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Friday, 18 November 2011

G20 elevates gold's currency status

Would you prefer gold or sovereign debt as financial backing?  In November, 2011, the G20 asked Germany to use Germany's substantial gold reserves to back the European Financial Stabilization Facility (EFSF).  Germany rejected that proposal.  That proposal, and more significantly Germany's rejection of that proposal, elevated gold's status as a valuable international currency.  By declaring their wish for gold backing, the G20 inadvertently enhanced gold's status as currency.  And, in a subtle sense, the G20 also betrayed deteriorating sentiment towards sovereign debt.

I acknowledge Greg Hunter's USAWatchdog for this observation.  For more see "Case for gold in Eurozone bail-out".

For more market commentary, go to or follow my colleague Paul Wise's blog at Paul Wise's Blog.

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