I’ve noticed a certain correlation between posts predicting a fall in the price of houses in the English-speaking world and posts predicting a jump in the price of gold.
There’s a certain logic to this: the “money supply” exists in the form of bank loans, such as for houses, and expands globally at anywhere between 7 and 15 per cent annually. This expansion of loans is hugely in excess of any actual economic growth occurring on Earth.
The theory is that, as gold is highly limited, its value should grow as it gets more scarce in paper money terms each year.
The counter argument is that gold’s price did precisely the opposite from 1980 to 2000. Many argue that gold is simply a pretty jewellery fabrication material with a very few industrial uses. It’s simply not worthwhile to use it as an absolute measure of worth any more, if it ever was.
Since 2000, its price has almost trebled, however.
So do we take that as meaning that gold’s role as an alternative type of money to bank loans is back, or is this just a blip?
Who here wants gold?