I would not want my thoughts on Bretton Woods 2 to be construed as a recommendation to sell gold (or buy it). I said nothing about the chances of a Bretton Woods 2 coming about, especially one with a role for gold. We presently have Berlusconi mentioning “talking about a new Bretton Woods.” We have other leaders talking about global regulation and closing markets, which is a far different thing. We have little to go on. If Bush mentions this in a speech or Paulson or Bernanke mention it, it boosts it and assures it.

Obviously, an agreement would take a long time to arrive at, especially since some Asian countries have built up trade based on having strong currencies and the U.S. has low savings based on a weak currency and low interest rates. A new agreement would have to mean higher domestic interest rates in the U.S. (ergo lower stock prices) and the accompanying depressing impact for awhile.

Gold can go up if the chances of a meaningful agreement based on gold deteriorate. It can be under pressure, in my view, if those chances go up. The fact that such an agreement is being raised in discussion and the fact that the existing monetary system is a wreck both suggest that the finance ministers will be considering some serious reconstruction. That places a damper on gold at this time. As always, gold remains a useful insurance asset in case that no system can be put in place and existing currencies continue to or completely lose their acceptance.