There were big numbers for gold last week, the kind of upside numbers we haven’t seen in a long time.
Gold ended the week at $1,669.90 and silver traded up to $30.78, for a silver/gold ratio of 54.2, one of the lowest readings since January.
In the media this week we found speculation about a plan to return the nation to the gold standard. My position on a return to the gold standard is that would be a really bad idea for the U.S. to make that move unilaterally. We would be handicapping ourselves in global markets and countries with script currency would magnify themselves at our expense, exactly like they did when we were previously on the gold standard.
While it’s a bad idea for the U.S. to peg our currency to gold, the world desperately needs some kind of a reference currency; that currency would be a global master exchange standard that keeps everyone honest when it comes to managing their own currency.
Sometimes I can’t shake the feeling that commerce as we know it today borders on mass insanity. I’m going to come to you to buy some tangible asset, in exchange I’m going to offer some numbers in a computer somewhere. I don’t even own the computer where they reside, but I want to trade some of those blips for your sea kayak.
The only reason it makes sense is because you’re then able to turn around and use those blips to buy something else. Yet there is nothing at all underlying any of these transactions except our collective mass insanity that we’re all going to accept computer blips as payment.