We have made it possible, without gold and without foreign exchange, to maintain the value of the German mark. Behind the German mark stands the German capacity for work, while some foreign countries, suffocated by gold, have been compelled to devalue their currencies.
How strange a thing this is! The Priest telleth me that the Soul is worth all the gold in the world, and the merchants say that it is not worth a clipped piece of silver.
Gold, unlike all other commodities, is a currency...and the major thrust in the demand for gold is not for jewelry. It's not for anything other than an escape from what is perceived to be a fiat money system, paper money, that seems to be deteriorating.
Americans are always mortified when I tell them this, but in England, it's a tradition to put your plaques and photographs and awards and gold records and stuff in your bathroom. I don't know why.
Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise.