Europe Has Been Preparing A Global Gold Standard Since The 1970s

The comments below are an edited and abridged synopsis of an article by Jan Nieuwenhuijs

The current fiat international monetary system is ending; unconventional monetary policy has entered a dead-end street and can’t reverse. European central banks saw this coming decades ago, when the world shifted to a pure paper money standard. Accordingly, European central banks have prepared a new monetary system based on gold.

Europe Has Been Preparing A Global Gold Standard Since The 1970s | BullionBuzz
Pyramid of gold bullion on euro banknotes background

When the last vestige of the gold standard was terminated by the US in 1971, circumstances forced European central banks go along with dollar hegemony. Sentiment in Europe, however, was to counter dollar dominance and slowly prepare a new arrangement. Currently, central banks in Europe are signaling that a new system that incorporates gold is approaching.

Up for discussion: the rise and fall of Bretton Woods; Europe equalizes gold reserves internationally; private gold ownership distribution; and setting the stage for a gold standard.

In conclusion, Nieuwenhuijs writes that Europe has been countering US dollar hegemony since the 1970s; it wants gold back in the center of an equitable system. It has equalized official gold reserves internationally, strategically allocated its gold, and is promoting gold as a means of storing wealth and protecting against inflation.

Asia is also against dollar dominance and in favour of gold. In 2019, the Malaysian prime minister suggested a new international currency pegged to gold. The Shanghai Gold Exchange’s president has called for a new super-sovereign currency to offset the dollar’s dominance, which he predicted would decline while gold prices rallied.

Economic strength is more equal than it was in 1971. The economic strength of the largest power blocks—the US, China, Russia and the Eurozone—is roughly in line with their official gold reserves.

Japan and the UK have likely been pressured by the US to limit their gold reserves. Why Canada has zero gold is beyond the writer, but it could be because it has in-ground reserves.

Although Europe and other nations are prepared for a new monetary system that incorporates gold, it’s unclear how this system will look. However, gold will have a prominent role, and its price will be significantly higher than it is today.

A monetary system without an anchor is bound to fail, and what anchor is more suitable than gold? Gold is the most evenly spread financial asset without counterparty risk, and its stability has a proven track record of 5,000 years.   

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