CITY AND SUBURBAN
Gold tells us not to put our trust in Euro-Monopoly money
CHRISTOPHER FILDES
Chess masters can suffer fool's mates over money — Bobby Fischer is holed up in Belgrade, trying to extract his match prize from a busted bank — so I do hope that Nigel Short and Gary Kasparov, would-be world champions, took my advice. They were offered a match prize of ten million marks, which turned out to be Reichs- marks, their value destroyed by inflation. Such are the perils of paper money. 'My advice to Short and Kasparov', so I wrote here in March, 'is to accept nothing but gold.' If the price of gold was at a ten-year low, if European central bankers were sell- ing and the Bank of England was neglect- ing to buy, if the Economist was urging its readers to get out, then gold (I thought) was due for a bounce. Since then it has bounced up by 20 per cent, and pundits have fallen over each other trying to explain this. It looks simple to me. In the 25 years since the Bank ran down its stocks of gold, its paper money has lost almost nine- tenths of its value. That is what comes of trusting central bankers' promises to -pay. The central bankers, though, would prefer us not to have the choice. An exclusive licence to print money is the most desirable monopoly, and last year earned the Bank more than £1.5 billion. (It went to the Treasury). So central bankers enforce their own monopolies, accept each others' paper promises, seek to impose them on the mar- kets at face value, and dream of a Europe with only one currency — Euro-Monopoly money. Their power, though, is not what it was. In the last nine months the markets have repeatedly called their bluff and set their own price on one European currency after another. Gold is the perennial com- petitor to paper money, which is why the central bankers fear it, and when they lose their grasp, gold comes into its own.
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