Real Money – The Monetary History of Gold and Silver

Gold and silver are well known and valued today, as they have been for over 5,000 years. ​​​​​​​Although civilization has moved to the use of fiat money, gold and silver have retained their value even when they are not used as official monetary instruments.

Before the concept of money was discovered, people exchanged their goods and services directly for other goods and services. However, without a medium of exchange, trade could only take place if both parties had what the other wanted. For example, one farmer may sell wheat to another farmer who sells apples. But what if you don’t want apples? Instead, you can trade a medium of exchange that acts as a store of value, such as gold. The farmer could accept the gold as payment and exchange his gold for a steak later.

No one knows exactly how gold was discovered, as there are only records of gold being used as jewelry and as a form of payment for other goods. However, it is known that several civilizations independently came to the same conclusion – that precious metals are valuable – and began using gold and silver as money.

Gold and silver have held their value as a form of payment for thousands of years. Humans also found other uses for metals. An ancient silver goblet, spoons and plates were found. Silver was even used on the battlefield in the form of arrowheads and blades. While gold was also used in warfare, it was usually used as plates on shields and the hilts of swords, more as an ornament than as a weapon of war.

Until recently in history, gold and silver were used as the primary form of payment. The dollar was originally a promissory note that could be exchanged for gold, as outlined in the Constitution. US dollars were denominated in gold until 1933, and silver was used for coinage until 1964. As the relationship between precious metals and fiat currency was severed, the value of the dollar and virtually all other currencies plummeted. In a sense, gold and silver are the only real form of money in this world as they act as a medium of exchange and store of value.

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