(1) Arbitrage moves the supply of any good into its various uses and among its various users so that its price is uniform (for homogeneous units of supply) across all the uses. If the price were higher in one use as opposed to another, profit would exist for moving it out of the other use and into the profitable one. It’s an empirical question as to whether or not the demand for gold as money would be sufficient to draw gold out of other uses and into a monetary use.
This story has a breakdown of the amount of gold in various uses:
(2) The existence and timing of asset price bubbles is an historical, not theoretical, question. One cannot “know” when they exist. One can only make a judgment based on one’s entrepreneurial foresight. They can be known to exist ex post. What we can know about asset price bubbles theoretically is that they are caused by monetary inflation and credit expansion. We can use evidence of monetary inflation credit expansion, then, to guide our judgment concerning the existence and extent of asset price bubbles.
(3) One argument is that as the crises arrives, entrepreneurs realize that demands will decline for their products. Their debt servicing, however, continues which squeezes their profit. In response, they shift away from long-term borrowing (so as not to increase their debt service) to short-term loans (so as to make up for lost sales revenue).