Judy Shelton is an economic adviser to Trump and has now been nominated by him as a new member of the FED board. The nomination is remarkable, because Shelton sees a role for gold in the international monetary system. A few months ago she wrote:
“In proposing a new international monetary system linked in some way to gold, America has an opportunity to secure continued prominence in global monetary affairs while also promoting genuine free trade based on a solid monetary foundation. Gold has historically provided a common denominator for measuring value; widely accepted at all income levels of society, it is universally acknowledged as a monetary surrogate with intrinsic value.”
She argues that ever since the dollar was decoupled from gold in 1971, all currencies now move freely against each other, and a monetary anchor is missing. In fact, there are no concrete international agreements on currency (manipulations). This “everyone-for-himself” approach was seen in 1971 as the ultimate free-market solution, but now appears to be extremely vulnerable to geopolitical chicanery.
By reconnecting the international monetary system with gold, governments would again be forced to play the game “fairly”. Of course, this reform is so sensitive that Trump cannot express it publicly, making Shelton’s appointment all the more striking.
The gold community has been wondering for years if Trump is a proponent of the gold standard. Since his presidency, Trump has been talking about low interest rates, high government deficits and a low dollar, not exactly signals of a conservative fiscal policy, let alone advocating a gold standard. However, it does fit with his conviction that this allows the US to compete fairly with the rest of the world.
As a presidential candidate, Trump was critical of the current dollar-dominated system in which the US currency has no reliable fixed value. In an interview with GQ magazine, he hinted that he too is actually a fan of the gold standard:
“Bringing back the gold standard would be very hard to do, but boy, would it be wonderful. We have a standard on which to base our money.”
The appointment of Shelton by Trump seems strategic, the expertise of Shelton will be useful in the next crisis if reforms in the monetary system become inevitable. And the gold price has quite possibly already taken an advance on this in recent weeks.
In our opinion, the revaluation of the gold price is only a matter of time. Either because the market forces it through rising demand from Central Banks and other investors, or through a gold revaluation initiated by Central Bankers.
NB: For more information about Shelton’s ideas for monetary system reform, we recommend reading the full article: