Comment: Purchasing power

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Purchasing power

In a crisis scenario where people are desperate for food and water, you'll get less food and water for an ounce of gold than you would now. So gold doesn't gain in purchasing power, it loses purchasing power. It just doesn't lose nearly as much buying power as FRNs (which go to zero). One way to look at it is that in this sort of scenario, the buying (bartering) power of MREs and ammo and medicine, etc., goes way up relative to pretty much everything else, including gold.

At some later time after the dollar collapses, when some normality of returns and people aren't desperate for food and water, the FRNs will still be worth zero but gold will regain its earlier buying power, approximately. That's what it means to say gold is a "store of value." The familiar example is an ounce of gold buying a high-quality suit of clothing, from roman times until now. That will be true after the dollar collapses too.

In both scenarios gold does extremely well relative to FRNS, because the FRNs go to zero. In the former scenario, gold loses its buying power, and in the latter it retains (or regains) its buying power.