Gold hits $2,702 in futures, reigniting debate on real value

Gold sets new records in futures, reopening the debate on money's true value

The price of gold has reached a new all-time high: $2,702 per ounce in futures, according to trader data. This figure, celebrated by some as a milestone and dismissed by others as a monetary illusion, has peine one of economics' oldest debates: Is gold rising, or is the currency used to measure it falling?

The short answer is that both are happening simultaneously, which explains the lack of consensus. For part of the analysis, the yellow metal merely reflects the loss of purchasing power in unbacked currencies. For another, gold is just an asset subject to supply and demand, and its status as a safe haven is more of an inherited myth than a measurable reality.

Gold rises because fiat currency depreciates

The most repeated argument is that gold isn't going up; the currency is going down. Proponents note that an ounce of gold remains an ounce of gold, while legal tender is printed without restraint. Consequently, the metal maintains its purchasing power over time, while the paper used to compare it loses value.

Under this interpretation, nominal records are simply the accounting translation of sustained monetary depreciation. Gold would thus be a stable store of value, while fiat money is a promise that erodes with every issuance.

Gold's real purchasing power under scrutiny

The objection comes from the other side: if gold is rising, why can't you buy more things with it? A calculation circulating in the discussion compares the metal's price with everyday goods and concludes that, in terms of gold, food has never been cheaper. Others counter that gold isn't used to buy eggs at the market but is exchanged for paper, and its practical utility is limited.

Some go further, arguing that gold only preserves value rather than increasing it, and that its price depends on there being more poor people willing to buy it. The debate then shifts to demographics and mining: extracting an ounce requires leveling mountains, polluting rivers with mercury, and paying a human toll rarely included in the quote.

Alternatives to gold: iridium, stocks, and other havens

Traditional metal faces alternatives. Iridium, much scarcer, is presented as a less volatile haven, though its liquidity is minimal. Stock indices like the Nasdaq or S&P 500 outperform gold over various periods, according to cross-referenced data. Bitcoin, with only a few years of history, competes for the same niche.

The counterargument is that gold has functioned as currency for ten thousand years and none of these alternatives have stood the test of time. Liquidity, they insist, is what separates a real haven from a promise.

Who wins and who loses from the record

The practical effect of the record depends on when one entered. Those who bought years ago accumulate returns described as massive; those who missed the desired entry point console themselves with a 12% annual return. But the uncomfortable question remains: if gold always goes up, why not sell and realize the gain?

According to veterans, selling equates to returning to the system one fled. Here lies the paradox: gold is presented as a refuge against fiat money, but its value is only expressed in fiat money. Without a structure of prices and wages in official currency, no one would know how much an ounce is worth.

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With the metal at highs and the discussion going in circles, the unanswered question is whether this record anticipates something beyond a rise. Some see signs of trouble ahead in the global economy. Others just see an ounce that remains an ounce.