Gold at $1,500? Don't hold your breath
Is Gold a commodity or a currency? It certainly fits the definition of a commodity: A substance of value, with a uniform quality produced by many different producers.
By Garry White
Published: 6:13PM BST 11 Oct 2009
However, unlike other commodities it has relatively few uses other than as an ornament. Copper is used in wiring, iron is used to manufacture steel but gold's main uses are – and always have been – as a store of value and as a way to demonstrate personal wealth. Even if solid gold bathroom taps are not to your taste, they certainly make a point.
This means that gold really should be considered as a currency – and nothing else. This brings us on to the subject of fiat money.
Fiat currencies are not backed by gold. When most currencies were on the gold standard, a unit of currency could be exchanged by central banks for a fixed weight of gold. That way, paper money could be used instead of using gold or silver coins.
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