The Growing Debt Problems and the Potential for Gold as a Global Reserve Currency
In a recent interview with Kitco News, Keith Weiner, CEO of Monetary Metals and president of the Gold Standard Institute, discussed the growing debt problems worldwide and how gold could once again be recognized as a global reserve currency. While the U.S. dollar is not at risk of losing its status as the world’s reserve currency, gold is becoming an attractive alternative on the world stage.
Weiner sees gold as an essential tool in global financial markets, but he acknowledges that it will take time for this scenario to become a reality. He outlines four significant steps that the gold market must take to achieve this ultimate goal.
The Four Steps to Gold as a Monetary Asset
- Replace fallen currencies with a gold-backed currency: Weiner believes that the paper currency regime centered on the U.S. dollar is failing, and gold can become a monetary asset to replace it.
- Build a neutral vault for global reserves: As gold’s role in international trade grows, a neutral vault would facilitate digital exchanges and payment transfers.
- Finance gold reserves: The financing of these reserves would be crucial to further monetizing gold.
- Create derivatives based on gold financing: Derivatives would provide additional financial instruments to enhance the use of gold as a monetary asset.
Weiner acknowledges that these steps are just the beginning and that more will be needed to transition towards a more monetary role for gold. He dismisses the idea of a gold-backed BRICS currency, citing the difficulties of reaching a common agreement among countries with diverse interests. However, he suggests that gold could still play a role in settling trade imbalances among countries, particularly those in the BRICS group.
While gold’s final destination as a global reserve currency is uncertain, Weiner’s company, Monetary Metals, has demonstrated that gold can be successfully financed. They have launched gold bonds and provided significant yields to investors. Weiner believes that as gold becomes an essential global monetary asset, the opportunities for financing will increase, reducing price risk and making gold a more viable asset.
