I think people greatly overestimate the importance of gold. Gold cannot feed your people, or win a war or cure a disease. And in a crisis likely won't be useful for buying things that do.
Gold is maybe just a bit better than fiat currency. Even in terms of inflation, what would happen to the market value of gold (not in Dollar terms, but in terms of what it can buy) if the government decided to spend down $200B in gold to buy stuff with?
> And in a crisis likely won't be useful for buying things that do.
In a crisis, the value of gold holds more than that of the Papiermark, or even the US dollar - I can buy only one egg for the two I could have bought five years ago. Gold is uniform, portable, divisible and durable - useful attributes in a crisis, and worth more than Confederate dollars.
Gold is useful - for filling teeth, for electronic coating. It's value has stayed normal for thousands of years - although in times of inflation or crisis it might become a little overvalued temporarily as people flee to its safety. One could switch to other precious metals like silver, but this happens to them too.
> It's value has stayed normal for thousands of years - although in times of inflation or crisis it might become a little overvalued temporarily as people flee to its safety
That hasn't been the case after the Dollar and all other currencies were unpegged from gold. Adjusted by inflation it has been a very volatile asset in the last 50 years:
If you think the value of gold has remained stable, that's only because you're only measuring it during times and places of stability. See how much bread your ounce of gold buys you when there's no bread to buy. In a real crisis, the value of gold drops to near zero, just like fiat money does. No hungry person cares about electronic coating.
The best you can say is that gold is tangible, portable and universal. So you can bring it with you (often in the form of jewelry) as you flee, and it will likely return to value in some other time/place.
And yet it wasn't a very good asset to hold between 1980 and 2000, despite quite high inflation during the period. It's nominal value barely moved while real value of USD halved.
Gold isn't really held because central banks expect its value to go up always. It's held because its safe from other risks like assets being frozen, the currency completely collapsing to 0, etc. Gold has managed to always hold "some value" over centuries. It's a hedge.
Everytime it comes up this fruitless educational effort appears, indicating a persistent irrational value, decoupled from reality . Which makes gold valuable even in conflict zones where irrationality abounds..
How? This issue is never money - it's always availability and logistics. In a regional crisis, what would you do with the gold? Is there anything to buy from outside the region? If so, how would you get it in? And does gold really help here, or would the other countries give it to you or lend it to you anyway?
Sometimes you have one border blocked from one side, and another not blocked from the other. For instance when the UN split up Israel they gave the Isrealites connectivity to the Mediterrean and the sea, only country other than Egypt to span both and enormously valuable. Huge value loss to the Palestinians: Israel has even had plans for a canal.
Worth noting the UN partition plan was never actually adopted in a binding way.
Gold is maybe just a bit better than fiat currency. Even in terms of inflation, what would happen to the market value of gold (not in Dollar terms, but in terms of what it can buy) if the government decided to spend down $200B in gold to buy stuff with?