A warning: Is this the end of the gold rent?

The capitalist practice based on the market economy of the past 250 years dictates that when profit rates begin to fall, the system shifts to a phase of commodity speculation based on the existing accumulation of surplus value. Rather than a search for profitability through gold, the preservation of value takes precedence. Throughout history, increasing exchange value first through silver and then through gold, while simultaneously triggering speculation, has been a common path. The cultural and traditional habits of households facilitate this speculation.

We can view household gold purchases in China, India, and Turkey as being driven by both cultural factors and an intention for "investment."

What about central banks?

Their concern is to prevent the erosion of reserves and provide a backup monetary foundation.

To what extent can this current period of renewed interest in gold be effective in terms of the gold standard compared to the Gold Standard System (1870-1914) or the Gold Exchange System created at Bretton Woods (1944-1971)? The world, which experienced the First World War immediately after the Gold Standard System, entered a stagflationary process exacerbated by the oil shock following the Bretton Woods system.

Due to the massive increase in capital flows, we have witnessed a significant devaluation of the dollar against gold. For example, in the 1920s, 1 ounce of gold was around 20 dollars; today, it has exceeded 4,000 dollars. So, is there an economic justification for this 200-fold increase, and is it a sustainable level? No, because the US national income, which is the source of the great surplus value, has only increased 35-fold in 100 years. During this period, the population increased by 250 million to reach 360 million, and per capita income increased approximately 10-fold. Assuming that due to poor income distribution, this 10-fold increase was reflected to the average citizen as only a 5-fold increase, we are facing a 200-fold increase in gold that absorbs a portion of the world's surplus value.

In other words, the increase in gold is approximately 40 times greater than the increase in per capita income. The gold investor has achieved 40 times more wealth than the average citizen.

THE FUTURE OF GOLD AND THE SITUATION IN TURKEY

I believe that the US, which holds the largest reserve (8,133 tons), will not be content to let its own capital accumulation sit idle in vaults. For this reason, the future of gold is not very bright. In capitalism, no commodity or good is more valuable than the profit of capital. No investment vehicle that hinders the reproduction of great surplus value is exempt from this.

As per the fundamental premise of neoliberalism, the role of reserves is to hold contingency funds in preparation for payment crises. That is where "reserve management" comes into play.

It is noteworthy that 47 percent of the increase in the CBRT (Central Bank of the Republic of Turkey) reserves stems from gold stocks (around 700 tons). No other central bank in the world, excluding the US, maintains such a high ratio of gold reserves.

While withdrawing from the US bond market to invest in gold and increasing reserve diversity is positive for the CBRT, it is not sustainable. This is because warning bells for gold have already begun to ring. Since we know that the US easily uses its own currency in international payments, we can also understand that it has the power to intervene in the dollar with its gold reserves.

Gold, which fell by 200 dollars per ounce last week, is still very valuable, but there is no guarantee for this. The one-year postponement of the escalation in customs tariffs following the US-China trade agreement was effective in the decline of gold's value. This is because while the actors of capitalism allow speculation on a basic commodity, they also anticipate that this situation cannot last long and will eventually trim profits. Because if it is possible to produce value-added and, consequently, surplus value far above the value-added obtained from gold-based commodities, this will be utilized.

Growth in artificial intelligence and digital investments is very rapid. Although it is claimed that this speed will bring a "bubble," or "overproduction," it can be easily observed that we are not yet at that stage. Artificial intelligence investments show growth of nearly 20 percent and are not even at 1 trillion dollars yet. In digital investments, the crypto market is nearly 5 trillion dollars in size. All of these are, of course, significant values within the world's great surplus value. However, it is observed that they have a path to follow, as they stand out as areas that capitalism sees as profit opportunities. It is already observed that the use of cash has been abolished in Sweden and Norway. Of course, gold is not being used in its place; this is just a stage in the transition to digital currency. Payments via QR codes are becoming increasingly widespread. Digital derivatives of these payments are also on the way.

It is expected that a currency's exchange value should be infinite, while its use value should be zero. Gold and silver coins (bimetallism) have long ceased to be instruments that fit this definition. This is because a large portion of the gold reserves on Earth has already been extracted, meaning that the liquidity of gold appears to be a very weak possibility.

Submitted for the attention of the Central Bank and households...