China is the world's largest producer of the precious metal, but of late its central bank has been buying up large quantities. So what is it doing with it?
Does gold still have the same value it used to? When it was first used people put value on “oooh, shiny rock, it must be precious”, but now is it really that valuable? It sounds like they’re hoarding it because they think it’s useful as a currency, but if things got bad would other countries care about it?
Gold is agreed upon as a store of value. There’s always someone willing to buy it. You’re right that its intrinsic value as a material is lower than the actual price but people’s belief in gold is the same as their belief in a fiat currency.
The difference is that gold is a physical asset, so that no matter what the rate of inflation or the fluctuation of the market price if you have a tonne of gold you will always have that tonne.
Also it is not administered by a central bank with a political agenda.
Lastly gold is rare and finite. Eventually there will be no more gold to be mined.
I think the fact that it’s very chemically stable is likely a factor as well so it can be stored for effectively an infinite amount of time & it won’t degrade/react, it’ll still be gold.
It tends to go up in value during chaotic times as people use it to insulate their savings from the economy when they are expecting regular currencies or economies to crash.
About 10% of gold usage is in technology. This has been steady for many years. Jewelry and Investments can trade off. But yeah, basically its just mostly values because its a rare shiny rock.
And it will likely keep doing so, as while in the past gold reserves only dropped when gold was lost (like ye old Spanish ship going down in the Ocean) against its natural increase of continued mining, these days, gold is also used in quite a lot of applications where it becomes impractical to recover after being discarded.
And this removal of gold reserves will only keep increasing with the increase of its uses in technology.
So, yeah, its value is almost assured to stay very solid and monopolizing the worlds gold also gives you a degree of control over technology markets.
Markets where the west has typically kept China behind the curve.
It gives them leverage, economical and technological.
Does gold still have the same value it used to? When it was first used people put value on “oooh, shiny rock, it must be precious”, but now is it really that valuable? It sounds like they’re hoarding it because they think it’s useful as a currency, but if things got bad would other countries care about it?
Gold is agreed upon as a store of value. There’s always someone willing to buy it. You’re right that its intrinsic value as a material is lower than the actual price but people’s belief in gold is the same as their belief in a fiat currency.
The difference is that gold is a physical asset, so that no matter what the rate of inflation or the fluctuation of the market price if you have a tonne of gold you will always have that tonne.
Also it is not administered by a central bank with a political agenda.
Lastly gold is rare and finite. Eventually there will be no more gold to be mined.
I think the fact that it’s very chemically stable is likely a factor as well so it can be stored for effectively an infinite amount of time & it won’t degrade/react, it’ll still be gold.
Not if i shove it in the good old fusion reactor
Very good point.
Historically, the value of gold was tied to its “incorruptibility”. It is associated with purity and permanence.
Oh, look! An asteroid made almost entirely out of gold! T’would be a shame if someone were to mine it…
It tends to go up in value during chaotic times as people use it to insulate their savings from the economy when they are expecting regular currencies or economies to crash.
About 10% of gold usage is in technology. This has been steady for many years. Jewelry and Investments can trade off. But yeah, basically its just mostly values because its a rare shiny rock.
Its value has kept increasing over time.
And it will likely keep doing so, as while in the past gold reserves only dropped when gold was lost (like ye old Spanish ship going down in the Ocean) against its natural increase of continued mining, these days, gold is also used in quite a lot of applications where it becomes impractical to recover after being discarded.
And this removal of gold reserves will only keep increasing with the increase of its uses in technology.
So, yeah, its value is almost assured to stay very solid and monopolizing the worlds gold also gives you a degree of control over technology markets.
Markets where the west has typically kept China behind the curve.
It gives them leverage, economical and technological.