Quote Originally Posted by Lenno View Post
The value of the dollar has dropped 50% so the price of gold has doubled. Read up on Wiemar Germany
Not quite true. They move both relative to each other at times and at other times independent. Both fiat and gold have subjective value and are subject to many external forces - the velocity of king dollar probably being the most important.

Wiemar Germany is a great example of the destruction of a fiat currency but not necessarily how gold will always move in relative terms against the dollar as it is printed. Right now the dollar is king and pretty much everything is valued with it - it jerks the chain of every other asset in existence and holds all other assets by the "short hairs". When it is replaced the new king will be the measure. I kind of doubt that gold will be that new measure. Sadly Gold will probably never hold that status again unless there is a complete collapse - and then only until a new system is setup.

Still, gold is a great way for people to hedge against inflation although it is not the perfect instrument for that either.