Tags: Forbes | gold | dollar | Fed

Steve Forbes Reiterates Support for Gold Standard

By Dan Weil   |   Tuesday, 05 Aug 2014 02:54 PM

Steve Forbes, chairman of Forbes Media, once again has made clear his support for a gold standard.

"Gold maintains its intrinsic value better than anything else on Earth, and that's for 4,000 years," he told Birch Gold Group, a major gold and silver dealer.

"And when you see the dollar price fluctuate around gold, that means the dollar is either weakening or people's perceptions about the dollar are changing."

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A gold standard would prevent the Federal Reserve from printing money in excess, which Forbes believes the central bank has done in the past few years, he said.

"Let's say we fix the ratio at $1,300 to an ounce of gold. So if it went above $1,300, the Fed would stop the printing. If it goes below $1,300, it would print to keep it within range."

That's very simple, Forbes notes. But "that's what the high priests of funny money don't want you to know," he said. With a gold standard, "you wouldn't need the insurance" of buying the precious metal as an investor, he said.

One reason the Fed doesn't like the gold standard is that "the economics profession knows less about money than it did a hundred years ago," he argues. "And they and others have a vested interest in currency instability. Currency trading, the volume on a daily basis, is over $3 trillion."

Returning to the gold standard would put currency trading "out of business."

December gold futures traded at $1,289.40 Tuesday afternoon on the Comex, up 50 cents from Monday.

Speculation that the Federal Reserve will raise interest rates as soon as this year has hurt gold recently.

"I would keep an eye on bonds because obviously one of the reasons why people tend to be negative on gold is the fact that we are approaching a normalization of U.S. interest rates and speculation about when tightening will commence," Saxo Bank senior manager Ole Hansen tells Reuters.

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