Is gold regaining importance as an official currency?
04.02.2019 - News
created by Arnulf Hinkel, financial journalist
Paying the doctor's visit with gold coins? Settling rent payments with bullions? Surely these are customs from a time when Roman emperor Caesar paid his troops in gold – or are they? After the precious metal had almost completely lost its function as a means of payment in the early 20th century, there has been a clear reversal of the trend in recent years.
People tend to rely on gold in times of economic crises and hyperinflation
Especially in regions suffering from political instability or economic slumps due to such factors as sanctions and embargos, the often severely weakened domestic currencies are increasingly being replaced by gold. In autumn 2018, the London-based publication Middle East Eye reported that among landlords in Iran, which has been hit hard by intensified US economic sanctions, a growing trend is to exclusively accept gold as payment for rent. In Turkey, gold has also seen a rise in popularity as an everyday means of payment over the past two years. The German website Goldreporter.de last year reported that in Venezuela, which currently suffers from an inflation rate of an estimated 80,000 per cent, medication is often available only in exchange for gold coins. However, the advent of gold as a daily means of payment is by no means limited to crisis regions or emerging markets.
Gold is an official means of payment in some US states
After the Mormon state of Utah introduced gold as its official currency in 2011 as a precaution against high inflation, the states of Wyoming and Texas followed suit, issuing respective laws in March and September 2018, according to the German news magazine Focus. In all three states, however, not every form of gold is recognized as a means of payment equal to the US dollar or foreign currencies: only gold coins officially issued by the US or foreign governments are legal means of payment. Currently, there are several efforts in the US on a national level to clear the way for gold and other precious metals to be recognised as official means of payment.