Heinz,
As far as supply goes, gold miners keep on producing gold, right? So, for gold to be a store of value and not weaken under inflationary tendencies, the demand has to increase as well. At present, in several countries dollar and not gold is the unofficial store of value, and the demand for dollar (or other similar assets) is sky rocketing. Dollar is the new gold, therefore, and just as gold was not debased on increased production because demand kept up with supply, the same may well happen with dollar (just look at the trade deficit the rest of the world is allowing the USA).
Finally, it is all a matter of perception, and if gold - an inert metal with little use outside the dictat of fashion - can be a store of value, why not the dollar? Why should a gold bug make a distinction between metal and pulp, if perception drives both in identical ways? Now, of course, perception may change. It changed for gold and may change for dollar. But I don't think that any supporters of the gold standard is in a position to criticize the dollar.
-BGR.
PS: And, yes, gold has a finite source. But, by present consumption patterns, it is going to be a long time before that is hit. |
