Local Currency, World Currency or Gold Currency?
For at long as there have been fiat currencies there has been a debate over whether they can be stable. The most accepted answer is "temporarily" which could mean years, tens of years or hundreds of years but not forever. The question then becomes one of how to manage your wealth. This is particularly important if you have moved to a place such as Nicaragua who tends to be a victim of floating exchange rates.
There are many articles, generally written by someone with a vested interest in how you manage your money, that will tell you what they feel is best. Gold, stocks, bonds, real estate and more are typical answers. Well, there is an interesting article in Forbes titled If the Gold Standard Scares You, How About a Parallel Currency Option? that makes a very interesting argument for a third alternative.
The author's proposal is to establish a choice—that is another currency, backed by gold—and let individuals freely pick what they feel is best for them.
The basic problem facing a country like Nicaragua, Pakistan, Cambodia — or China — is that the major international currencies, such as the dollar, euro, pound and yen, are highly variable compared to gold.
You can argue – correctly, I would say – that this represents the unsteady value of these floating currencies, while gold itself is relatively inert, a constant of stable value. Gold has served this role for centuries. It’s not gold that is “volatile,” but rather these chaotic bits of fiat paper.