The Gold Jewelry Standard — A Continuous System from Ancient Times to Present Day
Jewelry Buyer in the East — “What is the weight and purity? What is the Gold Price today?”
Jewelry Buyer in the West — “What is the retail price?”
(1) Admittedly, even I did not recognize this to be false at first. I viewed jewelry as a segment of gold that was not the fulcrum but instead an edge case fashion. True gold ownership, I felt, was manifest through the bullion markets, where monetary gold was acquired and sold every day to the tune of billions of dollars. It was only on the trip to Asia and through reflection on global gold flows that I realized this view was flawed. The low margins over pure gold value in the East on jewelry meant that it wasn’t jewelry that was being acquired, but gold. When re-analyzing the flows, it became obvious to me that most gold mining flows into the jewelry market. Combining these two heuristics: Gold demanded as savings in the form of jewelry is the ultimate causality, the fulcrum anchor for bullion markets and mining. The physics of gold keep it functioning as an efficient measurement of monetary inflation practiced through the lens of modern economics, but only the jewelry market has served as a de facto gold standard since ancient times.