Hi,
thanks for the reply but I tend to respectfully disagree.
I have never heard of gold protecting a currency or country. Did it protect ireland or GB in the erly 90's? Nope, we devalued our currency. Japan, no, went in to recession/depression for nearly 2 decades.
The US is printing money like never before for the promise of repayment, in the form of bonds. Not gold backed i believe, plus its currency has tanked due to this printing of money. Hard to believe that their large gold reserves have held up their currency. If fact I read that they cannot sell their bonds anymore.
If you look at this list it clearly shows that economic power etc.. has nothing to do with gold reserves of each country.
http://en.wikipedia.org/wiki/Official_gold_reserves
I disagree the
analogy with money, as one has to earn money by working or trading services etc..The practical use is that you can buy stuff with it, as everyone accepts it. You need an internal tradeable entity unless you return to barter systems. (this could be gold or anything, but its value would not go up due to speculation!). Tradeable goods protect people from rampant inflation surely, not gold. As seen in
Zimbabwe , a barter system returned to the street due to hyper inflation. I don't believe they have gone to gold exchange, although I could be wrong.
Someone digs gold from the ground, its a naturally occuring free element. Its base cost is related to its extraction/refining cost. To question golds practical use should be the most relevent question to ask, not questioning it gives it an assumed inflated value.
It would be similar to question why oil increases in value, but ignoring the uses of it. It is their practical uses that are their primary uses. If something has no practical use, then i question its value, particularly if it increases with time. (excluding things like exceptional pieces of art etc..which may have a value to some one but certainly not globally, to everyone )
Thanks for your response, but I guess its just a global thing, makes no sense to me but that just seems like the way it is...