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Gold is not really scarce and as seen its price plummets multiple times throughout history as large quantities were unexpectedly discovered. If even a minority

Gold is not really scarce and as seen its price plummets multiple times throughout history as large quantities were unexpectedly discovered. If even a minority of the people currently hoarding gold decided to sell, the price would crash. Gold is a strange asset. It is valuable because it is seen as a strong way to store value and it is a strong way to store value because people collectively believe it to be so. In that way, it is actually quite close to bitcoin.

spiralx 5y ago
I remember being surprised when I read that half of all of the gold we have has been mined since 1961, which really does show that basing your currency on it would have massive problems.
- Lazare 5y ago
  See also the inflationary spike of the Renaissance era, sometimes called the Spanish Price Revolution: https://voxeu.org/article/does-inflow-precious-metals-new-world-really-explain-great-inflation-renaissance-europe https://voxeu.org/article/does-inflow-precious-metals-new-wo... Prices rose sixfold over 150 years, which represents a ~1% inflation rate which seems low by modern standards, but the thing about inflation is that expectations matter far more than the absolute rate, and European society had ~0% inflation assumptions baked into it, so the effects were significant and sweeping. The graph of price levels in England in that article is just wild. It's now generally accepted that that the main driver of this was the Spanish treasure fleets from the New World, which significantly increased the money supply in Europe.
  - spiralx 5y ago
    Which itself followed the Great Bullion Famine, where there was too little gold and silver available: https://en.wikipedia.org/wiki/Great_Bullion_Famine https://en.wikipedia.org/wiki/Great_Bullion_Famine It's also amusing that silver was far more critical than gold historically.

spiralx 5y ago

I remember being surprised when I read that half of all of the gold we have has been mined since 1961, which really does show that basing your currency on it would have massive problems.

Lazare 5y ago
See also the inflationary spike of the Renaissance era, sometimes called the Spanish Price Revolution: https://voxeu.org/article/does-inflow-precious-metals-new-world-really-explain-great-inflation-renaissance-europe https://voxeu.org/article/does-inflow-precious-metals-new-wo... Prices rose sixfold over 150 years, which represents a ~1% inflation rate which seems low by modern standards, but the thing about inflation is that expectations matter far more than the absolute rate, and European society had ~0% inflation assumptions baked into it, so the effects were significant and sweeping. The graph of price levels in England in that article is just wild. It's now generally accepted that that the main driver of this was the Spanish treasure fleets from the New World, which significantly increased the money supply in Europe.
- spiralx 5y ago
  Which itself followed the Great Bullion Famine, where there was too little gold and silver available: https://en.wikipedia.org/wiki/Great_Bullion_Famine https://en.wikipedia.org/wiki/Great_Bullion_Famine It's also amusing that silver was far more critical than gold historically.