The gold standard has been an issue that has been debated for some time by proponents of such a system as well as opponents of such a system. Although some analysts might believe that a return to a gold standard is highly unlikely in today’s modern global economy, proponents of such a monetary system still make interesting arguments for its consideration.
In a recent article from Kitco.com, former Fed Chairman Alan Greenspan reportedly had some interesting insights. Per the article, Greenspan was quoted in the World Gold Council’s Gold Investor February issue as stating: “The risk of inflation is beginning to rise…Significant increases in inflation will ultimately increase the price of gold. Investment in gold now is insurance. It’s not for short-term gain but for long-term protection.”
In his commentary, Greenspan focused on the idea of a return to a gold standard and how it might help mitigate risks of an “unstable fiscal system.”
He stated ‘Going back on to the gold standard would be perceived as an act of desperation. But if the gold standard were in place today, we would not have reached the situation in which we now find ourselves. We would never have reached this position of extreme indebtedness were we on the gold standard, because the gold standard is a way of ensuring that fiscal policy never gets out of line.”
Greenspan continued his remarks, stating “There is a widespread view that the 19th Century gold standard didn’t work. I think that’s like wearing the wrong size shoes and saying the shoes are uncomfortable!” “It wasn’t the gold standard that failed; it was politics.”
Given the levels of sovereign debt around the world, and current monetary policies, a return to a gold standard is not as far-fetched as some might believe.
The European sovereign debt crises and U.S. mortgage crises of 2008 could potentially be the tip of the iceberg. The Chinese economy could potentially be the next major bubble to burst, and if so, it could have a significant impact on financial markets all over the world. Many countries are highly over-leveraged and increasing debt loads may not be sustainable, especially if interest rates begin to rise. The next economic crises and/or recession could be closer than investors realize.
The point may be, however, that gold may potentially provide a meaningful hedge against inflation and other economic issues.
If you don’t currently have an allocation in physical gold, now may be the time to consider getting started.
Acquiring and holding physical gold has never been easier. Speak with an Advantage Gold account executive today about the potential benefits of physical gold ownership. Our associates are here to answer any questions you may have, and can even show you how to buy and hold physical gold using your IRA account.
Don’t wait for the next economic crises or stock market crash before taking action. Explore your options for physical gold ownership today. Call us at 1-800-341-8584 to get started.Tags: advantage gold, gold, gold standard, greenspan, high debt levels, monetary policy