Central Bank Highlights the Importance of Gold

 “If the Entire System Collapses, Gold Will Be Needed to Start Over.”

De Nederlandsche Bank, Central Bank of the Netherlands

If we said something like, “Gold is the perfect piggy bank – it’s the anchor of trust for the financial system,” you would not be at all surprised.  

We’ve said things exactly like that many times.

But this time its not us saying it.  The statement comes from a central banker!  Spoken by someone in that community, it amounts to a stunning admission!

This surprising candor is from the central bank of the Netherlands, the sixth largest economy in Europe.  Its central bank, De Nederlandsche Bank (DNB), holds more than 600 metric tons of gold.  It explains, “A bar of gold always retains its value, crisis or no crisis. This creates a sense of security. A central bank’s gold stock is therefore regarded as a symbol of solidity.”

For all their money-printing shenanigans, many central bankers (although not all!) know exactly what they are up to.  There is no better example of this than Alan Greenspan, the Federal Reserve’s longest serving chairman.  Before he joined the Fed, Greenspan wrote quite lucidly about gold as real money and fiat, made-up central bank money as a path to economic peril.  After he left office, he returned to that view.  It was only while he wielded the power to boom and bust the economy at the Fed that he forgot what he had espoused.  And so, boom and bust the UUS economy he did for 19 years!  

Now the Fed is booming the economy again, but this time on a bigger scale than ever before.  That means that the next bust will be bigger than ever before.

De Nederlandsche Bank says, “In times of financial crisis, DNB’s physical gold stock functions as an ultimate reserve asset and as an anchor of trust. The gold stock serves to cover ultimate systemic risks. To ensure a wide geographical distribution, the gold reserves are held at different locations in the world.

“Shares, bonds and other securities are not without risk, and prices can go down. But a bar of gold retains its value, even in times of crisis. That is why central banks, including DNB, have traditionally held considerable amounts of gold. Gold is the perfect piggy bank – it’s the anchor of trust for the financial system. If the system collapses, the gold stock can serve as a basis to build it up again. Gold bolsters confidence in the stability of the central bank’s balance sheet and creates a sense of security.”

We could have said the same thing.  But sometimes its nice when their own man says so!