Pittsburg, Kansas | One other thing that makes gold a good money is its stock to flow ratio. Gold has a very high stock to flow. Mining only adds a small amount of supply (flow) to the total amount of gold available (stock) so the stock remains very stable. Something like wheat, on the other hand would have very high flow (the amount harvested each year) compared to the amount of stock (at harvest there are large stocks, but by the next year before harvest the stocks are very low - highly varying stocks in relation to the flow). For a commodity money to remain stable, the stock needs to remain stable. Gold fits the bill because only a very small portion of it is actually consumed and lost permanently. Nearly all of it remains as stock, maintaining a very constant supply compared to any other commodity. John
Edited by John Burns 12/1/2015 11:11
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