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Brodsky: Gold Standard Will Send Precious Metal to $10,000
Friday, October 14, 2011 09:06 AM
By: Forrest Jones
Gold prices would hit $10,000 an ounce or even more, five times than where they are now, should current calls for a return to the gold standard become reality, says Paul Brodsky, co-managing member of QB Asset Management.
Loose monetary policies are fueling worries that too many dollars in circulation may fuel inflationary pressures down the road, and many want a return to the gold standard, which ties the value of dollar to gold.
Proponents, including Steve Forbes and Ron Paul, argue a gold standard would prevent what they see as irresponsible money printing and force the U.S. to live within its means by limiting the amount of money monetary authorities can print.
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"Policy makers are holding a burning match," Brodsky says, according to CNBC.
(Getty Images photo - removed) "Baseless currencies follow the tyranny of short-term politics and so shall this."
The country’s monetary base (currency in circulation plus bank reserves held at the Fed) has tripled to $2.68 trillion following the completion of the Federal Reserve's recent quantitative easing programs.
Under quantitative easing, the Federal Reserve buys assets from banks with the aim of pumping those banks full of money so they'll invest and fuel more hiring, with side effects including inflationary pressures.
Even if the U.S. doesn't scrap its current monetary policy and adopt a gold standard, the yellow metal next year will remain in demand, as it historically does amid market volatility typical of today.
"With macro headlines threatening demand across the complex, we have become more selective about commodity exposure," Morgan Stanley analyst Hussein Allidina writes, according to Bloomberg.
"Gold and silver are our top commodity picks heading into 2012."
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