The price of gold up until the 1920s was pretty stable sub-$19 - even below the government's fixed rate. As far as I understood, the gold rush had very little i

The price of gold up until the 1920s was pretty stable sub-$19 - even below the government's fixed rate. As far as I understood, the gold rush had very little impact on the price of gold. But I also think this confuses topics. You are just talking straight up arbitrage that has nothing to do with being a bank. That arbitrage from high supply area to low suppy area will lower the price. The arbitrager makes some money on the transactions, but the net effect is to push the price down. Not that great for the huge socks on loans already on the banks balance sheets. While the way the Fed operates, currency enters our economy through bank deposits turned into loans (not as true as it once was in the post QE world) those loans are going to be repaid 5+ years when inflationary effects have already started pushing the dollars down that they are being paid back in. Plus, the point of the extra reserves is to drive down rates since there will be a greater supply. They get hosed in both ways.