Be careful what you wish for Ron Paul. What a world on the gold standard may look like

CNBC's Mark Koba on Thursday has a critical look at US presidential candidate Ron Paul's ideal world – one without a Federal Reserve and a return to the gold standard.

Paul who belongs to the libertarian wing of the Republican party, has published two tomes on the topic – End The Fed and The Case for Gold.

Koba writes tying the US dollar's value to a ounces of gold has been done before — even during times that a Fed was in place:

Reverting back to gold would do more harm than good, even in the Fed's worst days, says David Abuaf, CFA and CIO of Hefty Wealth Partners.

"The gold standard brought about some long-run price stability but it's also led to short-run volatility," Abuaf explains. "It acts as a limit on economic growth. The money supply would be based on the production of gold. The management of money is easier with a fiat currency."

And there may not be enough gold to go around to back up the dollar — it could be hostage to the whims of gold traders.

Click here to read further at CNBC.

Ron Paul may own the gold debate among presidential contenders but he is not the only one promoting stronger ties between the value of the dollar and bullion.

Newt Gingrich while campaigning in South Carolina recently said that he would appoint a commission to look into gold "because a dollar you save today ought to be worth a dollar 30 years from now."

NPR quotes Simon Johnson, former chief economist at the IMF, who has some sobering arguments against Gingrich and Paul:

"First of all, the supply and demand for gold around the world changes. It changed a lot during the 19th century, so there were big fluctuations in value from that," he says. "Secondly, the dollar was convertible into gold — except when it wasn't."

In the 1800s, before U.S. greenbacks became dominant, banks would issue currency backed by gold, but in financial panics, that convertibility was often suspended. And, says Johnson, being under the gold standard does not necessarily force governments into fiscal rectitude. That was obvious back in 1812 when the British attacked Washington and burned the U.S. Treasury.

"The only good news for the Americans the day the British burned the Treasury was [that] there was nothing in the Treasury. The country was completely broke," Johnson says. "You could absolutely drive the country into the ground, ruin public finances and face the awful consequences even under the gold standard."

MINING.com reported how Paul expressed his sentiments about gold in congressional hearings to current Fed chief Ben Bernanke in July. Click here for video of the exchange.

Jack Caldwell of Infomine had an in-depth look at Romney, Gingrich and Ron Paul's views on and likely support for the broader mining industry:

Ron Paul’s fortune is mainly invested in Canadian junior mining companies should give up hope and a reason to support him become president. Just think, if the following is true, as soon as Paul becomes president, mining by those Vancouver juniors around the Canyon will explode and Ron will be the richest president in history.

Eric McWhinnie of Wall Street Cheat Sheet wrote in December, according to the latest data available from his 2010 Form A financial disclosure statement, Paul is heavily invested in gold (NYSEARCA:GLD) and silver(NYSEARCA:SLV).

The WSJ explains, “The remainder of Rep. Paul’s portfolio – fully 64% of his assets – is entirely in gold and silver mining stocks. He owns no Apple (NASDAQ:AAPL), noExxonMobil (NYSE:XOM), no Procter & Gamble (NYSE:PG), no General Electric (NYSE:GE), no Johnson & Johnson(NYSE:JNJ), not even a diversified mutual fund that holds a broad basket of stocks.”

Click here for the list of Paul's top 15 stock investments.

It's not only Paul that is invested in gold. Frontrunner Mitt Romney also holds gold, but it's a fraction of his portfolio.

The FrumForum in August teased out an interesting factoid after Republican presidential candidate Mitt Romney filed his financial disclosure report: he and his wife Ann own a significant amount of gold.

Out of a personal wealth of $190 and $250 million, the couple own between $250,000 and $500,000 in gold.