Roubini attacks the gold bugs

Nouriel Roubini

Earlier this month, in an article for “Project Syndicate” famous American economist Nouriel Roubini joined the chorus of those who declare that the multi-year run up in the gold price was just an almighty bubble, that that bubble has now popped and that it will continue to deflate. Gold is now in a bear market, a multi-year bear market, and Roubini gives six reasons (he himself helpfully counts them down for us) for why gold is a bad investment. Roubini does not quite go so far as to tell his readers that there is no role … [Read more...]

Oxford Hayek Society talk followed by Q and A

Detlev at Oxford Hayek Society

The Oxford Hayek Society invited Detlev to give a talk at Christ Church on 14th May 2013. This was followed by a lively discussion afterwards ... … [Read more...]

Gold sell-off: There is only one question that matters

gold

Last Friday I participated in a (very short) debate on BBC Radio Four’s Today Programme on the future direction of gold. Tom Kendall, global head of precious metals research at Credit Suisse argued that gold was in trouble, I argued that it wasn’t. So yours truly is on record on national radio on the morning of gold’s two worst trading days in 30 years arguing that it was still a good investment. Is it? I still think that what I said on radio is correct and even after two days of brutal bloodletting in the gold market and … [Read more...]

Some personal thoughts on surviving the monetary meltdown

1 kilo gold bar

Let us start by looking at the economy from 10,000 feet above: After 40 years of boozing on easy money and feasting on fantastical asset price inflations, the global monetary system is approaching catharsis, its arteries clogged and instant cardiac arrest a persistent threat. Most financial assets are expensive, and many appear to be little more than securitized promises with low probability of ever delivering payment in full. Around the globe, from Japan to the US, a policy of never-ending monetary stimulus consisting of … [Read more...]

U.S. Republicans introduce gold standard debate – mainstream media go mental

1 kilo gold bar

I am not holding my breath over the Republicans' plans for another gold commission to investigate the possibility of returning the USA to a gold standard in the case of the Romney-Ryan ticket winning. Of course, I like the Classical Gold Standard, which existed from about 1880 to 1914, and I am convinced it was a humongous mistake to do away with it, a mistake that was further compounded by the abandonment of its weak successor, Bretton Woods, in 1971. And you know what I think of our present unconstrained fiat money … [Read more...]

Is gold in a bubble?

gold

To answer this question is not straightforward. As the gold-sceptics keep reminding us, gold pays no coupon and no dividend, it does not offer a running yield, so traditional measures of 'fair value' do not apply. But gold is money, and just as the paper ticket in your wallet does not pay interest, neither does gold. Gold is a monetary asset that has functioned as a medium of exchange and a store of value for thousands of years, around the world and in almost all societies and cultures. Many modern economists believe that … [Read more...]

By abandoning the gold standard we embraced monetary central planning, chaos

Ben Bernanke

With this essay I will try to reconcile two apparently conflicting perceptions of the key problems with our present monetary system. I will start by characterizing these two positions first: As readers of this website and my book know, it is my conviction that the central problem with the present system is the high degree of elasticity of the money supply. A system of constant fiat money expansion, of ongoing injections of new money into the economy via financial markets - sometimes slow, sometimes fast - must … [Read more...]

Why gold is my favourite asset

1 kilo gold bar

I hate to give personal investment advice. So please do me a favour and do not treat the following as investment advice. I am expressing my personal opinion here. I do so with honesty and conviction, without a personal agenda - I am not trying to sell you anything - but with some good arguments, hopefully. However, it is still an opinion. Nobody knows what the future will bring. I don't know what will happen to the gold price in the next week, the next month or for the rest of this year. I don't even know what 2013 will … [Read more...]

What gives money value, and is fractional-reserve banking fraud?

Falling 100-dollar bills

I thought I should address a couple of points that I consider to be misconceptions and that frequently come up in discussions with the audience or other speakers when I present my views on the fundamental problems with fiat money. I am not always in a position to correct these misconceptions right then. They are often woven into questions on other points and I have to leave them uncommented as not to disrupt the flow of the debate. My book is, I believe, quite clear on these points, so I could simply refer people to Paper … [Read more...]

Thinking inside the box – Chatham House on gold

gold

Last week, Chatham House, formerly known as the Royal Institute of International Affairs and a non-profit, non-governmental institution in London whose "mission is to be a world-leading source of independent analysis, informed debate and influential ideas on how to build a prosperous and secure world for all", published a report with the title, "Gold and the International Monetary System." This report summarizes the findings of the Chatham House Gold Taskforce. This taskforce, comprising 10 permanent members but involving … [Read more...]