Is a new Gold Standard coming to town? If one is, it’s likely to be in Europe. So says independent financial writer Jan Nieuwenhuijs.
The gold analyst writes in The Gold Observer that Europe is the most likely to take the initiative—as opposed to the U.S.—because revaluing gold “would damage the dollar’s status as world reserve currency.”
The euro, on the other hand, as the second most liquid currency in the world, “would enable the eurozone to revalue gold without devaluing much against other currencies and commodities.”
The more debt is being accumulated on the balance sheets of European central banks, the more likely they will revalue gold to write off this debt.
Here’s the gist of Nieuwenhuijs’ thinking: The ratio of government debt to GDP in many countries is at record highs. And no country, leader or economist has proposed a strategy to lower those debt burdens.
He points to the primary tools that governments can lower their debt to GDP levels: