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Expert: the role of gold in the world economy increases
Material posted: Publication date: 01-11-2016
Analyst site Ian Nieuwenhuis in his interview to financial newspaper Het Financieel Dagblad stated that the role of gold in the global financial system will once again increase.

According to him, the unlimited volume of issue of "paper money", which was forced to run the world's Central banks will fail the sharp rise in inflation, since the regulators are not yet able to stop this process.

"We're all in the same boat. Everywhere low interest rates, and on all continents print money. Only the United States has suspended issue. Paper money has many faults. They can be printed an unlimited amount of that from the political point of view is very tempting. This principle was applied in 2008 to rescue the financial system. However, since then, nothing has changed. It would be bad if the next crisis will end paper money. Most likely, we would expect significant inflation," - said the expert.

At the same time, he notes that gold is much stronger related to the real economy, because it is real goods and he is able to preserve the value.

"Gold is a hard currency. It cannot be printed like paper money, it will not disappear. It retains its purchasing power over the long term. And if it is in the centre of purchasing power, its stability is likely to continue in the short and medium term. Gold is associated with economic fundamentals, this item. And in this respect I feel safe, keeping part of their savings in gold. It protects against economic shocks. If the Euro falls, gold rises, so my purchasing power is maintained," - said Nieuwenhuis.

He calls attention to a situation which happens with world gold reserves: all key Central banks are trying to stock up on precious metal and are restocking or repatriation of their reserves.

"And in the international monetary system, something has to happen. The dollar cannot remain at the center of this system. Since 1971, when the dollar was separated from gold, the United States received unprecedented privileges. A large part of trading operations in the world held in dollars. Thus, in the world there is a huge demand for dollars, and the US can simply print them.

In the new system, gold will play a role. Take a look at the events in Europe. The Netherlands and Germany will return its gold from the US. Austria and Belgium are conducting the repatriation. Russia and China are buying a lot of gold. The Chinese have too many dollars in foreign reserves and thus depend on the vagaries of American politics. The transition to the new system will be gradual. No one needs another shock."


Tags: assessment , economy , gold

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