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Gold is the best form of money on earth. Here’s why:

Anything man has a desire or need for can be used as money. In fact, throughout history everything man has a desire or need for actually has been used as money, under a barter system.

In the absence of a universal means of exchange you have no choice but to exchange what you have for what you need. If what you have is accepted, directly, in return for what you need then what you had was money, for this one transaction.

What do you do if the person who has something you need doesn’t want something you have? You either find someone else who does have something your seller wants and barter with him to get it or you have to find something else the seller wants. Then you’ll have the same problem to solve with the second guy as you had with the first. As you can see bartering for goods becomes a confusing mess.

What you need is a means of exchange that works for all deals. You need something on this earth that anyone selling anything would accept as payment. And you need something that you yourself would accept as payment for anything you may wish to sell. The ideal candidate would have the following qualities:

• Transportable: Must not be bulky, too big or oddly shaped.
• Divisible: You must be able to easily divide it into different sizes.
• Storable: You must be able to easily store it.
• Fungible: One piece of equal size and weight can be substituted for another.
• Resilient: As your transporting, dividing and storing it it should not rust, melt or decay in any way as to lesson its value.
• Measurable: Its weight should be unique to itself and easily verified.
• High Unit Value: It should have a high value per unit of measure, transport or storage.
• Desirable: It should be widely appealing and considered a luxury in and of itself.
• Rare: It should be rare, but not too rare, in relation to all other things on earth.
• Hard to Counterfeit: It should be extremely difficult to reproduce.

This is quite a long list of attributes to expect to find in one thing.

Many things have been tried including wheat, seashells, cattle, whiskey, tally sticks, beads, precious gems, silver, gold, cigarettes. After thousands of years of trial and error silver and gold became the most accepted and widely used means of exchange. Silver was used first and then Gold was later used by the Egyptians.
All the other competitors were naturally weeded out for not having one or more of the above qualities. Tally sticks lasted the longest because the Exchequer government accepted them for the collection of taxes. Platinum and Palladium have many of the qualities of gold, but, they are not readily identifiable and are too rare to be practical.

Some might say that oil is being used as the latest form of worldwide currency. Oil is hard to transport, store, measure, has a low unit value and is of no use for small transactions between private parties. Its trade is limited, therefore, to countries or large corporations.

Only Gold and Silver meet all of the above criteria and that’s why they are truly money. As mentioned above, anything man needs or desires can be used as money provided the buyer and seller agree. However, Gold and Silver are the only universally accepted means of exchange. They are recognized, worldwide, to be money solely based on their intrinsic qualities.

It’s extremely important to recognize the long historical trial & error that left only Gold and Silver still standing as universally recognized money. Whatever manner of paper promise or substitute is referred to as money none other meet all of the criteria, above. That goes for stocks, bonds, treasury bills, paper bills or treasury notes, annuities, ADRs, mutual funds, REITs and even cars, bicycles, food and houses. Many of these paper instruments and goods have their place in speeding the flow of exchange or in direct fulfillment of man’s needs or desires. However, they all depend on the viewpoint of a particular buyer to evaluate their worth. They cannot be viewed as a universally reliable means of exchange.

That’s why Gold (And Silver) are the best money on earth.  So,  Where does money come from?

Tags: dollar, Finance, gold, money, silver

This entry was posted on Tuesday, July 15th, 2008 at 9:52 pm and is filed under Finance, dollar, gold, money, silver. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.