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A Global Gold Standard?

November 8, 2010

By David Galland
 

My email box has been deluged this morning with emails from friends and associates about the letter Robert Zoellick, president of the World Bank, penned for the Financial Times. In that letter, he suggested that it’s time to consider once again including gold as a key component in a new global reserve currency.

Here’s just one of many articles on his comments.

It’s worth noting that he’s not talking about adopting an actual gold standard, per se, as that is seen as too limiting to the Keynesians running the world’s central banks, but rather using gold as an “international reference point.” Kind of like Timmy Geithner’s “indicative guideline” on current account surpluses mentioned a moment ago; something to pay attention to for as long as it’s convenient, then to studiously ignore.

While even a passing mention of the gold standard by a member of high officialdom can be viewed as an encouraging step on the path back to fiscal sanity, such mentions are little more than specks of dust in the wind at this point.

The ultimate capitulation of the fiat money systems in favor of something far more tangible will come – but it won’t come without a great deal of trauma and volatility, and not until the politicians have run out of all other options.

In the meantime, it should be one heck of a show, and one hell of a ride for gold investors.

 

David Galland
Managing Director
Casey Research

 

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