Smuggling gold into an economy increases supply. Supply vs demand is affected. Do it enough and the balance tips, the price of gold falls. If your currency is backed by gold and the price of gold sinks, your currency sinks as well. If the currency sinks while the local economy is faltering, inflation has a more severe bite...
ArenYashar t1_iy2czs5 wrote
Reply to How could smuggling gold into a country with a struggling currency negatively impact its economy? by JovialNarcissist
Smuggling gold into an economy increases supply. Supply vs demand is affected. Do it enough and the balance tips, the price of gold falls. If your currency is backed by gold and the price of gold sinks, your currency sinks as well. If the currency sinks while the local economy is faltering, inflation has a more severe bite...