To add some context, gold was actually something backed by the US government during the Bretton Woods era (40s-70s), where 1 ounce of gold was pegged to 35 dollars. This was only possible because the US accumulated so much wealth relative to rest of the world after WWII, so they controlled the majority of the gold supply. After the golden age of Keynesian America ended with stagflation in the 70s, the US government had to stop all of their gold from fleeing the country, so this guarantee had to end. Which leads to the Nixon shock, where the dollar (and all other currencies as well) became free-floating, and we enter a brave new world where humanity hasn't lived before (neo-liberalism).
Given all that, it's easy to see why the value of gold has plummeted during the 70s - 00s. Though I could see two reasons as to why gold prices are rising during the last decade:
- Gold is actually just a part of the asset bubble (in the same group as housing, stocks, and crypto), and investment in it is aided by too much money printed by the US government not being used towards productive ends but towards rampant asset speculation.
- The current era of neo-liberalism is going to end pretty soon, and some goldbugs are rooting for the revival of late 19th-century classical capitalism, where gold was actually the international standard. I think this is very unlikely though, even if the US dollar loses its status with the end of the petrodollar system. My guess is we're going to deal with free-floating currencies for quite some time, especially when wars are going to happen and governments have to print more money to sustain their war efforts. (I think the best monetary system would be neither gold or crypto, but instead something like the Bancor (https://en.wikipedia.org/wiki/Bancor))
Given all that, it's easy to see why the value of gold has plummeted during the 70s - 00s. Though I could see two reasons as to why gold prices are rising during the last decade:
- Gold is actually just a part of the asset bubble (in the same group as housing, stocks, and crypto), and investment in it is aided by too much money printed by the US government not being used towards productive ends but towards rampant asset speculation.
- The current era of neo-liberalism is going to end pretty soon, and some goldbugs are rooting for the revival of late 19th-century classical capitalism, where gold was actually the international standard. I think this is very unlikely though, even if the US dollar loses its status with the end of the petrodollar system. My guess is we're going to deal with free-floating currencies for quite some time, especially when wars are going to happen and governments have to print more money to sustain their war efforts. (I think the best monetary system would be neither gold or crypto, but instead something like the Bancor (https://en.wikipedia.org/wiki/Bancor))