I hear some economics arguing that currency should be pegged to gold as a way of ensuring that its value isn’t arbitrary / volatile but I don’t understand how this would solve the problem. I understand that gold is a scarce resource that is difficult to mine but is it this alone that gives it intrinsic value ?
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Outside of industrial use, gold basically has no real value. Let’s say that society collapses tomorrow. You’ve been buying up gold for $1,000/ounce because you know a guy that gets you a “great deal” and you wanted to be prepared.
Well, now your gold is worth only as much as you can trade it for. Which would be a lot less than $1k per ounce.
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