If there is only 100 ton of gold in Malaysia to back RM, it means there only will be 120 billion RM (1 ton worth 1.2 billion based on RM120k/kg) available in the economy, cannot print more.
So you are limiting money that can be possessed by public at 120billion.

The 120 billion only circulating around, no more no less.
When someone has made profit 1 million, somemore need to loss 1 million based on the limiting supply of money.

When you produce goods like car, house, there is only 120 billion available to buy the goods.
If you produce more than 120 billion, nobody have the money to buy it.
So any extra goods produced will be no buyer, aka no one want to produce more, how can your economy can growth when nobody can buy the extra goods you produced?

Economy growth because you produce more goods/services, which needs to be consumed by extra money created through loan multiplying effect and extra printing by central bank.

But with gold backed currency, cannot create more money if no gold, so no loan can be given. No loan given, no extra consumption power, hence no economy growth.

Payrise, the boss needs to generate extra money to pay for it, same scenario with extra goods produced.
If the whole economy has fix money available, means the boss cannot produce more goods, so the boss need to pay from his pocket instead of business that generated more profit.
Every year keep on payrise from boss pocket, boss goes broke, company closed down. (aka zero sum game as mentioned, some one need to lose 1 million before other get extra 1 mil)

I really would like to get an answer... i've been trying for a long time to find out why so many ppl keep saying limiting credit/money supply will be bad for economy... but so far the best answer i've heard says that it will cause deflation... which i don't think is bad for the economy either

Limiting the money supply and credits is "bad" for the economy according to some ppl because it limits growth and prosperity. But then, this growth and prosperity is built mostly on debt and not because of productivity. It couldn't be denied that the world has witness the greatest prosperity in recorded history of mankind during the last few decades thanks to the current monetary system, but more often than not, it's abused. The debt has to be repay some time in the future by future generations but it's impossible to get out of it because of the sheer amount of debt that's created and also the amount of $$ printed. That's how I understand it.

I see what you're saying... but you assume the value of goods is fixed and cannot change... this is not true... the value of goods will change... if amount of goods increase and money supply and credit supply remain constant  then price of goods will fall... leading to deflation... which once again i don't see as a bad thing...

Economy not growing... also not true... at least in the sense you are talking about... Gold backed currency will only limit MONEY SUPPLY not CREDIT SUPPLY... CREDIT can still expand...Loans can still be given...( i dont support a credit driven expansion of the economy, i think those always end in tears)

As for not getting a pay rise... yes... the boss needs to generate more income... harder to do when prices keep going down i grant you... so less likely he will give you a pay rise... but what you say about the company having to go broke also doesn't seem true... Look at the phone industry... every year the price of a phone goes down not up... yet they still manage to make a profit... also so what if he doesn't give me a raise... every year my salary allows me to buy more stuff because of the deflation.

Anyhow... FIXED money supply and Fixed credit supply... some guys say if so than no economic growth... ok fine ... i don't really agree... but i see what you mean...in terms of GDP you won't see much growth... since falling prices will balance it of... of course if you adjust for the deflation you should see some growth

I say with fixed Money supply and Fixed credit supply... you can get increase in economy... the problem i see is how to handle the contraction of money supply to match gold supply without causing too much pain

Japan is facing deflation issue, no inflation.

Why Japan economy is in poor shape?
Because of deflation.
As said, from consumer and rich people, deflation is good, as can pay less.
But in term of macro economy, it is bad, factory has no incentive to produce more. Less profit can be made due to price goes down, less profit, no expansion, no payrise, no new hiring which eventually will haunt back the general public as consumer in term of income power (having a job to generate income)

If printing money can polong boom, Japan already booming non-stop, as since after 80's, Japan already underwent many round of QE or money printing already, instead we see stagnant Japan economy for decades.

Japan is facing deflation issue, no inflation.

Why Japan economy is in poor shape?
Because of deflation.
As said, from consumer and rich people, deflation is good, as can pay less.
But in term of macro economy, it is bad, factory has no incentive to produce more. Less profit can be made due to price goes down, less profit, no expansion, no payrise, no new hiring which eventually will haunt back the general public as consumer in term of income power (having a job to generate income)

If printing money can polong boom, Japan already booming non-stop, as since after 80's, Japan already underwent many round of QE or money printing already, instead we see stagnant Japan economy for decades.

Everyone already try to get rid of USD, but only limited success.

If you doing import export, a lot of stuff still quoted in USD, any payment made in USD.
Our company just recently made enquiry to China machinery company and receive quotation which all quoted in USD and payment is USD.

Gold is not a money nor currency but another asset class which investors can diversify into.

Properties can store value, land can store value, share can store value, oil/iron ore/besi buruk also another one can store value, so does gold, silver, copper etc.

