In this recent interview for the Strategic Investment Conference, Jim Grant spoke on the benefits of holding gold and cash right now, citing a myriad of problems related to the inability of Central Banks to understand the current economic situation.
When asked about his position on gold, Grant responded:
I would characterize gold not so much as a hedge against monetary disorder, but as an investment in it. People will say well that’s a hedge against armageddon, no, armageddon doesn’t happen mostly, but what we are in the midst of is monetary shenanigans, and I see no real chance of being fewer of them, and a great chance there will be more of them.”
The problem, Grant notes, is that the central banks of the world are engaged in “monetary improv,” although an astute observer can see the lack of confidence in the world economy. This lack of confidence is illustrated by the large amount of interest in gold in Asia:
Western central banks to the extent that they are run by people who follow the educational path of Janet Yellen, and Ben Bernanke, and Mervyn King and MIT people I think they have one view which is that gold is a curiosity, it’s like a monetary tonsil. It’s this thing of ancient standing of no immediate relevance so they can’t explain it they don’t know what to do with it.
Gold however has its fans in the East and gold is moving from West to the East. When Western central banks do sell as the Bank of England did in the late 90’s, as little Venezuela did in the first quarter and is probably doing now, typically those are moments to pay attention because they’re moments of distress in the world.
People who hold the view that the stewards of our paper and digital currencies have the answers, that this monetary improv conducted for the past seven or eight years by the world’s Western central banks and certainly Japan, that this is the way forward. I try to understand what they’re saying but I can’t make head nor tail out of it. It seems to me the opposite is so obvious that sometimes I wonder if I’m seeing things.
Grant added: “I think both the institution of government-created money and of credit are in a tough way.”
