Gold is an asset. Central Banks own other assets besides gold. There's nothing magical, conspiratorial, or spooky about it.
More specifically (but not perfectly), gold is effectively shadow money. Legal tender laws demonetised gold and Governments/central banks instituted their own money in its place but Governments cannot force people to use their money beyond a certain point. People only accept fiat as long as it serves "well enough" as a form of money but if Governments debase their currency enough and drive excessive inflation then it is toast and people will switch to other things. As seen in Iraq, Argentina, Zimbabwe etc, other fiat currencies can often be used to fill the gap (particularly those of more stable economies like the US$ or larger, neighbouring countries). In Vietnam land prices are often quoted in gold (in taels), so guaranteed that they think gold is money. Before their outlawing, the Norfed Liberty dollar users thought they were money. Although only a small community, most of the users on this thread think PMs are money. Gold may not be money whilst fiat is forced on people with the threat of violence and whilst it works well enough, but it will sure as heck be likely to fill the hole if/when the fiat system collapses notably by the central banks themselves. Gold is central bank insurance because it is "shadow money" to their "political money".
Interesting question! I guess the demand is strong enough to compensate the increase of supply. And even so, gold is so scarce, it won't lose value easier. I think we should worry about the ETF issues. It's the "fiat gold"...
Yes. Everything has a demand curve including money. Your personal demand for money increases when you don't want other things and vice versa. There are many legitimate reasons to have a stock and the size of your personal stock also affects your demand for other things. Whether or not thousands of other people think the same way as you do at any given point in time is secondary to whether your stocking of money changes what you think money is (but obviously still very important). It's true that sizeable changes in demand and supply could substantially affect prices, but the "purpose" of prices are to signal to the market what is scarce and what is not, what is in demand at the present moment and what is not (the invisible hand at work). A simple example is that you have $5 and your willingness to trade that $5 depends on what goods and services are presented to you and the amount to which you value having that $5 compared to the goods and services. If you're hungry you will probably find more value in a loaf of bread than in the $5. If you're well fed but wanting to save for a house you might value the $5 more than a McValue meal. Wanting to hold onto the $5 does not change the fact that the $5 is money (since the baker wants it more than their loaf of bread and is willing to trade).
Or that the increase in production of other goods and services is strong enough to offset the increase in supply from mining - so there's no nominal inflation - or there's a greater increase in the supply of goods and services compared to new mine supply so that's there's nominal deflation. The new mine supply is inflation by definition.
What's wicked is that we measure gold and silver in dollars and other paper money. Measure how much paper notes gold is worth? Like paper notes were the ultimate value on Planet Earth. Why not measure the value of currencies in gold and silver? Like: 1 USD = 0.00045 oz gold (just an example, don't look at the figure) The way we're measuring today seems upside-down... how we're constantly calculating how much gold is worth in dollars. If you look at it the other way around, you get a totally different picture.
its call precious and its metal and I want mine. mine it yourself baby my money is my baby, my mine is mine, mine is gold can't you see the dis-connect ? how to prove that gold is not money?
The world is flat and gold is currency is what you believe....fascinating fantasies. Next, you're gonna tell me Thor (as in the supernatural being) actually exists. How many times did you buy that bridge some guy was telling you he has for sale?
