LETTERS: ONCE upon a time, there was an aphorism "The Golden Rule: He who has the gold makes the rules".
Gold is a precious metal that has historically been mined for a variety of uses, making it valuable at all times.
Due to its chemical stability and lack of tarnish or corrosion, gold is also more valuable than money. Gold can always be used as money because gold's worth will never decrease.
Unfortunately, Zimbabwe, which has the second-largest gold reserves in the world and whose extraction is the primary source of its export revenues, experienced inflation due to the rise in the cost of imported food, fuel, fertiliser and other necessities.
As a result, the Zimbabwean central bank has raised its benchmark rate from 80 per cent to a fresh record of 200 per cent.
Thus, Zimbabwe's central bank has launched gold coins in an effort to curb the country's out-of-control inflation and stabilise the local currency. It is hoped that these coins will reduce the demand for foreign cash from the populace.
Because the people would be able to buy the one-ounce, 22-carat coins in local currency and US dollars and other foreign currencies at a price based on the current international gold price and the cost of manufacturing, it would undoubtedly result in a profit for the nation.
What will happen if all nations follow Zimbabwe's example and introduce gold coins in their own nations? Even though the official gold standards are no longer in effect, other currencies continue to influence gold. Therefore, gold must be traded like other currencies.
The secret to maintaining wealth may lie in switching to gold. For instance, during the hyperinflation of the Weimar Republic in Germany in the 1920s, Germans who kept US dollars backed by gold did not suffer from poverty.
Investors can still buy gold even when no nations are using the gold standard. Investors convert their home currency into the money of several of the most prosperous countries in history when they purchase gold.
People can protect themselves from periods of unpredictability in the world economy by investing in gold. Trends and reversals occur in any currency, and this is true for gold too. Gold is a proactive investment to hedge against potential risks to paper currency.
Gold is one of the major minerals mined in Malaysia.The majority of gold deposits are found in Pahang, Kelantan and Terengganu.
Moreover, as consumers have grown more conscious of the investment value amid inflation risks, demand for gold bars has climbed by at least 30 per cent as compared to previous year.
This demonstrates an increase interest in gold. Therefore, to control inflation and reduce reliance on foreign currency, we should consider introducing gold coins as an alternative to currency in the future.
Arvinth Nair Mahendran
Faculty of Business and Communication
University Malaysia Perlis
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times