Holy Roman Empire

“Welcome to Austrian Economy Online, I’m your host, Boni. Today, we’ll discuss a topic that’s on everyone’s mind—gold.

As we all know, gold represents wealth. Our everyday currency, the Guilder, is issued based on the gold standard. It’s fair to say that gold is deeply intertwined with our lives, and no one can truly separate themselves from it.

Over the past month, the price of gold on the Vienna Gold Exchange has risen by 7%, reaching a two-year high.

Now, we’ll connect with economist Professor Brigitte Voss to analyze the impacts of this surge in gold prices.”

“Beep beep beep…”

Host: “Professor Brigitte Voss, can you hear me?”

Brigitte Voss: “Yes, I can hear you.”

Host: “Professor Brigitte Voss, the recent surge in gold prices has drawn significant public attention. Could you share your insights on the impact of rising gold prices on the global economy?”

Brigitte Voss: “Of course, Host.”

“We all know that gold is a precious metal, often used directly as currency or as a standard for it. Its price has always been relatively stable, with only minor fluctuations under normal circumstances.

The 7% rise in gold prices over the past month can be described as both unexpected and expected at the same time.

Some might say my statement sounds contradictory and illogical, but in reality, it’s not contradictory at all.

It’s unexpected because, as a currency or a standard, the inherent value of gold remains constant. Under normal circumstances, such a significant increase shouldn’t happen.

However, beyond being a currency, gold is also a commodity. And as a commodity, its price is subject to market forces. Thus, short-term price increases like this are perfectly normal.”

“Setting aside gold’s status as a currency, if we analyze its role purely as a commodity, the reasons for the price increase become clear.

The rise in gold prices on the Vienna Gold Exchange is not an isolated incident. Around the same time, the London Gold Exchange also saw a similar increase.

The immediate cause of this price surge was an announcement two months ago by over ten major gold mining companies, including South Africa Mining Group and Britain’s Dawson Gold Mining Group, among others. They simultaneously declared plans for equipment maintenance, which led to reduced gold production.

This decision directly resulted in a decrease of 20 tons of gold circulating in the global market last month. With demand outstripping supply, prices naturally rose.

Equipment maintenance is temporary, and gold mining giants are profit-driven so production capacity will naturally resume soon.

However, whether gold prices will immediately return to normal levels is uncertain. With the progression of time, the gold standard has become the mainstream monetary system.

In recent years, the rapid growth of the global economy has led to a corresponding surge in demand for currency.

This has also driven an increasing demand for gold as the monetary standard. However, gold production has not grown at the same pace.

To meet the demand for currency, many countries have continuously increased financial leverage. While the nominal exchange rate with gold remains unchanged, the risks associated with currency overissuance are becoming apparent.

The recent increase in gold’s exchange rate against multiple currencies reflects this factor. It highlights the inflation caused by excessive currency issuance under the gold standard.

Fortunately, this is not a concern for us. The value of the Guilder remains stable against gold.

My advice to everyone is that, unless absolutely necessary, avoid holding large amounts of foreign currency.

After all, you never know, at some point, the money in your hands could turn into worthless paper.

Currently, several European countries are already experiencing substantial currency devaluation. If their governments do not stop the reckless issuance of currency, it is only a matter of time before disaster strikes.”

Host: “Professor Brigitte Voss, you just mentioned that insufficient gold reserves in some countries have led to inflation. What measures can these countries take to address this situation?”

Brigitte Voss: “The simplest solution is to adopt the New Bi-Metallic Standard. Now, don’t misunderstand me, what I’m proposing is not the traditional gold-silver bimetallic system. Instead, it’s a more advanced Dual Basis Standard.

For most countries, accumulating sufficient gold reserves isn’t something that can be achieved in the short term. However, if they still wish to maintain the gold standard, what can be done?

Through research, I’ve found that the New Bi-Metallic Standard can perfectly resolve this issue.

To put it simply, this involves using a reliable credit-backed international currency as a substitute for gold to serve as the monetary base for currency issuance.

This effectively allows a single unit of gold to act as the monetary basis twice, enabling the issuance of two sets of currency while ensuring normal redemption.

This innovative Dual Basis Standard is what I call the New Bi-Metallic Standard.”

