If you have ever wondered how close world governments are to recognizing gold as money, look no further than Europe.
In a May 25 press release, the European Parliament stated:
“The Economic and Monetary Affairs Committee of the European Parliament has approved gold to be used as collateral confirming its status as a high-quality liquid asset”
They went on to say:
“Yesterday’s unanimous agreement by the European Parliament’s Committee on Economic and Monetary Affairs (ECON) to allow central counterparties to accept gold as collateral, under the European Market Infrastructure Regulation (EMIR), is further recognition of gold’s growing relevance as a high quality liquid asset. This vote reinforces market demand for a greater choice of assets that can be used as collateral to meet margin liabilities.”
Who has 111.5 tons of gold? Greece does. And the European parliament is now saying, “Sure, gold is money. Put your gold up as collateral.” Of course, if Greece then defaults on its loans, it will lose its gold.
I don’t want to wander off too far in discussing European politics, but there is an important point here – and it is highly relevant for those of us who own gold as a hedge.
Since the crash of 2008, more and more institutions and government bodies at all levels are coming around to the fact that in an uncertain world, gold is the best kind of money you can have.
In late 2010, ICE Clear Europe, a leading European derivatives clearing house, became the first clearing house in Europe to accept gold as collateral.
In February 2011, JP Morgan became the first bank to accept gold bullion as collateral.
The Chicago Mercantile Exchange, are now accepting gold as collateral for certain trades.
And as I mentioned in a previous post, the Utah House recently passed a bill to recognize gold as legal tender.
From being almost irrelevant in the minds of the world’s largest traders and institutions, gold is suddenly shining very brightly as a secure and very real monetary asset.
For those of us who own a tad less than 111.5 tons of gold, this shift is still important.
In a nut shell, gold is safe money. Safer than cash. Safer than stocks or bonds. Best of all, if things go badly wrong with the world’s economies, gold will leap in value. It will be money, and very valuable money.
If you don’t own any gold yet, now is the time to start buying.
You can buy gold coins and gold bars online at GovMint.com.