Comment by declan_roberts
4 hours ago
I don't quite follow. Countries hold gold to protect their own currency from devaluation, not bc they expected it to become stronger against a dollar.
4 hours ago
I don't quite follow. Countries hold gold to protect their own currency from devaluation, not bc they expected it to become stronger against a dollar.
How does holding gold protect from devaluation? No one has currency backed by gold any more.
I don't think holding gold does much, but in theory, a central bank could prop up its currency by selling the gold. It's like selling any other asset.
> How does holding gold protect from devaluation?
I think the idea is to rise the value of your currency, you rise the demand for your currency, by selling for it something that everybody wants, like gold.
Of course this demand is artificial and you'll run out of hold to sell at some point, but it can hopefully carry you over thd bump.
I still don’t get it. Why does everyone want gold? Its uses are some types of electronics and jewelry. Almost seems like crypto, it has value because it is somewhat rare… and everyone else also thinks it has value.
Sincere question.
13 replies →
If you have USD and you think it will value less soon, you change it to gold instead. If you own gold in the US and think that the USD value will drop very low, you move out of the USD fearing gold retention.
But there isn’t a good reason to think that since countries such as Italy, UK, France, and others are in much worse financial positions.
A lot of this stuff is just business as usual, and then tabloids like to turn it into some doom and gloom nonsense.
From [1], in 2025 government net debt / GDP for the countries mentioned was:
Germany 47.2 USA 96.7 France 108.8 Italy 127.7
[1] https://en.wikipedia.org/wiki/List_of_countries_by_governmen...
If you sell something in US, you get paid in US dollars. If you believe dollars soon won't be worth the paper they are printed on, you immediately spend dollars on something that has durable value and take it with you instead.