Gold and the Gold Standard.pdf

CHARACTERISTICS OF THE GOLD STANDARD
Monetary Gold 'versus Gold'in tkt Arts
When the, value of gold falls and the commodity
price level rises, the.price of the gold used in manufacturing
jewelry,utensils, etc., does not rise,
although the costs of other materials and of labor
involved in their manufacture and marketing will
advance. This means that the prices of articles made
largely of gold do not" advance in times of rising price
levels as much as do wages and the prices of most
other commodities. Gold jewelry and other gold
articles, therefore, at such times appear cheap as
compared with most other goods, and this situation
stimulates demand for them, thereby increasing the
flow of newly mined gold into the arts and diverting
old gold into the arts from moneta,ry uses. The
hoarding of gold, ornaments, trinkets, and bullion"
is also stimulated, particularly in countries like India
and China, where there is usually an enormous
demand for such commodities. All this tends to hold
back'the,upward movement of general prices and the
reduction in gold-mining profits that results from
them. '
When, on /the other hand, commodity prices are
falling and. the value of gold is rising, we have the
opposite situation. Then the prices of jewelry,
ornaments, and other gold manufactures do not fall
as much as the prices of most other things and as
wages, because the price of gold itself does not fall.
This makes gold products appear dear to the conl
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