Throughout civilisation gold has been used as money, but the two are less closely related now than has been normal through the last 3,000 years.

Modern currencies (like many older forms of money) can have their supply expanded by diktat, usually by a government or a central bank. All modern money is subject to government in this way, which means that the value of savings is decided, to an extent, according to a political agenda. Modern savers are exposed to any economic or political crisis which could cause money to be over-issued, so their long term prosperity depends on the reliability of the political mechanisms for imposing monetary scarceness.

Historical precedent indicates it is not always in politicians' interest to keep money scarce.

Because of its rarity gold reliably imposes scarceness, which is what occasionally makes it useful as money. Whether or not a physical manifestation of money - in the form of bullion - is a desirable thing is open to debate at any given time. But if a monetary material of reliable scarceness is desirable then gold is still as appropriate as ever. The investment question concerning gold is not whether or not it reliably imposes scarceness, which it does, but whether or not such reliable scarceness will in the future be required by savers.

Because the significant majority of people currently believe that our governments and our central banks have sufficient skill to manage the supply of money gold’s use as a monetary material has waned, especially over the last 70 years. This is a regular pattern. Gold will quietly slip into the background when paper money becomes widespread because, as the famous Gresham's Law says "bad money drives good money out of circulation". But part of the mystery of money concerns gold's cyclical re-appearance, which the following pages will aim to explain.

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