Why is gold not a commodity?

The main problem with gold is that, unlike other commodities such as oil or wheat, it is not exhausted or consumed. Once gold is mined, it stays in the world. If the price of gold is permanently below production costs, the mines will eventually close and the supply of gold will decline, pushing the price until supply and demand find a new balance. This is largely the case even with gold's sister silver, which tarnishes and, in modern times, has found numerous important industrial applications that place it beyond practical recycling.

Another important issue in this regard is that gold miners have low market power due to enormous stocks of gold on the surface. The only difference is that, unlike blockchains, which can be replicated in a potentially infinite number of competing currencies with similar characteristics, gold is not replicated. The application of blockchain technology to allow the frictionless exchange of the title of ownership of gold is, therefore, the most important innovation in monetary technology since the arrival of standardized currency in the first millennium BC. However, they also sometimes claim that, unlike bitcoin, gold is a “barbaric relic” from a long time ago, before computers and the Internet dominated world trade.

In short, gold is a finite resource that has been valued as a repository of wealth for thousands of years and covers countless periods of political tension and market volatility. In other words, there is no force that prevents the price of gold from falling below a certain level, that is, during the wedding season in India, from October to December, large quantities of gold are traditionally purchased not only for brides to use, but also to give new couples what is considered a traditional means of preserving wealth. Therefore, blockchain efficiencies can be combined with gold's unique and eternal storage of profits, demonstrating that gold is not only a commodity but also the ultimate store of value, as suitable for the future as it was for the ancient world and everyone else. For those who want to add gold to their portfolios, The Perth Mint offers a range of options for the modern investor.

Falling gold prices eliminate less efficient mining companies, reducing average production costs. Almost all the gold that has been mined throughout human history still exists today. Since the annual flow of mines is exceptionally small compared to accumulated gold reserves, any attempt to create a cartel and set prices would fail. Since gold is not consumed, almost all the gold in the world that has been mined still exists, most of which is available for sale at the price that its owners believe is right.