Many economies throughout history have used gold, silver and other precious metals as currencies because of their ability to store value, their relative ease of transportation and the ease of exchanging them for different denominations. Gold is neither an asset nor a commodity. So is it practically useless or, at best, is it collectible? Undoubtedly, some gold investment products may have aesthetic or emotional value (think grandmother's jewelry or some rare coins). And it can be argued that the value of gold is due solely to its scarcity and to the expectations that future investors will price it higher than us now, just like they collect baseball cards or stamps.
However, this is not the distinguishing feature of collectibles, but of other investments (why do people buy stocks that don't pay dividends?) — and also the media of exchange. In addition, for most investors, the aesthetic characteristics of gold do not matter, only its monetary aspects are relevant. The Federal Reserve, the central bank of the United States, provides the nation with a secure, flexible and stable monetary and financial system. Principles and Practices of Monetary Policy Review of Strategy, Tools and Oversight of Monetary Policy Communications %26 Regulatory Letters Banking Applications %26 Legal Developments Financial Stability Assessments Coordination of Financial Stability %26 Shares Reserve Bank Payment Services %26 Financial Market Data Utilities %26 Infrastructure Research, Committees and Forums International Exchange Rates and Data Monetary Balances, Stocks and Reserves Congress has specified that Federal Reserve banks must hold guarantees with a value equal to that of the Federal Reserve bonds that the Federal Reserve Bank puts into circulation.
This warranty is maintained primarily in the form of an EE. UU. Corporate securities sponsored by the Treasury, federal agencies and the government. Board of Governors of the Federal Reserve System.
Gold's performance as a stable value standard has been exemplary. In fact, it's much better than one would rationally expect. The things that the gold standard made possible, such as the extraordinary stability of bond yields during the 19th century, have never been replicated with fiat currencies. Just look at those results (achieved without market manipulation) and tell me which central bank mobster — tell me the name of a real person — who thinks he could do it; and then explain, if true, why he hasn't done it yet.
Few consider cryptocurrencies to be a form of currency, while others view them as a store of value similar to gold. According to data from the World Gold Council, it represents only about 17.5 percent of the total demand for gold. When the dollar left gold in 1971, no one was interested in remaining tied to the dollar, and currencies floated. Therefore, gold is a commodity only in a tiny part, which means that we cannot value it as copper, it is enough to observe the annual balance between production and consumption.
Second, gold doesn't behave in a similar way to other assets, so its correlation with them is very low, so it can serve as a portfolio diversifier. In the era before 1914, most major governments participated in the world gold standard, which was nothing more than the extension of many centuries of minting gold and silver coins around the world. I wouldn't, because the ECB is subject to political pressures or other agendas to which gold is immune. First, without cash flows, gold cannot be valued using standard valuation methods, such as DCF, etc.
And, with all due respect to these gentlemen, I advise them to vote for gold for the duration of the capitalist system. No one has found a better path, not even in the form of a proposal; and no one has ever needed to find a better path, because gold has always worked very well. It could be argued that, ideally, intelligent people could unite and create a better, i.e., more stable, basis for money than gold. To understand why gold works, as a standard of monetary value, we must understand what makes money good.
But we know that the demand for gold is actually much higher, since the WGC focuses on annual flows, ignoring the enormous stocks of gold and the fact that demand and supply for gold come from marginal buyers and sellers who accumulate a large number of ingots. Gold doesn't generate any cash flow on its own (unless you borrow, but then it's something else), so it's not an asset like stocks or bonds. . .