Wednesday, September 7, 2011
But how about silver rounds or even small silver bars. Could these be validly called silver money or even just money?
Let's look at what money is. Most money these days is an idea backed by confidence. One is willing to accept money according to how confident one is in the fact that it can be exchanged for goods and services at a later time. In that sense anything, in which one has confidence can be exchanged for goods and services constitutes money. In fact, through the ages many things have been used as money. Actual goods have been used, such as goats, wood, even rocks and leaves. These days we are educated and cultured even, to regard specially printed paper as money and our use of this is dependent on our willingness and agreement to accept this paper money and use it. If everyone agreed that monopoly money was an acceptable form of exchange, we would happily use that. As it is we use dollars and cents or euros or francs or whatever the particular paper money or currency is in our country.
The important aspect of money is, not so much the agreement of what we use but the stability of the medium. Paper money has not proved to be stable. It fluctuates in value. We have seen over the years how it has dropped in value meaning that we must now use more of it to exchange for the good and services we want.
Enter Silver Money. There is already an agreement that silver has value which demonstrably does not change and therefore makes it an ideal vehicle to use as money. We are not talking dollars here but the actual exchange value of silver over time. If you acquire some dollars, keep them for some years and then use them. What you can purchase with those dollars is less than it would have been had you made that purchase at the time of acquisition. The inherent instability due to fluctuations in the agreed value of the paper money makes it difficult to retain any value. With silver money, or actual silver in other words, the inherent value does not change. You can hold onto it for years and still obtain the same value in goods and services as you could at the time of acquisition. This is real money and fulfils the purpose for which money is designed.
As such the form of the silver is immaterial except that it should be in an amount that matches the goods or services one is purchasing. Coins, rounds, small bullion bars can serve as money for small purchases and the larger bars, say one to 15 kilos for the larger purchases depending on the value of the good or services one is buying.
In this way silver IS money and can be used as such. Ah, you might say, what if someone refuses to accept silver in payment? Silver money will come into its own on a gradual basis as the existing currency reduces in value more and more. This has happened in other countries. In such circumstances, hard precious metal such as gold and silver appear to become more valuable. It is not that they are becoming more valuable. It is just that they are retaining value, something the existing currency is not doing.
More and more people then will be willing and interested in accepting silver as money so it is unlikely under those circumstances that anyone will prefer a bucket of bank notes to a silver coin. Especially as the bank notes continue to deteriorate in value and the next day it might take two buckets of bank notes and the third day, three and so on. Silver money in the form of silver coins or small bullion in bars will suddenly acquire a greater attraction not the least for its convienience.
So in view of the ongoing deterioration of currency around the world it is probably a good idea to hoard some silver coins and bullion bars. You just never know when you might need some silver money.