This caption below the picture associated with Mr. Macdonald’s article about the difficulty of mining gold illustrates the mistaken belief that the difficulty of mining for gold somehow makes gold unsuitable as a medium of exchange:
“The price of gold is going haywire, driving a frenzy of investment that’s calling into question the metal’s reputation as a safe-haven during times of economic uncertainty.”
Gold mining is an industry and no one should expect that investing in this industry should be more profitable than investing in any other industry. A higher price of gold certainly will make it profitable to cover the increased expense associated with extracting gold from marginal deposits. This is no different from any extraction industry. Known oil deposits are opened and closed as the price of oil goes up and down. Gold mining over time is no more or less profitable as any other industry. Gold mining should not be confused with the inherent qualities of gold as a monetary medium, one of which is the difficulty and expense of bringing more gold to market through mining.
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