Bitcoin is perfect, since the supply is rigidly defined by mathematics. Unfortunately we are still a long way from accepting bitcoins as a common reference. Until then, a new gold standard could be established as the common reference, the true credit-risk-free asset against which all currency credit risk is determined and the corresponding true credit-risk-free rate is calculated.
Gold generates no intrinsic return, as rightfully pointed out by gold antagonists; but herein lies its most important qualification as the common credit-risk-free benchmark. I doubt we will ever return to the old gold-standard. But the new gold standard could take root in this framework.
At the time of publication, Bo Peng was long gold.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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