Even if the only objective was low and stable inflation it would be a bad idea
The price of gold reached an all-time high of $2,000 per ounce in early August. And while mainstream economists have treated gold as a sideshow since the world abandoned the gold standard in 1971, this recent price increase is a significant signal.
Three explanations for the elevated gold price – related to US monetary policy, risk and investors’ growing desire for a safe-haven alternative to the dollar – have been offered. Each contains some truth.