Recent hype on the gold made me think how we ended up on a gold frenzy after neglecting this precious metal for such a long time. Historically, gold has always been representation of power and wealth. Being the first metal introduced to mankind, it was the metal of gods. Homer mention of gold as the glory of immortals and sign of wealth. Power loved gold and gold loved power.
Nevertheles the inventon of printing contributed to the introduction of brightest idea ever; "printing the wealth". Thanks to genious bankers, we came to believe that we can actually "print" wealth. During the early stages of banking system, lawmakers were smart enough to limit the amount of printable fiat currency (we call them dollar or euro etc)to the value of gold reserves. This fixed exchange rate between gold and a given currency provided some sort of cap for central bankers to write "cashiers checks" at free will for the populist governments. The system worked for a while until when the ambitions of the politicians surpassed the principle of self control and gold standart has let to fall apart. Central bankers and the politians who are released from their chains initially applied anti inflationary monetary expansion policies and adhered to the basics of the textbook economics. But as the famous saying goes; "absolute power corrups absolutely",during the post WWII period the central banks led by the maestro Federal Reserve System gradually injected the system with unfunded "promissory notes" the so called paper money. This system of controlled floodind worked for a while thanks to deflationary counter preasure coming from Asia led by China by the abundant supply of goods. This decade-long process led the FED and major central banks got a bad habit; curing through monetazing. Is there a trouble, just print baby! Are there more troubles, print more baby!
Yes this current phase of monetary expansion is not sustainable and self destructive. The more paper they print the less value it has and hence more need to print. Yet there is one currency that central banks can not print; good old gold. Those who do not understand why fiat currencies devalued against gold since last ten years should keep in mind that the game is just starting. The game will end when this corrupt fiat currency system collaps and the new exchange system is established under the so called gold standart. Price of the gold? You name it..
