Jim Sinclair has been saying this for ten years and FOFOA agrees. The idea is that gold will serve as the long term unit of account for wealth reserve. This concept is quite different from a gold standard or a currency based on gold. Currency will be currency and it will be paper fiat. It will provide the need for a liquid and plentiful vehicle to conduct economic activity. Depending on the issuers control of supply, this currency could also serve as a short term or intermediate term unit of account. But true long term wealth reserves will be held in gold. Therefore, gold will maintain its price at far higher levels as the transition is made away from paper into gold for these reserves. While part of the monetary system, gold will not be the basis of currency. It will reflect relative supply and strength of money as it is managed by its convening authority. An authority buying gold will weaken its currency and strengthen it by selling.
12:10p ET Tuesday, December 21, 2010
Dear Friend of GATA and Gold (and Silver):
Hinde Capital CEO Ben Davies was interviewed about gold’s prospects a few days ago on CNBC Europe, remarking that gold may be reincorporated into the international monetary system, that if that happens gold’s price likely will remain substantially higher for a long time rather than fall back as it did in the 1980s, and that in any case China will be putting a floor under the gold market. The interview is eight minutes long and you can watch it at YouTube here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.