The Hierarchy of Money and The Case for $8,000 Gold

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

In the hierarchy of money, gold is superior to fiat money. From a historical perspective, the past decades have been characterized by trust in fiat money, whereby fiat made up the lion’s share of global international reserves. The war between Russia and Ukraine (and by extension East and West), inflation and systemic risks are reversing this trend. A long-term gold valuation model, which assumes gold will account for the majority of international reserves, suggests that gold will exceed $8,000 per ounce in the coming decade.

The Hierarchy of Money and The Case for $8,000 Gold - BullionBuzz - Nick's Top Six
Benjamin Franklin watches anxiously as business people make investment decisions

Nieuwenhuijs discusses the hierarchy of money and a long-term gold valuation model.

In conclusion, he writes: “Throughout the ages the price of gold always rises as the amount of physical metal available is insufficient to meet mankind’s liquidity needs. National currencies devaluing against gold to increase liquidity is a fact of life.” “In the old days, coins were debased by lowering their bullion content, resulting in more units of national currency. Since the gold standard was abandoned in 1971, fiat money can be created by the stroke of a key, aimed at boosting growth, or revitalizing the base of the pyramid. But the top inevitably follows. The price of gold has to go up to reset the shape of the pyramid. Now—given war, inflation, and systemic risk—will be one of those moments for the gold price to adjust.”

Leave a Reply

Your email address will not be published. Required fields are marked *