Very wishful thinking. I suspect that gold is already in a bubble that is going to burst, for the simple reason that, outside of electronics and some chemical applications, it is pretty useless.
During the age of Mercantilism, when the value of gold was determined by its scarcity, and it backed currency, it was a different situation. And while most economists would say that the age of Mercantilism is over, I would disagree, and say that the concept of Mercantilism still exists, but is no longer limited to specie.
Expanded Mercantilism is no longer limited by just commodities, either, but has dynamic elements such as economic activity, productivity, and research and development.
In retrospect, even the concept of Mercantilism that whoever had the most specie was the most powerful, may have been in error. The power was derived *not* from the having of specie, but from the *mining* of specie.
The ability and will to mine becomes the center of economic activity in a nation, with its benefits expanding like ripples on a pond from a pebble. Literally, a growing nation mines, and a nation in decline mines less.
To make matters even worse, gold has become utterly disconnected from the market, outside of the people who buy it and sell it.
-—outside of electronics and some chemical applications, it is pretty useless.——
You sound like a guy ;-)
Ah, “it’s a new world”. Somehow people have fundamentally changed. Me, I’m a conservative, and I will continue to bet on something that has maintained its value, everywhere for at least 5000 years. But that’s just me. If you are so certain gold is a bubble then I suggest you pile into DUST and get rich.
Gold has held a continuing purchasing power for 5,000 years. Reach into your pocket and pull out whatever currency that you have in there and the same cannot be said. Man cannot make things to be used for bartering that maintain purchasing power. Gold is just as scarce today as it was at any other time when you take into consideration the population increases. What has happened to the purchasing power of your currency just in the last 12 years?
On the contrary: precious metals (Gold and Silver) are money. Which is to say: they are very useful indeed.
Precious metals possess all of the attributes of money (fungibility, portability, store of value and so forth)
Fiat currency has most of the attributes of money, but it does not act as a store of value. After a few years a dollar bill has only a fraction of its original buying power. However an oz of Gold from (e.g.) the time of the Incas retains its buying power.
Something that has the attributes of money is valuable because it has those attributes. Would-be barterers can use money to overcome the otherwise insuperable problem of discovering a Coincidence_of_wants .
Trade requires money. Let's examine this vital function of money with respect to the coincidence of wants:
Chicken farm example:
You run a chicken farm, and you need to buy a great many things to keep your farm and family going.
In a given month you need - for instance - to buy chicken feed, to hire someone to repair your generator, to buy a nailgun to allow you to mend chicken barn #9, to hire a midwife to help give birth to your widowed daughter’s baby, to buy milk and bacon - and so on.
Some of these resources will be buyable with chickens or eggs. And some of them will not - there's no coincidence of wants if the midwife or the nailgun owner don't want chicken meat or eggs.
Remember: these people need to replace their consumables in order to stay in business: they can't use your food to buy more nails or WD40 or painkillers or whatever they need from their suppliers a hundred miles away.
But all or most of these resources will be buyable with money - with Gold or Silver. This is because offering money as part of a transaction vastly improves the chance of a coincidence of wants
Chicken farm example - continued:
You’ve had a successful month at the farm, and you now have loads of chicken meat and/or eggs to sell.
100 people line up to buy what you’ve got.
* 50 of them have horribly devalued fiat money, food-stamps and a bad attitude
* 40 of them have plans for barter - some of which are better than others. One is willing to work on your farm for food: another is willing to sell you their body, another has a stack of AA duracell batteries, another has some miniature bottles of scotch - and so on, with dozens of variations. You have to gauge each transaction on its own merits - an exhausting process - and half of the barter offers are simply going to be unworkable.
* 10 of them have Gold and/or Silver.
Which customers will you prefer selling your produce to? They all want what you've got - but do you want what they've got? Again: real money vastly increases the chance of a coincidence of wants.
In summary:
Only Gold and Silver fulfill all of the prerequisites of money. This gives them inherent value - useful (for instance) in a survival situation.
As we know: fiat currency can also be used to run a chicken farm - but fiat is currently losing at least 7% of its buying power a year. Once price inflation reaches a certain level, only real money will be accepted as money.
Hope this was helpful.