PROJECT M
 

In gold we trust

From the time of Roman emperor Nero to the day the US lost its triple-A credit rating, the demand for gold has served as a barometer of the people’s trust in governments and currencies

© Panos Pictures

In gold we trust

From the time of Roman emperor Nero to the day the US lost its triple-A credit rating, the demand for gold has served as a barometer of the people’s trust in governments and currencies

Central Banks Go Gold

Even the International Monetary Fund (IMF), which does not print money, followed the US about-turn on gold in 1971. While the Bretton Woods Agreement compelled member countries to pay 25% of initial subscriptions and demanded interest payments for loans in gold, it reversed the practice in 1976.

The IMF now claims gold reserves may destabilize currencies of members, but it finds itself increasingly isolated in that view. After many years of selling off their reserves, central banks around the world are buying gold again. According to the WGC, they purchased a total of 200 tons in the first half of 2011 alone.

In contrast to the attitude of the IMF, the German Bundesbank refers to its 3,401 metric tons of gold reserves (the second-largest hoard in the world) and points to the confidence that it “instills in the currency.” It is something the euro could do with more of.