[mapontosevenths]

You are forgetting the opportunity cost. The gold does not generate wealth it just stores value, like a mattress stuffed with bills. It has become a dead, stagnant, and unproductive thing and by doing that it has removed value from the overall economy that was previously there.

[amanaplanacanal]

How? The money that was used to buy it is now in the hands of somebody else that can invest it. Nothing was lost. It just changed hands.

[mapontosevenths]

There are two sides to every transaction.

In this case 1/2 of the trade is a dead end. In another hypothetical transaction we might see that the money was instead used to pay for services, and that profit was then spent on food, and then it was spent on fertilizer, and then it was spent on chemicals, and then it was spent on mining, and then it was spent on energy, and then it was invested in.... You get the idea. You can follow a single dollar around the world for years. The money is exchanged, and then exchanged again and again generating profits and adding value to the economy with every exchange.

With the purchase of gold that half of the transaction is instead just... dead. The money is no longer in the economy, it's locked in some dudes junk drawer or a safe instead. Worse, it's not being used to generate excess returns like all of the items above are.

Gold is just... useless. Except of course as a store of value, but even then it's only good if you think the dollars value will decrease and don't care that it's not great for the world around you to extract money from the economy and render it effectively dead.

[amanaplanacanal]

So before, person A has the dead thing, and after, person B has the dead thing. The result for the economy is exactly the same as if the transaction didn't occur, except the people have switched places.

[mapontosevenths]

In economics this is often referred to as a "sterile asset". Buffet called it an "unprodcutive asset". The terms "Zero Coupon" or "Non Yielding Asset" might also apply. You should be able to google any of them to learn more about why they're not good for the economy or for the 'investor'.

The TLDR being that the money exchanged for that useless rock is now wasted. It could have been used to provide genuine economic value, instead it was used to participate in another silly, wasteful, "greater fool" game.