…

It’s unclear exactly when Franz developed the habit of listening to radio broadcasts, even though he was well aware they were often full of exaggeration.

The so-called rise in gold prices was, in fact, a deliberate manipulation by the two major gold-producing countries, Britain and Austria, to attack the currencies of other nations.

As for gold production capacity, isn’t that entirely under the control of the gold-mining countries?

To increase the competitiveness of their currencies, Britain and Austria have consistently restricted gold exports, deliberately creating problems for their competitors.

For countries on the gold standard without sufficient gold reserves, this is a critical blow. The demand for currency in the market doesn’t decrease just because gold reserves are insufficient, forcing these nations to raise their currency issuance leverage.

This is precisely what Britain and Austria want. The higher the leverage, the greater the risk. While these risks may not be apparent during periods of economic prosperity, any disruption can lead to immediate collapse, leaving these countries with no resilience.

Although Britain and Austria are fierce competitors for monetary dominance, they have no issue collaborating to control gold pricing, using it as a weapon to strike at other competitors.

From the very beginning, the gold standard was a massive trap set by the British for the rest of the world. And it’s a known conspiracy, countries know the risks but have no choice but to fall into it.

That said, gold is still relatively stable. Even with deliberate manipulation, it can’t be pushed too far, as excessive actions would also harm the interests of Britain and Austria.

Many countries have tried to escape this trap, but all have ultimately failed. History has shown that nations on the silver standard were hit even harder.

Since the mid-19th century, silver has consistently depreciated, with fluctuations far greater than those of gold.

As gold standard countries, Britain and Austria work to stabilize gold prices to protect their interests. Market fluctuations are mainly hurdles deliberately set to disrupt other currencies.

These fluctuations typically stay within a few percentages and are temporary. Generally, within a few months, the market returns to normal.

In essence, when governments start buying gold, gold prices rise immediately. Once the buying stops, the market often returns to normal.

This rise in gold prices is also highly targeted. For example, if gold purchases are made using pounds or guilders, these issues don’t arise.

Importing gold still involves tariffs, but if nations directly hold pounds or guilders as reserve assets equivalent to gold, they can achieve their goals without needing to buy gold and pay tariffs.

At its core, this is just another method of promoting monetary dominance, albeit in a more subtle way.

…

After listening to a segment of the broadcast, Franz hung up the phone and said, “Frederick, go check on the progress of wireless radio research. News as interesting as this should be shared with the whole world.”

Until wireless radio is developed, wireless broadcasting is naturally out of the question. What Franz was listening to was a wired broadcast, a technology that emerged alongside the invention of the telephone.

Simply put, it connects multiple telephone lines in parallel to the same information source.

Such an advanced technology is, of course, beyond the reach of the average citizen. To listen to broadcasts, one must at least own a telephone and pay a hefty broadcast fee.

Currently, there are fewer than twenty cities worldwide with broadcasting capabilities, and the total number of broadcast users is less than 50,000.

Austria, being at the forefront of the Industrial Revolution, also began its broadcasting efforts relatively early. Vienna now has over 5,000 paying users, making it the city with the highest broadcast coverage in the world.

However, this number is already approaching its limit. Unless wireless broadcasting is developed, increasing the coverage rate further is unlikely.

Given the limited audience, broadcast programming is naturally not very diverse. Aside from news, there are only popular current affairs commentaries, the occasional song, or a few jokes, which count as entertainment programs.

The only advantage, perhaps, is the absence of advertisements. It was not because the broadcast companies don’t want to collect ad revenue, but because there are too few users to make it worthwhile.

Moreover, the current clientele consists entirely of high-end users, none of whom are short on money. What they demand is premium service.

Frederick shrugged and replied, “No need, Father. I went to check yesterday. Progress is very slow. The transmission range is still stuck at 1,200 yards (approximately 1,097 meters), and there can’t be any obstacles in between.”

There was no helping it, Franz’s memory wasn’t great. He had long forgotten the principles of wireless radio and now had to rely on scientists to figure it out on their own.

“1,200 yards.” That number was far below Franz’s expectations. Forget wireless telegraphy, it would barely even work as a walkie-talkie.

Franz sighed, “Never mind, let them take their time experimenting! Scientific research relies entirely on luck, there’s no point in rushing.”

This comment was directed at Frederick, but it was also a way for Franz to console himself.