The History of Gold and Silver

Gold and Silver have been the predominant currencies for over 5,000 years.

They became money somewhere between 680 BC and 630 BC when they were minted into coins of equal weights in Lydia which is now Turkey. This first form of “money” was portable, durable, divisible, and fungible as well as a store of value unlike today where paper currency, which isn’t really money as it has no store of value. You can always print more paper money, but you cannot print more Gold or Silver.

We urge everyone to watch all 10 parts of the Mike Maloney series, “Hidden Secrets of Money” Money vs Currency – Hidden Secrets Of Money Episode 1 – Mike Maloney (youtube.com)

In 1834, the USA created a new US Dollar that was backed by gold at a ratio of 1.5 grams of gold per $1.00. Interesting side note is that the silver to gold ratio was 16 ounces of silver to one ounce of gold.

By doing this, every time the country wanted to expand the number of dollars in circulation they had to have the gold to back it. This stopped them from the excesses that are so prevalent today in all western European countries.

From 1834 until April 1935, Americans could walk into a bank and exchange their dollars for gold. But in 1935, President Franklin Roosevelt used a recently amended Emergency Banking Act to make it illegal to own gold and forced all citizens to return their gold or face hefty fines and/or jail. His rational for passing the Gold Reserve Act of 1934 was to help the United States recover from the Great Depression.

In 1944, post World War 2, 730 delegates from 44 Allied Nations gathered at Bretton Woods, New Hampshire to establish a financial system that would foster growth for all nations. During the war the nations competed for growth through manipulation of their currencies and sought a solution to prevent currency wars from persisting. The decision was to accept the United States Dollar as the world’s reserve currency backed as it had a long history of being fully backed to gold.

The exchange of US Dollars for gold ended in 1971 when Nixon took the US off the gold standard ending the agreement made in Bretton Woods in 1944.

Owning gold remained illegal in the US until 1974.

 Over the years there has been numerous paper currencies come and go. If paper currencies aren’t backed by a commodity like Gold or Silver, they are called fiat currencies and every fiat currency in history has failed.  Here is a good video to watch that describes 9 fiat currencies that have collapsed.  A Short History of Fiat Currency Failures: 9 Currencies That Have Collapsed (hardmoneyhistory.com)

The US Dollar remains even today as the world’s reserve currency and along with recently promoted Gold bullion is the only tier 1 asset (considered riskless) in the world according to the International Bank of Settlements which is the Central Bank for Central Banks (IBS). How long the US dollar remains “riskless’ is unknown, but it certainly is much riskier now than gold which likely explains the 2019 decision by the IBS to elevate gold from a tier 3 asset class to tier 1, it is likely going to replace the US dollar altogether very soon.

 Finally, the latest news on gold and money and currencies is the BRICS nations stating that they will be coming out with a currency fully backed by commodities which will almost certainly include gold if it isn’t exclusively gold.  Stay tuned.