Donald Trump is going to have a busy first 100 days in office. Based on his plan of action, released just hours after declaring victory in November, Trump plans to tackle dozens of policies ranging from tax reform to repealing and replacing the Affordable Care Act.

However, Trump has other plans in mind, too, extending beyond his first 100 days in office. Among them, he's suggested bringing back an idea that hasn't been U.S. government policy for 46 years. That's right folks: the gold standard.

Gold bars stacked inside a bank vault

Image source: Getty Images.

Is Trump really bringing back the gold standard?

There's a pretty good chance that some of you reading this right now probably weren't even alive the last time the U.S. had the gold standard in place (1971), so let's start with a brief description. Because most of the world's economic powers had different currencies in the 1800s and 1900s, gold served as the common denominator by which the U.S. dollar, British pound, French franc, and other major currencies were backed. In pretty simple terms, a dollar (or any other currency, for that matter) could be exchanged for actual gold upon demand, which presumably encouraged trade and trust and made things simpler.

In an interview with GQ last year, Donald Trump said the following when questioned about his views on the gold standard:

"Bringing back the gold standard would be very hard to do, but boy would it be wonderful. We'd have a standard on which to base our money."

This statement may come as little surprise given the Donald's love for all things gold, including his personalized helicopter. But Trump's love for the lustrous yellow precious metal digs far deeper than décor. When the U.S. government legalized the private ownership of gold in 1975, Trump was an aggressive investor. Selling for about $185 an ounce at the time, Trump noted that he sold his stake between $780 an ounce and $790 an ounce, calling the money-making investment "easier than the construction business."

Image source: Getty Images.

Why the gold standard?

Trump may not be alone in his interest in returning the U.S. to the gold standard. Some of Trump's biggest campaign rivals, including Ted Cruz, Mike Huckabee, and Ben Carson, have all implied some degree of support for the gold standard, with Cruz being the clear top supporter among these three.

Select data might also suggest more than limited support for the gold standard among the American public. According to a 2015 poll from Gallup, 39% of respondents approved of the gold standard in the U.S., compared to just 15% who disapproved. Yes, that does mean 46% of respondents were undecided, but it nonetheless demonstrates pretty strong favorability toward the gold standard based on those who gave a definitive response.

The appeal of the gold standard rests with those consumers who are growing weary of a ballooning federal deficit levels and nearly $20 trillion in national debt. With the need to have gold on hand to exchange for dollars on an as-needed basis, the Federal Reserve's ability to print money would be restrained, limiting the amount of debt that could be issued annually. Some pundits believe that the gold standard could be America's ticket to getting out of debt, or, at worst, balancing its federal budget.

Image source: Getty Images.

The gold standard probably isn't a good idea

Unfortunately, the idea of returning to the gold standard is probably a long-shot, even if Trump and a few high-profile politicians have offered their support. Most economists tend to agree that leaving the gold standard and moving to a lighter version of the gold standard in 1933 was a big reason why the U.S. emerged from the Great Depression, and many feel that heading back to the gold standard now would be a mistake.

And while supporters would suggests that the gold standard would rein in the irresponsible behavior of the Fed, the downside of reinstituting the gold standard is that it would also tie the Fed's hands in terms of offering fiscal stimulus to get the U.S. out of recession. Given the hardships U.S. financial institutions faced in 2008-2009, it's plausible that far more may not have survived had the U.S. still been on the gold standard. By a similar token, it would have been practically impossible for the Fed to have introduced three quantitative easing programs if we were operating according to the gold standard.

In addition to constraining what the Fed can and can't do, tying the U.S. to gold would mean accepting the wild swings that are sometimes inherent in the lustrous yellow metal. For example, between 2011 and early 2016, the price of gold on a per-ounce basis fell by 45%. Also, the gold market tends to stay in bull and bear markets for an extended period of time (a decade or longer), meaning recessions would be particularly hard for the U.S. economy to overcome if gold's per ounce price was also low.

As much as the Fed's strategy may cause investors to scratch their heads at times, the ability to influence the economy through monetary policy is simply too important to relinquish.

Image source: Getty Images.

Gold has plenty of reasons it could head higher

While we're probably not going to see a large rally in the price of gold anytime soon based on a return to the gold standard, gold itself has plenty of reasons it could head higher.

Trump himself is a good reason for investors to consider gold. Trump has no prior political or military experience, and it's always possible that his trade policies could get the U.S. into a trade war, or that his tax reforms won't work out as planned. Any aspect of Trump's reforms that fail to live up to expectations could be a catalyst for gold.

Additionally, even with the Federal Reserve raising the federal funds rate in December by 25 basis points, interest rates and yields on interest-bearing assets remain absurdly low. Low yields on bonds, CDs, and savings accounts discourage investors from purchasing interest-bearing assets because they could wind up losing real money to inflation. Instead, investors are still leaning toward gold, which may offer a higher return.

Supply and demand is a final reason why gold could be a worthwhile holding for investors' portfolios. Mining companies substantively cut their costs since gold fell from $1,900 an ounce, meaning supply has been constrained as well. Growing demand coupled with constrained supply growth is usually a good recipe for long-term price growth.

My suggestion: forget the gold standard and focus on the real drivers of gold prices.