Mainstream Media’s Increasing Attention To The Gold Standard

Below is an interesting perspective on gold from the Economist,

THE creditworthiness of a country used to be judged by the level of its gold reserves. Under the gold standard, a fall in reserves would lead to the central bank taking crisis measures. The country with the biggest reserves in the world is, not surprisingly, America, with 8,134 tonnes. But expressed in terms of reserves per person, the picture looks very different. It is no surprise to see Switzerland at the top of the list, but why is Lebanon in second place? Its reserves were purchased when the country was the Middle East’s financial centre in the 1960s and 1970s and safeguarded through the civil war years by legal restrictions and by central-bank governor Edmond Naim, who according to legend slept in the bank to protect the hoard. China does not feature in the list at all; but gold bugs fantasise about what might happen if the people’s republic were to swap just some of its mountain of Treasury bonds for bullion.

What’s interesting is that with gold prices over $1,500, there has been increasing instances of mainstream media’s reference to the gold standard.

Google Trends reveal of the upward trend in searches made on the “gold standard” (green trend line above window).

And at the bottom pane, in 2010-2011 (red circle) news reference volume has significantly improved compared with 2004-2007 and in 2008-2009.

Signs of things to come? Hmmmmm

Search Trends Reveal Growing Concerns Over Hyperinflation

During the last quarter of 2008, the near collapse of the US banking system prompted by some accounts of institutional or electronic bank runs paved way for the predominant concern of deflation.

The one year search trend in Google Trends reflected this (see below). Now with surging stock markets and turbocharged commodity prices, the pendulum has apparently shifted from deflation to the other extreme end-hyperinflation.

Deflation searches have been on a decline while searches for hyperinflation has been on the rise (see below).

As of this writing, deflation still dominates with 6.58 million articles against 2.5 million for hyperinflation. Meanwhile, inflation has 67.5 million articles while stagflation has 735,000 articles.

So there seems less interest on the middleground.

The point is we seem to be at the crux of a trend transition where public concerns appear to weigh on hyperinflation.