Where gold is needed

In terms of trust, gold has a unique profile: it is the only ore that is generally believed to be precious enough to maintain its value over time. Unlike diamonds, for example, it is impossible to make fake gold. Admittedly, the intrinsic value of gold is essentially symbolic, if we think about it; not much less than the underlying value of crypto-currencies, according to some. But this symbolism is almost atavistic; gold ‘speaks’ to people, whereas the blockchain does not. And indeed, gold has been in considerable demand in recent years, due to growing concern over traditional currencies.

Hence it’s not because the financial media have consistently downplayed its value, or that its market price has stabilised since 2013, that it hasn’t remained central to the system. In fact, discreetly, the appeal of gold generates massive investments, with the opening of new mines that are having a considerable ecological impact at the moment by the way (a nice theme for environmentalists).

Figure 2 – Evolution of the price of one ounce of gold. Source: Spot market

Through mechanisms such as swaps, gold loans, options, futures or credit derivatives, gold is a support for many financial tools. In early November 2018, France also attacked this market by signing an agreement with the company JP Morgan to carry out transactions on gold[5].  The objective, once Brexit is complete, is to make the French capital a gold market by offering financial products based on this metal without having to go through London.