In the Midst of Monetary Shenanigans Gold Will Shine

A well-known financial analyst recently expressed his views on gold and why the metal is the best defense against central bank monetary policies. Could his views be precise?


Gold best defense

Jim Grant, the well-known financial analyst and founder of Grant’s Interest Rate Observer, recently spoke at the Strategic Investment Conference in Texas about his views on gold and its uses.

As seen on Mises Wire, Grant isn’t a big believer in various doomsday tales that many gold bugs subscribe to, in particular those pertaining to the monetary system. Instead, his inclination towards the metal stems from the uncontrolled and ill-advised economic meddling that central banks are guilty of.

And with the high likelihood of central banks continuing to introduce their questionable policies at an accelerated rate, Grant sees a move to gold as the most natural response. “I would characterize gold not so much as a hedge against monetary disorder, but as an investment in it. (…) what we are in the midst of is monetary shenanigans, and I see no real chance of being fewer of them, and a great chance there will be more of them,” said Grant.

He further explained how central banks are unaware of the consequences of their actions, referring to their deeds as “monetary improv”. It is this improvisation that has slowly been eroding people’s confidence in the world economy – this is also the likely cause of Asia’s massive interest in gold.

Grant admitted that he doesn’t understand people “who hold the view that the stewards of our paper and digital currencies have the answers, that this monetary improv conducted for the past seven or eight years by the world’s Western central banks and certainly Japan, that this is the way forward.”

And how do the central bankers themselves perceive the yellow metal? Not that seriously, Grant finds: “Western central banks to the extent that they are run by people who follow the educational path of Janet Yellen, and Ben Bernanke, and Mervyn King and MIT people I think they have one view which is that gold is a curiosity, it’s like a monetary tonsil. It’s this thing of ancient standing of no immediate relevance so they can’t explain it they don’t know what to do with it.”

While Western central bankers might not understand the metal’s relevance, plenty of others do: Grant finds the resulting flow of gold from West to East concerning and a bad omen. “When Western central banks do sell as the Bank of England did in the late 90’s, as little Venezuela did in the first quarter and is probably doing now, typically those are moments to pay attention because they’re moments of distress in the world.” Grant rounded up his views on the importance of gold by saying that both the institution of government-created money and credit and are “in a tough way”.

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