by Markus Bussler, Euro on Sunday
EHe was Canadian minister in Stephen Harper’s government from 2006 to 2015, nine long years. A man who knows politics inside out. Someone who knows what he’s talking about. So should one listen carefully when Maxime Bernier speaks of a reset of the currency system? Secure. Should you adjust your actions accordingly? Not necessarily.
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The arguments that Bernier uses in an interview this week cannot be dismissed out of hand – but they are not new either. In his view, a fiat currency system has a limited lifespan. After all the money printing, after all the debt in both North America and Europe, the monetary system as we know it is finished. A new monetary system will emerge, one that is backed by raw materials. One in which gold will play a more important role.
Looking back into the past, fiat currencies have indeed had a limited lifespan. Currency reforms have been the rule rather than the exception in the past. And if you look at the level of debt in the industrialized nations, it seems difficult to imagine that it can one day be reduced without currency reform or debt haircuts.
Only – and this is a big only – no one likes to predict whether the US dollar, for example, will last two years or 20 years as the world reserve currency. Therefore, speculating on such a scenario is practically untimely.
An insurance
Those who have been dealing with precious metals for a long time will repeatedly come across theories that the big reset could be imminent – but nothing has happened to date. However, the dangers that our financial system poses are real and undeniable. The most recent increase in inflation has shown how quickly a dynamic can develop in this system that is difficult to stop again.
Investors are therefore certainly well advised to add an ounce or two of gold to their portfolio. Ideally in physical form, outside of the financial system. This physical gold is not something to be priced daily. Rather, it is insurance. Just in case, which hopefully won’t happen any time soon. But as I said: You can’t time such a scenario. If you want to be even more liquid, you can of course use the exchange-traded ETC Xetra-Gold (WKN: A0S 9GB) put. But insurance against imponderables in the financial system should be stored outside of it. Coins and bars are the first choice here.
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Image sources: Netfalls – Remy Musser / Shutterstock.com, Worldpics / Shutterstock.com
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