Every so often, the idea of resurrecting the Gold Standard becomes a mainstream topic of discussion and debate. It tends to arise during times of economic or geopolitical uncertainty. Yet most investors don’t understand the full context surrounding the debate. Younger investors may not even know most of the world was operating on a gold standard until 1971.
A term associated with the Gold Standard is “barbarous relic.” Once taken out of historical context, “barbarous” implies that it’s foreign to our civilized conceptions of money. That adjective supports the noun “relic,” which suggests that the yellow metal is a defunct object that was once operational a long time ago. Yet there was no radical shift from “primitive” to “civilized” in 1971, nor would most consider the 1970s to be that long ago in relation to the entire history of money.
