monetaryphysics

There’s a lot of chatter about gold plummeting by 9% in a single day. While that fluctuation seems significant, it serves merely as a diversion. It’s just superficial noise.

The more alarming reality is much deeper.

Gold has actually decreased by 99.9%.
$XAU

That may seem absurd—until you reconsider the perspective.

Picture this: what if humanity ceased gold mining around 500 AD? No additional supply. Ever again. A totally restricted monetary foundation. In such a scenario, a single ounce of gold wouldn’t be exchanged for several thousand dollars today.

It would command tens of millions.

This wouldn’t be due to a newfound fascination with gold. Demand wouldn’t have to surge dramatically. The change would stem solely from one element: supply control.

But that’s not the reality we inhabit.

Gold is not static. It is perpetually growing. Each year brings more metal extracted from the earth. The annual increase appears trivial, almost benign. Yet, when that cycle persists over centuries, the impact becomes severe.

Minor dilution, when compounded over time, leads to significant erosion.

Take a broader view, and gold’s long-term trajectory resembles nothing close to the “ideal store of value” story that many hold onto. Compared to a truly fixed-supply asset, gold hasn’t just lagged—it has quietly lost its worth for generations.

This is why focusing solely on short-term price fluctuations misses the bigger picture entirely. The decline didn’t occur yesterday. It didn’t take place last year. It gradually unfolded over hundreds of years.

Gold didn’t fall dramatically overnight. It gradually lost value due to continuous supply increases.

And this underscores a distinction that many overlook:

Scarcity and fixed supply are not synonymous.

Scarcity merely slows down dilution. A fixed supply completely removes it.

That disparity isn’t trivial. It’s not just 5%. It isn’t even 10 times.

It’s on a far greater scale.

Grasping this concept clarifies why gold, despite its lengthy legacy as currency, hasn’t retained purchasing power as many expect. It also explains why assets with hard supply limits behave fundamentally differently over extended periods.

This isn’t an argument against gold.

It’s a discussion about monetary mechanics.

Once you understand the difference between scarcity and permanence, it becomes impossible to overlook.

#GOLD #XAU #MonetaryPhysics #SupplyDynamics