The impulse to anchor money to something solid, finite and historically resonant never fully disappears. At moments of economic strain or inflationary fear, the idea of returning to gold gains renewed traction, moving from the margins into respectable policy debate.
In 1925, Britain made what appeared at the time to be a prudent, stabilising move. After the financial and social upheaval of war, the government opted to restore the gold standard, pegging sterling to its pre-war value. It was a move that seemed both respectable and disciplined, a signal of Britain’s commitment to financial orthodoxy. But the consequences proved deeply problematic. In effect, the return to gold locked the economy into an unrealistic valuation of the currency, undermining export competitiveness and intensifying domestic deflation.
For today’s investor, it exposes a recurring tension between economic idealism and the realities of capital markets. The gold standard was never just a monetary mechanism, it was a framework that constrained flexibility, amplified shocks and dictated the flow of capital. It required governments and central banks to prioritise currency stability over employment, growth or social cohesion.
Ruffer Investment Company Limited (LON:RICA) is a British investment company dedicated to investments in internationally listed or quoted equities or equity related securities
