Gold as a Money Anchor: we have been here before

Published on: Author: guwebteam

Gold has come and gone as an administrative anchor to the global monetary system. Gold’s appeal tends to rise when the viability of “fiat money” (that is, money that is used as a medium of exchange for goods and services but is not backed by a specific commodity) is in question, inflation expectations run high, and/or the exchange rates among global currencies are particularly volatile.

All of these preconditions are present to a greater or lesser degree today, driving the price of gold to unprecedented levels. If gold does, indeed, have a credible future role in the international monetary system that justifies its current price, why was it abandoned before?

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