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– US Editor Of The Economist: “Paper Dollar” And “Paper Euro” Will “Debase” In A “Big Way” (ZeroHedge, April 17, 2012):
“People Have Lost Faith In the 20th Century Religion Of Government Backed Fiat Money”
Matthew Bishop, the US Editor of The Economist, has been interviewed by the Wall Street Journal TV about gold and why “people have lost faith in the 20th century religion of government backed fiat money.”
He says that he has become an agnostic or an atheist with regard to his belief in government-backed money as he fears that governments are in a position whereby they are going to debase currencies such as the “paper dollar and “paper euro” “in a big way.” Gold becomes one of the “alternative religions” in that environment.
History shows that a deleveraging downturn takes a long time and can take 7 or 8 years. Inflationary pressures are building and will be seen in the second half of the cycle, according to Bishop.
Bishop says he would put some of his money into gold but is prohibited from this due to the investment policies of The Economist.
He advocates owning gold as a “portfolio of money” and diversification and advocates having 5% to 10% of one’s money in gold.
Bishop is reluctant to give price predictions but believes gold will be higher at the end of the year and higher in 5 years.
The Economist magazine has a strong Keynesian bias and has been one of the most anti-gold publications in the world with many simplistic, unbalanced and ill-informed articles.
There have been a few more nuanced and balanced articles pointing out gold’s safe haven qualities primarily by “Buttonwood” however most coverage of gold has been negative.
The publication has suggested on many occasions since 2008 that gold is a bubble. Clients of GoldCore have told us that they were prompted to sell their gold bullion as long ago as 2009 after reading such articles in The Economist.
Indeed, there has often been a suggestion that those who buy gold are irrational “gold bugs” who are anti-technology and anti-progress. Indeed, some who have bought gold have been framed as “doom and gloom” merchants who are hoping for a collapse of the financial and monetary world so that they can profit from their dramatically revalued gold.
The Economist’s US Editor’s conversion and growing belief in gold as money and a superior form of money is an important development and is another step towards gold moving from the fringe to the mainstream.
It is another step towards gold being accepted, respected and trusted as a safe haven asset and safe haven finite currency.