Gold Bullion Investment: A Return To The Gold Standard?

Throughout early history the value of money was directly linked to the value of the metal from which it was made. In 11th Century China there was a move towards Fiat money; which is a system where the money only has value because of a government regulation or law. All modern day currencies use Fiat money, however there is growing movement within the US to see a return to the gold standard. Read on to discover exactly what the gold standard is and how its return could affect gold bullion investment.

A history of gold standard

The gold standard is a system whereby the value of money is directly linked to a fixed weight of gold. This system has been used throughout much of Western culture on and off for centuries, depending on circumstances of the relevant country, such as war. In recent history the gold standard was used up until the World War I, when it was suspended as governments faced higher expenditure. It was reinstated 1925 – 1931, but then the UK left the agreement due to large amounts of gold bullions investment leaving across the Atlantic Ocean. Since then the money system of all countries has been based on the Fiat system.

Back to the future

Now many financial commentators are putting their weight behind a return to the gold standard that would see the value of paper currencies tied to gold bullion. Indeed, even billionaire publisher Steve Forbes has put his weight behind the move and predicted that the US will return to the gold standard within 5 years. He suggests that if the dollar was linked directly to gold then more countries would be interested in buying it.

Impact on gold prices

A return to the gold standard could prove to have a huge impact on those involved in gold bullion investment. This is due to the fact that the amount of gold that has ever been mined has a value that is less than the money in circulation in the US alone. There is simply not enough gold to equate to the amount of money out there. This would see the value of gold soar through the roof as paper money lost its worth. Considering the stability of gold and the possibility of large rises in its value; gold bullion investment seems even more attractive than it has at any time in the past.

Source by Richard Van-Rooyen

Gold Bullion Investment: A Return To The Gold Standard?