What would it take for a return to the gold standard? Brien Lundin
It’s been 50 years since Richard Nixon decoupled gold from its price fix to the U.S. dollar, and now, monetary regimes need a return to a gold anchor more than ever in order to restore stability and credibility, said Brien Lundin, executive editor of the Gold Newsletter and host of the New Orleans Investment Conference.
Speaking to Michelle Makori, editor-in-chief of Kitco News, Lundin made the case that the U.S. dollar has, since the end of the Gold Standard in 1971, lost 85% of its value relative to the consumer price index, which he said may even be understating inflation, and that another dollar peg to gold may be what’s needed to prevent further devaluation.
Importantly, all fiat currencies will inevitably “lose creditability” with current monetary policies in place, Lundin said.
“At that point, the only way to really re-establish some credibility for currencies would be to attach it to something, gold being the logical choice at that point, and it doesn’t have to be a 100% backing, it could be some fractional backing,” he said. “Central banks and monetary regimes will have to be forced to reconnect to gold in some way.”
Eventually, the markets will pressure central banks to establish stability in currencies, Lundin noted, especially once more monetary easing cycles are repeated in the future.
“We’re going to go through more and more of these cycles and I think at some point the markets are going to throw up their hands and say, ‘this is ridiculous.’ Any currency issued by governments will be essentially worthless and [we need something] to anchor our currencies to, and I think gold will be the logical choice for a number of reasons,” he said.
For more information on central bank gold purchases, and Lundin’s views on cryptocurrencies, watch the video above. Follow Michelle Makori on Twitter: @MichelleMakori (https://twitter.com/MichelleMakori).