflected in the substantial gold reserve accumulation by central banks in countries such as China, India, and Turkey in recent years.

Even so, the Western financial system has long followed the Yap model in order to preserve and exploit what remains of its gold underpinnings. As GATA has documented over the years — GATA documentation — Western gold price suppression policy has, for decades, relied heavily on creating enormous imaginary gold supplies. This has been achieved through the exaggeration and dishonest attribution of gold reserves via derivatives and false accounting, allowing multiple entities and investors to hold claims on the same physical gold. In practice, this means that instruments such as unallocated gold accounts, futures contracts on exchanges like COMEX, and gold-backed exchange-traded funds can collectively represent claims on physical gold far exceeding the metal actually held in vaults. The arrangement has functioned as long as few of the purported gold owners demanded physical delivery, with most instead leaving the oversubscribed metal on deposit with the participating banks and governments.

On Yap, the limestone coin at the bottom of the sea was apparently never oversubscribed. The Yappers were not as sophisticated — that is, not as susceptible to dishonesty and gullibility — as modern Westerners. Of course, the Yappers had the advantage of operating without financial news organizations or the major financial houses that wield influence over financial media in the West.

Asteroid Gold and the Future of Paperization

It is conceivable that the West's oversubscription of gold could be extended even further with the assistance of Psyche and NASA. Suppose it were broadly agreed that Psyche contains vast tonnages of gold, and suppose ownership of that gold could be allocated by international agreement among major governments and central banks. That gold could then be paperized — converted into financial instruments — and its price driven down as though the metal had actually been delivered to Earth. Indeed, this new, physically unreachable gold could render the International Monetary Fund's Special Drawing Rights obsolete; those reserve assets, whose value is determined by a basket of five currencies — the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound — remain perpetually available for formal monetization should the gold price control mechanism collapse.

With "Money for Nothing" four decades ago, the Dire Straits musicians captured the spirit — though perhaps aimed too low:

Now look at them yo-yos. That's the way you do it. You play the guitar on the MTV. That ain't working. That's the way you do it. Money for nothing and your chicks for free.

Now that ain't working. That's the way you do it. Lemme tell ya, them guys ain't dumb. Maybe get a blister on your little finger. Maybe get a blister on your thumb.

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About the author: Chris Powell is a journalist in Connecticut, where he served as managing editor of the Journal Inquirer, a daily newspaper in Manchester, for 44 years. He continues to write political columns for that paper and five others in the state and frequently appears on talk radio programs. He is secretary/treasurer and co-founder of the Gold Anti-Trust Action Committee Inc. (GATA), established in 1999 to expose and oppose the rigging of the gold market by Western central banks and their investment bank agents. He edits the GATA Dispatch, the organization's daily electronic newsletter. He is also a member of the Board of Directors of the Connecticut Council on Freedom of Information and served as its state legislative chairman from 2004 to 2010. GATA is a civil rights and educational organization based in the United States, tax-exempt under the U.S. Internal Revenue Code.