Yes, the government could potentially take actions to increase the price of gold during a period of deflation, although the specific actions that could be taken would depend on the policy tools available to the government and the specific economic circumstances at the time.
One way the government could potentially increase the price of gold during a deflationary period is by increasing the demand for gold. This could be done by using monetary policy tools, such as quantitative easing, to increase the money supply and boost economic activity. This could lead to an increase in demand for gold as investors seek to protect their wealth and hedge against the potential inflationary effects of the increased money supply. Does this remind you of anything, perhaps the last 15+ years of monetary policy in the us?
Alternatively, the government could potentially increase the price of gold by directly buying gold from the market. This could be done through the central bank or other government entities, which could increase the demand for gold and push up its price. However, such actions could have significant implications for the government’s balance sheet and could be subject to political and public scrutiny. There has been record buying by various country central banks of gold consistently over the last few years…
It’s worth noting that increasing the price of gold may not necessarily be the best policy response to deflation, as it could lead to unintended consequences and may not address the root causes of the deflationary pressures. Additionally, the effectiveness of any government actions to increase the price of gold would depend on a variety of factors, including the degree of deflation, the health of the economy, and the state of financial markets. What many believe is that the governments actually suppress the gold prices, for fear more people will turn to gold and silver as a safe haven asset and away from fiat currencies.