Because the current system has worked out so well lol.
And the gold standard has worked out so well, too.
How much gold do you think there is in the ground and out of the ground. If the population continues to rise, can the world sustain a gold standard? I think not.
As long as modern technological civilisation persists, we shall never again run about with a purse full of gold sovs, or silver shillings, and be exchanging them amongst ourselves for goods n services.
With that said, I could see a situation where gold may be used as a form of backing for a global currency, into which different nations 'buy a stake in', depending on what level of commodites they can pledge, with gold being a very natural choice.
China are currently the worlds biggest producer of gold and also the world's biggest importer of gold. The worlds #2 economic power is accumulating gold for a reason.
Whilst current economic pressures are deflationary, and the markets may be allowed to deflate and crash for a period of time, ultimately the only way that governments will be able to deal with their soveriegn debt and allow the system to keep functioning is to have great big devaluation event, whereby the the market is flooded with newly created currency (or the newly created currency that has already been created is unleashed from the dams of financial institutions balance sheets), which provides the liquidity for debt obligations to be met and for the system to keep on operating, albeit with a massive loss of value or purchasing power for those holding Fiat and/or government debt. During that brief period where the economy isn't quite moving and investing in equities isn't giving returns, but whilst the market also loses confidence in the value of government debt and fiat currency, is when Capital will all flow into commodities, and especially so, flow into gold.
Severe swings in the DOW/GOLD ratio occur on roughly 35-40 year cycles. We had our last peak at the height of the NASDAQ bubble in 2000 at around 43. Since then it corrected heavily down to around 6 in 2011, and has bounced back currently to around 16, but looks as though it is ripe to resume its trend back down towards single digits, or even sub single digits in the near future.
Looking more closely at the last cycle, DOW/GOLD peaked in 1966 at 28. Then during the Nixon Shock, as Richard Nixon suspended the gold window and ultimately abolished the Bretton Woods USD-GOLD global currency system, in order that the US government could deficit spend in order to prevent another deflationary economic collapse occurring during a Republican presidents watch, the DOW/GOLD crashed down to just 3 in 1976, but rallied back up to 9 in 1977, before resuming its trend and bottoming out at 1 in 1980. When Gold was worth around $800 per Oz, and a share of the Dow cost also around $800.
Looking at the current state of the DOW/GOLD chart, it looks to me, that the technicals are setting up to have the exact same thing happen once again, all whilst we have fundamental stories of China accumulating the yellow shiny metal stuff, hands over fist (and under reporting what they have)....
...erm so yeah....keep a fucking eye on gold! Gold seems to be rallying and breaking out now, but I suspect that equities are about to rally, and gold could either retest it's bottom or even go on and put in a new final bottom. But when gold moves up, as history has demonstrated, it will move relatively fast.
