Who is responsible for regulating the gold market and what effect have they had? It all depends on the economic management arrangements within that specific community. After the fall of communism it seems that it is no longer fashionable to think of gold as something that the state can control indefinitely.
This is not to say that we do not have spectacular examples of communist states that are economically powerful. China comes to mind and yet we are generally interested in the liberalization of the economy. The theory is that business will be able to sort out all the inconsistencies within the market using the brutal formulas of capitalism.
Essentially the investments that are not worth their weight will be thrown out due to a lack of customer support. Those that can actually do something will be able to survive. This is something that we learn as we go along the different routes that are supposed to bring us traction towards economic development.
Some people baulk at the brutality of the market. Gold is still a premium product in many communities and therefore we do not have to worry about the vulnerable. Many of the people that are operating in this industry are independently wealthy. The fly in the ointment would be the pensioners that make investments in gold on the basis that the returns alone will be able to support them during retirement.
If the market lets them down then the government has to step in and do the needful. This will mean that the welfare state will be burdened with the responsibility for extending benefits to the people that have received a raw deal from the gold market. That is a situation that is simply unsustainable in the modern context where the recession has made developed countries keenly aware of their limitations. Therefore the government has a legitimate interest in ensuring that the programs that run the gold investments are sound.
The regulation that has come into play in many countries has brought benefits to the extent that the governments have not felt the need to be extra vigilant about the industry. The consequences are felt in other parts of the world where chaos is the order of the day. We cannot forget the tragic consequences of the gold trail when human lives have been lost because the local governments are busy fighting rebels.
Although we might condemn the rebels, we have to also remember that some of these so called governments are nothing more than cabals of theft. They suck out the country’s resources and put them away in tax havens for personal use. The local people then react by rebelling against such nonsense.
The international market has consequently ticked the boxes and seen that there is a relationship between gold resources and political strife. That way we have a situation whereby there are demarcations between good gold and bad gold. Although these demarcations seem superfluous, they serve an important purpose.