THOMAS.BEHNKEBut lets say that I traded in a $10 gold coin for a $10 bank note. A month after I did so, the price of gold went from $10 an ounce to $9 an ounce. Didn’t I profit at the expense of the bank?
Conversely, if I traded in a $10 gold coin for a $10 bank note, and months later the price of golf increased from $10 an ounce to $11 an ounce, didn’t the bank profit off of the exchange?
This is why I’m confused. I can understand the point in all of this if gold coins did not have a monetary value (ex, $10) affixed to them and everything was based off of weight. Then, bank notes would simply be written out for a certain amount of gold ounces. Fluctuations in the price of gold would not cause anyone to lose/profit off of the deal.
What am I not understanding?