FinancialGuy Writes!

A Return To A Gold Standard?

I have been wondering for MONTHS – nearly years – when someone of real influence and clout would recommend that the world needs to revert to a gold standard of some form.

Finally it has happened!

The question now is what will it take for the idea to be taken more seriously by politicians around the world?

The real problem is that a gold standard would force politicians to live within – or close to – their actual financial means. That clearly isn’t in their best interests. It would require austerity measures on a scale that we can barely comprehend. They would be hated and unelectable for generations, but eventually, it would balance the books and pay off national debts.

It would also, of course, make the current holders of gold, silver, platinum and palladium very very very wealthy. And since most western governments have sold their holdings down in the last decade, the wealth would be multiplied in the Middle East and China.

In contrast, it would make the current debtors very very very poor. That would be the USA that suffers the most I presume. The US would no longer be the reserve currency, which would force mass selling, debt defaults, inflation and higher interest rates, while the money would flood into metals, forcing mass buying and major asset price rises.

How might the euro fare? Good question, with such imbalances between national economies, I’m not so sure, but it might cause euro members to be ejected so that wealthier nations can protect themselves more effectively.

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