Gold touted as currency crisis ‘bridge’

by Michael Klimes

JIJI

Gold is a bridge between “the old currency system” and “whatever comes next,” said Paul Tustain, founder and chief executive of BullionVault, a leading online gold and silver trading company based in London.

Tustain said recently he absolutely believes the world will face a currency crisis triggered by huge government debts in countries like Japan and Britain as well as active purchases of government bonds by central banks in major economies.

“I believe an event at some stage, in the next five or 10 years, will cause large numbers of people here, in Europe, Japan and perhaps even America to say, ‘I cannot afford to hold my savings in this currency anymore because the debt held by the government is simply so large that it has to be inflated away to nothing,’ ” he said.

Tustain predicts currency instability will push the price of gold up as investors lose confidence in their currencies. Gold “operates as a mechanism for storing value through a currency crisis,” he said. But Tustain foresees no rapid collapse in the yen’s value, saying, “The yen does have an enormously loyal domestic following and it will take a long time for that confidence to break.”

BullionVault sees potential in the Japanese markets with a small selection of very wealthy Japanese investors who are worried about the stability of the yen. Tustain’s strategy for Japan is very selective: “The people who interest me or our business are the 2 percent who are considering these issues and accept you cannot just be a doormat for government monetary policy. I am interested in the investors who would regard themselves as analytical and realistic.”