Rogoff advises creditor nations to buy gold

pmbug

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... there is a good case to be made that a shift in emerging markets toward accumulating gold would help the international financial system function more smoothly and benefit everyone.
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No, I am just proposing that emerging markets shift a significant share of the trillions of dollars in foreign-currency reserves that they now hold (China alone has official reserves of $3.3 trillion) into gold. Even shifting, say, up to 10% of their reserves into gold would not bring them anywhere near the many rich countries that hold 60-70% of their (admittedly smaller) official reserves in gold.
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Why would the system work better with a larger share of gold reserves? The problem with the status quo is that emerging markets as a group are competing for rich-country bonds, which is helping to drive down the interest rates they receive. With interest rates stuck near zero, rich-country bond prices cannot drop much more than they already have, while the supply of advanced-country debt is limited by tax capacity and risk tolerance.

Gold, despite being in nearly fixed supply, does not have this problem, because there is no limit on its price. ...
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... the status quo is that advanced-economy central banks and treasuries hold vastly more gold than emerging markets do, and a systematic shift by emerging markets will bid up its price. But this is not a systemic problem; and, in fact, a rise in gold prices would close part of the gap between demand and supply for safe assets that has emerged due to the zero lower bound on interest rates.

There has never been a compelling reason for emerging markets to buy into the rich-country case for completely demonetizing gold. And there isn’t one now.

https://www.project-syndicate.org/c...arket-reserve-asset-by-kenneth-rogoff-2016-05

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Rogoff is a thought leader and a leading voice of western central banks. He was the chief economist of the International Monetary Fund from 2001 to 2003 and is the Professor of Economics and Public Policy at Harvard University.

h/t: http://www.goldcore.com/us/gold-blo...w-risk-asset-rogoff-advises-creditor-nations/

Fascinating. More evidence that Rickards' assertion is right?
 

pmbug

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Oh snap. Rickards actually mentioned this a week ago or so. I guess I skimmed his post too quickly:
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Rogoff is a full fledged member of the establishment. Some of my inside sources, who must remain confidential, have told me that Ken is on the short list to fill one of the vacancies on the Federal Reserve’s Board of Governors.

And Rogoff wrote a May 3rd article titled, “Emerging Markets Should Go for the Gold.” ...

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To me, the elites are letting the cat out of the bag. Again, this is the top people in the system. A chief economist at PIMCO and a Harvard professor and former IMF chief economist who may be in the Federal Reserve Board, both argue that higher gold prices can produce the inflation the elites seek.

This is a signal telling you it’s coming.

http://dailyreckoning.com/elites-new-case-gold/
 

rblong2us

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but not just yet, eh ............

we never got below $1000 and we promised we would )-:
 
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