In a new “Spengler” essay at Asia Times online today, I argue that the gold price is an option on the decline of American power. In purely economic terms, gold is a very poor reserve asset compared to even a rather wobbly and ill-managed currency. Only if international relations break down and the trust between nations that supports reserve currency system fails does gold make sense. The last time this seemed likely was when Russia invaded Afghanistan at the nadir of the Carter administration in December 1979. America’s lucky that it has no real strategic rival. The Russians can’t be real rival for economic and demographic reasons, and the Chinese don’t want to be, even if they could. But the Obama administration is so destructive of American influence that the world has to own gold as a hedge against the collapse of America’s international position. I own a bit myself, not as an investment but as an insurance policy.
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