7/12/2013 @ 7:03PM
(Kitco News – Las Vegas) - The fact that gold is now seen as an investment vehicle reflects the poor state of the U.S. global economy said Steve Forbes, publishing magnate and chief executive officer of Forbes Magazine.
Forbes was one of the keynote speakers at FreedomFest, an annual convention that looks to gather free minds for open discussions on politics and the economy. In an interview with Kitco News’ Daniela Cambone, Forbes said that if investors and consumers had faith in the economy then there would be no need to hold the yellow metal.
He added that only jewelers and gold miners should be buying gold. However with little confidence in the dollar, he added that investors are either looking for defensive securities or are sitting on the sidelines.
“When [gold] has to be bought as an asset class it tells you that the politicians are making a hash of things, central bankers are making a mess,” he said. “If it’s fixed in value, the only ones who would buy it would be jewelers.”
“If the politicians do things right then you can invest your money into productive assets instead of trying to defend what you have,” he added.
With the high volatility seen in gold prices in the last few years, Forbes said he recommends only holding the yellow metal as an insurance policy.
As to where the price of gold should be, Forbes said the market should determine the value; however, the price has been skewed because of the Federal Reserve’s aggressive quantitative-easing measures. He added the moves have completely distorted the credit markets.
Looking at the current state of the economy, Forbes said the measures the Fed has taken to stimulate the economy have not worked and the best way to solve the problems is to have a “sound value for money” which is why he favors a new type of gold standard.
“It’s like having 60 minutes in an hour,” he said. “You don’t try to stimulate the economy by increasing the number of minutes in an hour. It’s a fixed measure.”
Like a ruler, a gold standard would be a guide to help determine the value of the currency, Forbes said.
“What a gold standard does is just ensure that the value of the U.S. dollar remains stable. If you make an investment and get paid back in five years it is still a 100-cent dollar not a 20-cent dollar or not an 80-cent dollar,” he said.
As well as being a publishing mogul, Forbes has also written a new book, Freedom Manifesto. Forbes was also a two-time candidate for the presidential nomination of the Republican Party.
In his book, Forbes addresses the perception of why people think markets are amoral and big governments are not. He added that in reality the opposite is true.