Gold: a six thousand year-old bubble revisited
By GCRU Gold News on Thursday, November 27 2014, 23:21 - Permalink
Since gold is a fiat commodity currency, its value will be determined largely by its attractiveness relative to other fiat currencies – the fiat paper currencies issued by central banks. Gold should not be analyzed as one of a set of intrinsically valuable commodities (silver, iron, lead, zinc, platinum, aluminum, titanium etc. etc.) but as part of a set of intrinsically useless and valueless fiat currencies – the US dollar, the yen, the Yuan, the euro, sterling, the rupee, the rouble, Bitcoin etc. etc.). It is therefore in times that market participants are nervous about the future value of most other fiat currencies that gold will be most attractive.
Such a time is what we are going through now. Many systemically important central banks have expanded their base money stocks and balance sheets massively. The Fed has quadrupled the size of its balance sheet. The Bank of England has more than tripled the size of its balance sheet. Many central banks have bought vast amounts of public debt.