An Unlikely Champion in a Return to the Gold Standard

OWNx Team Gold & Silver Market, News & Commentary

It is interesting that recently there are increasing numbers of articles written discussing the merits of returning our monetary system to some form of the gold standard. One of the most unlikely people to be warming to the idea is, none other than, former Federal Reserve Chairman, Alan Greenspan.

Alan Greenspan has a very interesting history when it comes to his view on gold and the gold standard. In 1966, Greenspan made the following statement. “This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”

Yet in his reign as Fed Chairman between 1987 and January 2006, he oversaw some of the greatest expansions of Fed power over the economy. It was accomplished leveraging a monetary system that is about as far removed from the gold standard as one can get.

Now, consider Greenspan’s latest public address. In an interview given to the World Gold Council’s Gold Investor February issue, Greenspan warned of the likely onset of stagflation, which would send the price of gold higher. He said, “The risk of inflation is beginning to rise… Significant increases in inflation will ultimately increase the price of gold.” As such, “investment in gold now is insurance. It’s not for short-term gain, but for long-term protection.”

However, he didn’t stop there. Regarding the gold standard, his observation was very clear, “We would never have reached this position of extreme indebtedness were we on the gold standard because the gold standard is a way of ensuring that fiscal policy never gets out of line.”

Sounds a lot like Greenspan is returning to his views of the 1960s. Should we return to the gold standard? There are admittedly many good reasons for it, and some valid concerns with it. The good news is that with today’s FinTech capabilities, gold and silver are certain to play a role in any monetary reform.  Whether due to monetary reform, or stagflation, accumulating gold and silver is a smart thing to do.

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