I never imagined how quickly developments have been shaping in the direction of my perspectives.
Here is what I wrote last Sunday
Global Central banks appears to be rediscovering gold as possibly reclaiming its role as money in a new monetary order. A new monetary order is not question about an if, but a when…
Those who obstinately relish the bias that gold is nothing but a barbaric relic will likewise suffer from taking on the wrong positions. But they eventually will succumb to the shifting expectations as with many monetary authorities today. The reflexive process of having prices influence fundamentals has clearly been taking shape.
Here is from Monday’s news (Reuters)… [bold highlights mine]
The world's largest economies should consider gold as an indicator to help set foreign exchange rates, the head of the World Bank said on Monday in a proposal that threw open the acrimonious currency debate days before a summit of G20 nations.
Writing in the Financial Times, World Bank President Robert Zoellick called for a new monetary system to replace the floating rates adopted in 1971 known as Bretton Woods II…
The former U.S. trade representative, who served in several Republican administrations including Treasury, said the new system "is likely to need to involve the dollar, the euro, the yen, the pound and (a Chinese yuan) that moves towards internationalisation and then an open capital account".
"The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values," he added.
The geopolitical pressure for a monetary reform possibly anchored on gold appears to be mounting.
And gold touched the $1,400 an ounce level. More uncertainties in the US$ and other currencies, more trust in gold.
ReplyDeleteWe've got to go back to quality money folks.
ReplyDeleteThere isn't enough gold in the world to use it as an actual currency as in gold coins which were used in the ancient world, nor is that practical in our modern world of ATM's, EFTPOS, online banking and credit cards. Any real currency would have to be a fiat currency, and having a fiat currency "backed by" gold is meaningless as long as the currency can be endlessly inflated by the incessant printing of more currency whether they be dollars, euros or some future global currency unit. It's the monetary system that needs to be fixed not the currency unit. Basically we need to solve the multi-trillion dollar global debt problem in some other way than "quantitative easing" which is just rolling over the debt.
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