why gold is not a good bet, page-48

Ye Olde gold rushes are an example where all of a sudden there was a huge increase in gold but no increase in the amount of goods. What happened say in California?

Well, the amount of stuff that you could get for an ounce of gold dropped markedly. The gold actually caused inflation.

But ctindale has written similar on the effects of the Spanish finding new sources of PMs in south America.

I've read bits and pieces in books that say as much. If there is a big increase in the amount of gold relative to the amount of goods and other assets, then just like printing money, it is inflationary (or should I say, gold is worth less).

I'll have to get out of the library again the books: 'The History of Money: From Sandstone to cyberspace' and 'A History of Money: From ancient times to present day'. Both these books give details of the ways that gold discoveries have been inflationary.

There may well be a new California, South America and Bendigo just waiting underneath the sea. Who knows?

- pug