CAPE TOWN (miningweekly.com) – An expert in gold has forecast that the true worth of gold will be recognised far more if the money bubble pops in 2014.

“The writing is on the wall for the dollar and other currencies. The monetary system is breaking down and central banks are serving their own interests. The return to gold is inevitable,” Jersey-based company GoldMoney founder and director James Turk said at the Investing in African Mining Indaba on Monday.

He told thousands of delegates on the first day of the summit in Cape Town that central banks had been unable to maintain the buying power of different currencies around the world.

“Gold is being saved, not being used as currency. With the way things are today, we will eventually go back to a place where stocks are cheap and gold becomes expensive.

“What we see today is boom and bust cycles. Banks extend credit until they’ve blown too much money. But as JP Morgan said before Congress in 1912, ‘Money is gold and nothing else’. What was true then remains true today.”

Turk said despite its setback in 2013, gold was holding its own against the world’s nine major currencies since the year 2000.

“One bad year after 12 is not the end of the world.”

Turk questioned whether government intervention was keeping the gold price down.  

“Gold is exceptionally undervalued at current levels and there’s imbalance between supply and demand.”

Turk added that another potential global crisis was brewing because of the mountain of debt that could not be serviced. Interest rates were rising in many countries, worsening the debt burden.

“Debt continues to grow and interest rates are rising. We’re facing a situation where the Federal Reserve will have to continue tapering or tell the US government it doesn’t have money to spend.”

Turk, who recently published his book The Money Bubble – What to do before it pops, said the US dollar was likely to lose more buying power and was heading for a hyper inflationary environment.

“We are in a fear currency bubble,” he noted, adding that the African continent needed to make the most of gold as an asset. 

“Gold is one of Africa’s greatest competitive advantages. Fifty per cent of gold mines are from Africa, with the lion’s share from South Africa.

“Africa needs to serve its own interests and take the lead in returning to gold and recognising it as money,” Turk pointed out.