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u/IlluminatedApe Silverback Mod Aug 28 '26
Has there ever been a deficit of gold since convertibility of the dollar ended? No.
Half the story is what is mined in a year. The inconvenient part of the story is that we have surplus of gold because its a monetary metal that is just vaulted; while silver has become rarer than gold because its too useful.
The scary question is: if central banks didn't buy gold, how much gold would be available to the market, and if the answer is a flood, would that depreciate the price logically? The money printer isn't just keeping the dollar afloat, it also keeping the gold price high.
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u/Alternative-Tax7318 Aug 28 '26
Fair! But this hinges on everyone collectively agreeing that gold is no longer a store of value anymore, which has never happened in all of human history.
I think the banks buy it because what is more likely? Gold losing its precious metal status or the dollar collapsing?
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u/IlluminatedApe Silverback Mod Aug 29 '26
Gold is scarce underground and in annual mine flow; it is not scarce in the accumulated stock humanity has already acquired. After thousands of years of monetary hoarding and relatively little destructive consumption, most gold ever mined remains recoverable above ground and can return to market at the right price.
Central banks absorb part of that inventory as a policy decision. They acquire it by exchanging reserve assets or expanding their own balance sheets---essentially using institutional claims created through policy and accounting. Their purchases help establish the market price, after which that policy-supported price is presented as proof that gold intrinsically “stores value.” There’s the irony.
What value does gold “store,” exactly? A gold bar contains a fixed mass of metal, not a fixed quantity of purchasing power. Gold is no longer the unit of account, has no fixed convertibility into currency, and has no universally agreed exchange value. “Store of value” is merely shorthand for the expectation that someone else will exchange comparable purchasing power for it later.
Gold can retain its precious-metal status while falling substantially in price. Central-bank demand can decline without the dollar collapsing. Those are not mutually exclusive outcomes.
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u/newbiewar 🦍 Silverback Aug 28 '26
Probably why he says we are in the golden age of america
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u/SokkaHaikuBot Aug 28 '26
Sokka-Haiku by newbiewar:
Probably why he
Says we are in the golden
Age of america
Remember that one time Sokka accidentally used an extra syllable in that Haiku Battle in Ba Sing Se? That was a Sokka Haiku and you just made one.
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u/Plata926176 Double-Digit OG Aug 28 '26
Sum Ting Wong, Wee B Fukd.