Thanks to those who've written in to answer yesterday's query regarding gold, currency and houses. The most interesting came courtesy of our friends over at RealEstateNewsblog:

Your assumption that "the reality is that gold no longer backs paper currency," is not 100% accurate. yes officially, gold is no longer backing the world's paper currencies. Notwithstanding, the investment communities still unofficially look to gold as "official currency". When the "price" of gold "rises"; in effect, what you are witnessing is not an actual rise in the cost of gold, but more a decline in the value of the dollar. This is what the writer is highlighting in his convoluted article.

So to summarise, the argument that "the market in gold" is doing better than "the market in property" is incorrect. There is no "market" in gold, because gold isn't marketed (except maybe as jewelry, but in relative terms this is a small quantity). Most of the world's gold is held/owned by central banks. The US govt also has a large reserve at Fort Knox. Ask yourself the question: why are the banks holding gold, if it's not a currency. The answer simply is that gold is a currency, but it may be that the powers that be simply dont want us to believe that.

It's an argument. But I'm still confused. Why, then, are the world's banks reducing their gold holdings like pimps fallen on hard times? And if there isn't a market in gold, why are more and more stock exchanges facilitating gold trading? Just because they're futures, certificates and shares being traded - it's still trading. If I buy copper, I don't expect to receive anything metalic.

Which brings me to this tangential but fascinating piece in today's Guardian:

Now a way has emerged for the more humble investor to make a killing on the international markets. Yesterday the price of copper hit an all-time record of 8,000 dollars a tonne, driven by frantic buying and selling by commodity brokers and futures traders. But a little-noticed fact is that every 2p piece made before 1992 is 97% copper - meaning that each coin contains 6.9g of the metal. Collect together 145 of them, and you've got a kilo's worth of copper. Now, just find another 999kg, a total of 145,000 coins, and you've got a tonne.

On their face value, those coins are worth just £2,900. But taking them to a scrap merchant and selling them on the open market for their metal content will make you a cool £1,500 profit, especially if you throw in the 25kg of zinc that are also sitting in your goldmine of loose change. The same trick can be pulled off with pennies, so long as they were circulated before September 1992, when the Royal Mint introduced new 1p and 2p coins made from steel with only a thin copper plating. For a 50% return on an original investment, that's very good even for the likes of George Soros.