(Mike Maharrey, Money Metals News Service) You’ll often hear me say that gold and silver have served as money for thousands of years. They’ve stood the test of time!
Now, this might sound like hyperbole coming from a “gold bug,” but there is ample evidence supporting this assertion. After all, we have coins dating back to antiquity.
Just recently, archaeologists discovered an ancient Celtic settlement in the Bohemia region of the Czech Republic. They estimate the settlement is around 2,200 years old. Among the remains of dwellings, production facilities, and at least one religious shrine, the archaeologists found several hundred gold and silver coins. They also found dies used to mint coins.
In other words, archaeologists found money that is well over 2,000 years old. Good luck to archaeologists trying to find U.S. dollars 2,000 years from now. I don’t think paper and digits in a computer will stand the test of time.
The archaeologists also found over 1,000 pieces of jewelry, pottery, and other everyday items at the site.
Researchers say the settlement was unfortified, and they believe the residents were major players in regional trade. According to a spokesperson from the Museum of Eastern Bohemia, there are indications that the people traded amber and other products “on routes across Europe.” The settlement is similar to other settlements along the “amber route corridor” that ran from the Baltic and North Seas to central Europe. Amber was highly valued for its beauty and was often incorporated into jewelry and religious objects.
That being the case, it makes sense to find gold and silver coins. Their value would have been recognized by all the various diverse cultures that traded in the region. That was one of the characteristics that led gold and silver to be adopted as money around the world. Their scarcity and value were universally recognized.
Gold and silver ultimately became money simply because people wanted to use them as such. No government mandate was necessary. The metals spontaneously evolved as money through a free market system.
Economist Carl Menger first to explain how money originates spontaneously through market processes, not through government action, in his seminal work, Principles of Economics. Gold and silver arose as money because individuals sought efficiency in trade, gradually converging on the metals as a commonly accepted medium of exchange. Gold and silver both possess the characteristics of good money because they are durable, divisible, portable, and widely desired.
Think about it. More than 2,000 years after these coins were minted, we know their value. The culture that produced the coins is long gone, but the coins are still valued by people today — not just because of their historical significance, but because we know exactly how much the gold and silver are worth. A person could easily use these coins as money today.
In contrast, fiat money such as the dollar is forced on people by government edict. Unlike gold and silver, fiat is easily produced by governments. All they need is a printing press (or a computer). The reality is that government people always give in to the temptation to create more and more of it for their own purposes. This steals the purchasing power and ultimately the wealth of those forced to use it. And when the government falls, so does the money. Confederate script is worth nothing more than its historical value.
The bottom line is that gold and silver remain a superior store of value compared to fiat.
So, people like me who laud gold and silver as “sound money,” arguing that it has been chosen by people to fill that role for thousands of years, are not just blowing smoke. We have the coins to prove it!
Photo courtesy of the Museum of Eastern Bohemia
Mike Maharrey is a journalist and market analyst for Money Metals with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.
