How is gold so valuable and the basis of currency, if it’s just being stored and not used for anything?
In: Economics
Well for one gold has a fixed supply, therefore, central banks cannot go crazy and “print” more of it.
Second, the economy organises itself based on price, profit margins, interest rates… A volatile currency makes that organisation difficult – it creates chaos. Gold provides stability.
Third, gold is perpetual.
As many have mentioned. No currency is back by gold anymore (or that I am aware of). But central banks hold them as reserves.
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