The Globe and Mail reports in its Saturday edition that gold is suddenly golden once more. The Globe's Ian McGugan writes that after
four years of declines, gold has suddenly reversed direction and gold bugs are once again congratulating themselves. One belief that unites many gold
enthusiasts is a conviction that the global economy is on the
verge of chaos. "Central banks are printing money to buy time for governments to get their fiscal houses in order, which most have
not done," Barrick executive chairman John Thornton told the
company's annual meeting this week. "The result: Today,
we have negative interest rates, while tomorrow we could well
have inflation. Either way, if you hold cash, you lose money. In
such a world, gold's function as a store and unit of value is
obvious." It is a fine-sounding argument, but one that The Globe thinks lacks coherence. If
central banks are recklessly printing money, as Mr. Thornton suggests, inflation should be running rampant as the flood of new cash bids prices higher. The doomsayers' argument
for gold will always be there, but the metal's reputation
as a rock-solid anchor of stability in an uncertain world is more a matter of faith than hard fact.
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