TEXT OF INTERVIEW

SCOTT JAGOW: At the start of this decade, gold was selling for a paltry $250 an ounce, the lowest price in 20 years. This morning, it costs almost $640 an ounce. The price has been going up because private investors and up-and-coming economies like Russia have been buying gold. They seem to like it better than the dollar, but none of the countries in the European Union has bought gold in years — until now. The Telegraph of London reports that some EU country, we don't know which one, just bought bullion. Editor Ambrose Evans-Pritchard follows the gold market. He says getting back into gold could pay off for European Central Banks.

AMBROSE EVANS-PRITCHARD: We've seen some very, very aggressive investment management by some of these banks, particularly the Bank of Italy. The Bank of Italy in 2005 switched 20 percent of its entire foreign exchange reserves out of dollars and into the British pound and it made an absolute killing doing that because the pound has rocketed against the dollar and that is effectively operating as a hedge fund. They anticipated a sharp fall in the dollar and a rise in the pound and the rode the wave. That is why I think banks like the Bank of Italy will start playing gold if they think there's going to be a further rally in coming years.

JAGOW: What kind of impact does that have on the dollar?

EVANS-PRITCHARD: If gold starts going up strongly I think it's a barometer of concern in the global system about the stability of the structure we now have. We've had an era of dollar hegemony, which has provided stability to the global system. The problem is with the huge U.S. current account deficit, this is obviously untenable. It can't go on forever and the world has to adjust and that's going to require some kind of dollar fall. If this is gradual, that's fine. If it happens too quickly, it'll cause mayhem because the economies of Japan and Europe are too fragile, they won't be able to handle the consequences of it. You'll have mayhem globally and gold will be seen as essentially an indicator of stress in the system. I don't think gold in itself going up depresses the dollar, I think it's a symptom of a deeper dollar malaise.

JAGOW: Ambrose Evans-Pritchard is a business editor with the Telegraph of London.