Gold’s role as money

In this video Juan Ramón Rallo, economist and university professor in Madrid, and Alasdair Macleod of the GoldMoney Foundation talk about the role of gold as money. This interview was recorded on November 15 2011 in Madrid.

Rallo states that fiat money does not lead to equilibrium, because it does not fulfill the basic functions of money. Therefore the market is always on the lookout for assets which can be used to fulfill these money functions. This is what caused recent bubbles in stocks and real estate. Gold however is different due to its monetary properties and it’s scarcity compared to the existing stock of gold. Therefore it doesn’t make sense to talk about a gold bubble. Gold is being monetised by investor demand and should be part of an investor portfolio to protect purchasing power.

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