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The Evolution of Silver and Gold as Currency

Published by Tavex Analysts in category Precious Metal Information Guides, Tavex News on 27.02.2023
Gold price (XAU-GBP)
1,832.47 GBP/oz
  
- GBP10.54
Silver price (XAG-GBP)
23.81 GBP/oz
  
- GBP0.09

We have already established that gold and silver have a long history and an important role in human history. Gold and silver are always synonymous with the words wealth and prosperity. Before the widespread use of paper money, gold and silver coins were the standard currency in many countries due to their scarcity and universal demand. 

The Ancient World

The use of gold and silver as currency began in 600 BC with the creation of Lydian coins, which were used as a store of value in trade. Over the past 2500 years, these precious metals have established themselves as the supreme form of money. 

Ancient Egypt did use gold and silver as the first currency for exchanging or bartering. In approximately 3,100 BC, the Egyptian leader Menes established the use of gold in the Egyptian economy by declaring its value. It was said that “one part of gold is equal to two and one-half parts of silver in value”. 

Other civilisations also quickly adopted this practice. Darius I of Persia issued an 8.4g gold coin with 95.83% purity, which was equivalent in value to 20 silver coins. Like modern centralized monetary systems, Darius considered the production of currency a royal privilege and imposed the death penalty on Persian governors who attempted to mint their own coins 

Gold arrived in Europe through different civilizations, such as Ancient Greece, Carthage, and Rome. Although Roman society had been using gold and silver coins as a form of currency for up to 100 years, the Republic officially adopted gold and silver as money in 300 BC, which resulted in the creation of the well-known Aureus coin 250 years later. Gold coins became a fixture in European culture, and even after the fall of Rome, the Byzantine Empire continued to use them until the Middle Ages. 

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Middle Ages 

The Norman conquerors who invaded England in 1066 originated the term “pound,” which referred to a pound of silver. We still use this term today to describe Sterling. In the 14th century, England started to use gold as currency, represented by the Noble coin. However, continental Europe was ahead of the curve, with the Italian Florin and the German Augustalis, introduced by Holy Roman Emperor Frederick II, becoming two of the most prevalent gold coins on the continent.

Also, one of the most widespread coins was Venetian Ducat which was used to pay for goods from the East. During the 16th century, Spanish conquerors took massive amounts of gold from the New World, leading to economic stagnation and inflation in Europe because of the huge influx of money. 

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Modern Time 

In the 17th century gold and silver production had become more advanced which led to increased storage of the large amounts of gold that merchants had accumulated. These reserves were kept in the royal mints. In 1931 the United Kingdom came off the gold under the leadership of Ramsay MacDonald. The United States abandoned gold much later in 1971.

Nowadays numerous central banks still possess significant amounts of gold, but despite this fact, no current monetary system supports its currency with gold as official backing. 

“If our money were backed by gold and silver, people couldn’t just sit in some fancy building and push a button to create new money. They would have to engage in honest trade with another party that already has some gold in their possession.” — Ron Paul 

So will gold and silver become currency again? There is no answer to this question. However, some U.S. states use gold and silver coins as currency. Humanity has learned historic lessons, but for now don’t plan to come back to gold and silver as currency. Anyway gold and silver are always a safe way to protect your money from economic instability. From year to year we understand that these precious metals remain stable and reliable investments. 

Gold price (XAU-GBP)
1,832.47 GBP/oz
  
- GBP10.54
Silver price (XAG-GBP)
23.81 GBP/oz
  
- GBP0.09

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