Gold is a currency! This is a core set of today’s economic system. However, Gold is traded in currency. In General, the price of gold is quoted as the reference is always in US dollars. The reason for this is that almost the entire gold trade runs exclusively against the US Dollar. Gold and the US Dollar have a very strong bond with each other. Even if we consider as a European Investor the price of gold in our own currency, so this is only a conversion course, so to speak, a synthetic crutch.
Figure: Gold in various currencies
(Source: Thomson Reuters)
Until the middle of the last century, and you could exchange it in any Bank of US dollars in Gold. But the modern financial and monetary markets and the needs of the real economy, made such an exchange with increasing expansion of the money supply impossible. Because there is now significantly more paper money (Fiat Money) than there is Gold in the world.
How exactly thousands of old Gold secures year today, yet our modern currencies?
As for wearing it every day for the money value stability and why the phrase “In God we trust is rooted” on the USD so deep in us, as hardly anything else?
You can read more about this in my new book: The greed for Gold
Source: Thomson Reuters
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