If there is inflation, paper money loses its value. When paper money lost a lot of value, the value of gold increased, that is, you can buy more things with it.
In a total collapse of paper money, people use gold and silver as money.
RE: If there is inflation, paper money loses its value. When paper money lost a lot of value, the value of gold increased,
OK, riddle me this — we all know that 2022 was the year of HIGH inflation. But look at the chart of the price of Gold vs USD:
https://ycharts.com/indicators/gold_price_in_us_dollar
It peaked at $1922/ounce on March 2022, then DROPPED to $1628 on November 2022 and climbed back up again to where it is now at $1875. Jut a little higher than it was on January 2022.
“If there is inflation, paper money loses its value.”
When there is inflation interest rates increase making it more expensive to hold gold so it is sold causing the price to go down.
Meanwhile, money is the bank is drawing interest.