A Point By Point Response To The ECB On The Precariousness Of The Gold Market And Its Threat To Financial Stability

The ECB is trying to cover its ass and I won't let them. Call me the Ass Coverer in Chief, or the Global Arbiter of Ass Coverage. It's what I was born to be.

Craig Hemke alerted me to this thing about gold by the European Central Bank yesterday. I promised a response to it. Here it is, point by point.

The full article is here. Quotes are in bold. My response is not bold. It's just true.

Gold prices have seen an unprecedented surge since 2023, reaching a series of all-time highs.

Nothing new here. Gold hit new all time highs in 2008, 2009, 2010, 2011, 2020, 2023, 2024, 2025. This is all very old news.

Gold has a long history as a store of value.

That's because it's the most liquid commodity in the world. In other words, it's money.

Given its limited industrial use…

That's also why it's money.

…demand for gold comes traditionally from retail customers (e.g. for jewellery),

No, traditionally demand for gold comes from the demand to trade things for other things. Trade requires the most liquid commodity available or the trade becomes too dangerous to execute and absent liquidity, people would rather make stuff for themselves instead, and then most would people die of starvation, and the ones that don't, can't specialize in anything but raw survival.

With the rise in popularity of gold derivatives, demand for gold still came traditionally from demand to trade, and so to this day. What has changed, though, is that with the rise in popularity of theft via lying through inflation about the supply of money available, the entire structure of production on the entire planet has become warped beyond all recognition, leading to insanity in every sector of production, to the point that humanity is destroying the planet and denying the most basic observable facts about reality, such as boys and girls exist.

Once it breaks, the market will force a radical and ridiculous realignment between the gold supply and the gold derivative (CREDIT) supply to line them up by force 1:1, either through the destruction of gold derivatives (AKA "deflation") or via destruction of the purchasing power of each unit of gold derivative to near zero (AKA hyperinflation), which are merely different paths to the same end.

The demand for gold as money, however, still has not changed much either way. It may go up slightly by employing some jewelry for use as money instead, but that can only go so far.

…although it is also employed as an investment asset…

No, gold is a divestment asset.