Silver: Money, Markets, and the Metal’s Role in the Coming Chaos
International Man: What is it about silver that makes it viable as a monetary metal—that is, something people actually use to store and exchange value?
Doug Casey: Let’s look at the definition of what makes a good money. There are basically six characteristics. A good money has to be durable, divisible, convenient, consistent, have use value, and some limit on supply. Using those six key characteristics, gold ranks first, silver second, and copper third. That’s why those three metals have been preferred money throughout history. They were superior to seashells, salt, cows, paper, and other commodities. In today’s world it makes sense to bring Bitcoin, which also satisfies those six characteristics into the mix.
So, to answer the question: Silver has always been a monetary metal, and it likely always will be.
International Man: Do you think gold functions better as money than silver—and if so, why? If not, why not?
Doug Casey: Gold is much scarcer than silver. It has an extremely high unit value. And its value relative to silver has increased throughout history. In the days of Ancient Egypt, gold traded at only three times the value of silver. In Rome, at the time of Caesar, the gold aureus was worth about 12 times more than the silver denarius. The US initially fixed the value of gold against silver at 17.5 to 1. Incidentally, fixing the value of any commodities—which fluctuate widely for many reasons—is always a bad idea. As of now, the ratio is about 100 to 1. The increase in gold’s value relative to silver is a trend that, with fits and starts, has been in motion for over 3,000 years.
It’s important to have an adequate quantity of money available for use in commerce. This was a problem in the early days of the US, when there was neither enough gold nor silver in circulation. Of course, the terms “adequate” and “enough” are rather arbitrary. That’s one reason why money itself should be strictly a function of the free market, not government. If there’s not “enough” gold or silver, more will be mined at a profit. When there’s too much, mining becomes unprofitable, and stops. Unlike government money, free market money is self-regulating.
Out of maybe 7 billion ounces of gold that have ever been mined, almost all is stored in vaults, safe deposit boxes, or w
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LewRockwell.com is a libertarian website that publishes articles, essays, and blog posts advocating for minimal government, free markets, and individual liberty. The site was founded by Lew Rockwell, an American libertarian political commentator, activist, and former congressional staffer. The website often features content that is critical of mainstream politics, state intervention, and foreign policy, among other topics. It is a platform frequently used to disseminate Austrian economics, a school of economic thought that is popular among some libertarians.
