Historically gold has been used as money. The value they had was the social acceptance behind them as a means of easing transactions. So wouldn’t mining more of it add more into circulation and lead to inflation (And with it a lower value of it’s value) back in those times? What gives?
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Let’s say there is 100lbs of gold in the world, worth 1 million dollars. You don’t have any of it.
You stumble on a mine and dig up 100lbs of gold. Now there are 200lbs of gold in the world. This influx of gold cuts the price of gold in half.
So now the 100lbs of gold that you dug up is only worth $500,000 and the gold of everyone else who owns gold is now worth $500,000 where it used to be worth $1,000,000.
You did devalue the gold in the wortlos by digging up more of it, but the value added to your personal stockpile of gold increased faster from adding additional gold than the value dropped from the overall decrease in the price caused by the inflation you induced.
You effectively transferred some wealth from other holders of gold to yourself by mining it.
The numbers in the real world are obviously not quite so clean, but the basic principle applies.
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