Q1: How does gold compare to fiat currencies in terms of the value?
Fiat and gold currency are different greatly in the sense of value due to their underlying foundations as well as the variables that influence their worth.
The precious metal, gold, has intrinsic value because of its scarcity physical properties and the historical importance of it as a storage of value. The value of gold is fairly steady and doesn't rely on any financial or government institution's support. Gold has been utilized as a medium of exchange and the tool to protect wealth for centuries, and it tends to hold its value during times of economic uncertainty or periods of high inflation.
Fiat currency On the other hand it is money issued and backed by the government. It derives its value from the confidence and trust that individuals have in the stability of the government issuing it as well as its economic system. Contrary to gold, fiat currency doesn't have an intrinsic value, and it can be used to create or withdraw from circulation through central banks. The value of currency that is fiat can fluctuate due to various factors including monetary policy economic conditions and inflation. When confidence in a government or its currency is lost, the fiat currency can see a rapid decrease in value or become worthless.
The value of gold stems from its inherent qualities and scarcity, while fiat currency's worth is determined by trust in the issuing government, and the ability of its government to sustain economic stability.
Q2: What gives gold and fiat currency the same value?
The fiat and gold currencies have their own values derived from different sources and factors and factors, all of which influence their value in the global market.
In summary, gold's value is determined by its inherent qualities, the scarcity of it, historical importance, as well as its function as a safe-haven asset, and the worth of fiat currency is determined by the trust in the issuing government and central bank's policies economic fundamentals, as well as forex markets.