I've already mentioned that the act of repatriating gold signifies something, not that it directly affects USD price or any currency. You can't be sure as well that everyone will stick to the USD till the end of the day, however you're entitled to your opinion. There were many instances that countries started to bypass USD in trade (I think sylar111 has mentioned few). Let's not run out from the topic where I originally questioned that "buying gold in the near future is likely to loss value for a number of years". Gold is definitely not a suitable currency tool(I'm not arguing that nor did I brought up the question of gold as currency in the first place!) right now but it has a store of value and possibly multiplies in its value in long term.
So, you're just guessing that they repatriate gold to save on expenses?Doesn't add up. Selling them off without the hassle of arranging the logistics of physical gold transportation from USA to Netherlands will be much easier! I'm not sure if it has any impact on euro and even if it has none, the fact remains that DNB did it. And secretly too.
Check out the Maybank branch that sells Kijang emas on their website. You can sell back to Maybank or any Ar-Rahnu(keep the receipt).

sidetracking again?It's not as if I said that everyone getting rid of USD today and expect everything to work without USD tomorrow. Again, all I'm trying to say is that the fact that so many countries are repatriating their gold from the Fed, and some bypassing the USD in trade, signifies something. Sure everything will still be in conducted in USD now but they're also anticipating currency crisis, USD crisis to be exact.

"Gold is not a money nor currency but another asset class which investors can diversify into."
I've already mentioned that gold is not a good currency tool.  But I do believe gold is money(according to the definition I learned). Your definition of money could be different, so I'm not arguing.

"Properties can store value, land can store value, share can store value, oil/iron ore/besi buruk also another one can store value, so does gold, silver, copper etc."
I'm talking about inherent value. If you put it your way, even pebbles can store value.

Bro, you don't know what you are talking about.

If worldwide use gold backed currency, then the money worldwide is fixed at an amount, capital inflow from A to B, B to C, doesn't increase the money supply. 

Last time, there is enough gold to back the limited currency in circulation, so gold backed no problem at all.
eg. US had 1000 tons of gold, which equivalent can back let day USD100 billion, while economy size is just 50 billion, no issue, money still can create more.

The world economy does "fly" after removing the gold backed back in 70's.
The world developed fast since after 80's and general public has a better life across.

Last time, in 70's, 80's, you need to beg employer to have a job, those having a job is considered luxury and most people live in poverty.
If want to use gold backed, economy cannot grow, hence people have no chance to escape poverty, rich people remain rich, poor people remain poor.

The boom is in the nikkei.
Yes, QE or printing money can boost the stock market and give the appearance that the economy is doing well.

But the consequence of that QE is that the currency falls as evident in the USD YEN.

The thing is. A "booming" stock market is often seen as an improvement in the economy. The thing is, on the contrary the consumers get affected and the general economy does not really improve. The stock market goes up because of the extra liquidity that's all. It does not improve anything. But then it also delays the crash.

When the fundamentals are already off. Pouring money in will become less and less effective.

The thing is, you cannot stop the inevitable.

I have already said that deflation or recession is a necessity to remove inefficiencies in the market. I never said that it's not painful but then it is a necessary pain. I hate repeating myself so I will not repeat what I written earlier.

Again, you fail to see the picture.

Assuming that the overall gold is constant. The countries that are more productive will be rewarded with more gold flowing into their system. The countries that are less productive will see capital going out of their system. That is how companies work right? They do not have the priviledge of creating money out of thin air. How come you are so rigid in the way you think? In this system, more control is being given to the free market rather then to governments.

If country A is productive, their capital can still increase due to increased inflow. So in the end, the gold that a more productive country has, will not be limited to 100 ton. So there is incentive to be productive.

Why not? If US is productive. There will be net inflow of gold into their economy thus causing their overall value of their dollar to increase.

The current system encourages things like crony capitalism etc.

Economy doesn't work in single loop but infinite loop.

So countries less productive see all capital going out until zero? 

Bigger picture is very simple for fixed amount money.
When start,
A country has 1 bil
B country has 1 bil

B capital keep on flowing to A due to so called more productive, every month flow 100 mil, at the end of 11th month, B has no money, while A maximum can have is 2 billion.

So if US is productive, all gold inflow to USD, the rest of world eat what? No gold, no money. 

sidetracking again?It's not as if I said that everyone getting rid of USD today and expect everything to work without USD tomorrow. Again, all I'm trying to say is that the fact that so many countries are repatriating their gold from the Fed, and some bypassing the USD in trade, signifies something. Sure everything will still be in conducted in USD now but they're also anticipating currency crisis, USD crisis to be exact.

"Gold is not a money nor currency but another asset class which investors can diversify into."
I've already mentioned that gold is not a good currency tool.  But I do believe gold is money(according to the definition I learned). Your definition of money could be different, so I'm not arguing.

"Properties can store value, land can store value, share can store value, oil/iron ore/besi buruk also another one can store value, so does gold, silver, copper etc."
I'm talking about inherent value. If you put it your way, even pebbles can store value.

Nikkei is still only 50% off its peak.

Also Nikkei is doing well, bounce off 50% from low because exporter profit more due to USD.

A booming stock market indices, doesn't necessary reflect how well the GDP growth.
Japan now official in recession, GDP growth negative 2 Q (-7%, -1%), but stock up 50% from its low... 

QE more money available to pour into stock market.

Japan is the classic example, money printing /= booming economy.