Zimbabwe tried backing its money with actual gold, and it still lost half its value in six months because nobody trusts the government.
SSRN · March 13, 2026 · 6284918
Why it matters
It's a common belief in 'hard money' circles that returning to a gold standard would instantly stop hyperinflation. This evidence shows that without fixing the underlying policy that forces the government to print money, a gold backing is essentially a cosmetic fix that the market will quickly see through.
From the abstract
This paper investigates the relationship between broad money supply (M3) and the parallel market exchange rate in Zimbabwe over the period 2016-2024. Using quarterly data on M3 and the Old Mutual Implied Rate (OMIR) as a proxy for the true parallel market rate, we find a statistically robust relationship between M3 growth and currency depreciation across multiple specifications. The OLS regression in levels yields an R² of 0.973 (p<0.001); the first-differences specification, which addresses pot