Gold the Reserve Currency

Could gold be the reserve currency of the day?

According to Eric Sprott, CEO of Sprott Asset Management, gold has unwittingly been made the reserve currency of the central banks.

In a recent interview Sprott stated, "I don't care whether the central banks have or governments have, but the markets made it the reserve currency... central banks have been aiding and abetting that process - they're almost making it the reserve currency by their actions, not by their statements and when it was a reserve currency silver traded at a ratio of 15 to 16:1 of the price of gold."

Over the shorter term, he says there is clear evidence of strong demand for the metal, "demand for silver is versus the demand for gold in the investment arena and when I see people like Gold Money sell as many dollars of silver, as gold. When I see the US Mint sell as many dollars of silver as gold which by the way implies in both instances, 50 times more physical than gold. And when we did the IPO for Gold Trust we made $440 million. When we did the IPO for the Silver Trust we made $550 million...Well how can the price be 50:1 when the money is going in 1:1?"

In the face of the potential global financial meltdown central banks are buying up gold as a hedge against currency losses, supporting the argument that gold is money.
Countries are also buying up gold and holding it in reserve. Russia, China, India are the biggest but also smaller countries such as Korea for example, are accumulating gold by the ton.

India is also not the only country where individuals accumulate and store gold, China is encouraging its citizens to do the same. Interesting that the western powers are encouraging people to buy currency, not gold.

This says more about the countries governmental policies than it does about gold as money.

The Maxim to follow? Buy gold, not money!