The ‘currency of last resort’ strikes gold

World

The ‘currency of last resort’ strikes gold

The precious metal’s popularity has exploded during the pandemic

Tom Stevenson

My late mother-in-law would have never described herself as a financial expert. But having been swept up in the partition of India in 1947, forced to abandon her house and land to start afresh on the other side of the new border, there was one number she always knew – the gold price. A portable medium of exchange, a reliable unit of account, a store of value in troubled times – these are the characteristics of a real currency when the chips are down.

It is no surprise that gold is back in fashion today. BullionVault, an online marketplace for precious metals, says the number of people buying physical gold on its platform doubled between February and March. The price has not been this high for seven years, and then only briefly.

The number of first-time buyers is the highest since 2011 when Europe’s sovereign debt crisis last raised serious questions about the reliability of fiat (paper) currencies. These have, since 1971, had no link to gold or indeed any constraint on governments’ temptation to abuse the printing presses...

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