With money players going for gold, the future of currency looks precarious

The chaotic political scene in the US, with 'so many foundational pillars of society hanging by threads', has spooked market confidence in currency, resulting in a 'perfect storm' moment of soaring prices for the precious metal, writes

- Matthew Bishop

In a small office space above a nondescript shop front on New York's Madison Avenue, a series of Rembrandts line the walls. Building what is now the world's largest private collection of the Dutch Old Master's works is one way, along with establishing a charity to protect big cats, that one of the most successful investors in gold this century has rewarded himself.

Thomas Kaplan has recently talked about an initial public offering of his Leiden Collection on the New York stock exchange - a way of "democratising the ownership of fine art" by allowing the public to buy shares in the paintings. But, as the price of gold has soared this year - reaching a new record of $4,000 an ounce this week - he has talked even louder about how much higher it might go. Describing this moment as a "perfect storm for gold", in which "against gold, the dollar will absolutely collapse", the billionaire is predicting that its price could soon exceed $10,000 an ounce.

This is a moment of vindication for Kaplan, who has been predicting this sort of surge - up 50% so far this year, while the dollar has fallen against other currencies by more than 10% - since before 2011, when he featured prominently in the book, In Gold We Trust? The Future of Money in an Age of Uncertainty, which I wrote with Michael Green.

"Compared to gold, all currencies are like toilet paper, though the dollar may be double-ply," he argued scatologically back then. It was a time when other leading capitalists were engaged in a fierce debate over whether it made sense to invest in the metal that had once underpinned the global monetary system, but had been increasingly ignored after President Nixon abandoned the Gold Standard in 1971.