Samenvatting

This article discusses the role of gold in a modern economic system. It starts from the observation that the price of gold has exploded in recent years, due to an increase in economic and inflation uncertainty following the start of the credit crisis, and that some policymakers have argued for a new role of gold in the global monetary system. Following a bird's eye view of the role of gold in monetary history, we next discuss two economic concepts - the ‘trilemma’ and Triffin's dilemma - which in the past have limited gold's usefulness in monetary systems. We finally discuss gold's present role and argue that, while gold undeniably acts as a safe haven in times of crisis, any return to a global fixed exchange rate system based on gold would unduly limit countries' flexibility to adapt to economics shocks. Yet in financial markets, gold will probably continue to serve its purpose as ‘clotted fear’.