Could we return to a Gold Standard ?

John Butler, author of the new book “The Golden Revolution”, provides an answer to the question if we could return to a Gold Standard. His answer to that question is clearly “yes”; he  thinks that a Gold Standard could be very well in the cards, even remarkably fast. The implications on the gold price would be remarkable as well, as explained below.

Mr Butler explains that his view is based on today’s economic situation. In particular, two economic facts could very well lead to a situation with the gold standard as an outcome. In particular, he mentions the decline of the US economy over the past years as well as the active US monetary policy weakening the US dollar. The results of that deteriorating situation is that other economies are being destabilized. This form of economic breakdown that is currently going on, could eventually lead to a gold standard.

Such a gold standard could occur remarkably fast, even as early as next year. BRIC nations for example, declared recently that they are working out their own monetary fund; you could say they are setting up their own World Bank which could already be set up in a year. By doing so, they could formally move back to gold and potentially will do so if the US dollar keeps on affecting them in a negative way.

Now how this play out? There are several ways, but Mr Butler sees one scenario as very likely. One country could become a first mover by linking their currency explicitly to gold. Russia is one of the potential first movers. How such a scenario would play out, is described in the video (see below). If it plays out that way, we should not be surprised to see the gold price go to $ 10.000 an ounce. The gold price did not yet reach such a high level, because it’s not explicitly adapted as an official monetary asset (part of cross border payment transactions).

 

 

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