There are signs suggesting that the return of real money is imminent. It will not be a top-down dictate; it will come from the ‘bottom up’. Gold and silver are real money, honest money. They demand honest dealings that are in accordance with reality. For that reason, Governments will never initiate their reintroduction. The people will just start using them.
First of all, it is necessary to understand that Gold is money (because of its stability of value), and silver is the medium of exchange* because it is the most marketable good**. Many things can act as a medium of exchange, even fiat in the short term. Goats, cattle, salt, cigarettes etc. have all been used. Silver is the best, and thus the preferred, medium of exchange.
Gold is money and is rarely used as a medium of exchange. Money’s job is not in the marketplace, but to store a stable value into the indefinite future (think of the Roman Gold still being dug up today). It is these properties of Gold that ushered in the modern world with its preoccupation with accumulating capital with all the blessings that entails. Before money, such accumulations were not possible.
Cash bans are being talked about all over the western world. The thinking behind this is that the black economy would be severely curtailed without dollars/Euros etc. in circulation. If all transactions were electronic, then all transactions could be known about – and taxed.
The actual effect in the real world of the implementation of a cash ban will be somewhat different. A fiat cash ban will change the option for the consumer. At the moment, the option is: do I use silver of do I use dollars? If someone can hang onto his silver and get away with handing over dollars, then obviously he will do so (Gresham’s Law).
The moment that there are no dollars anymore, then the option changes to: do I use silver, or do I pay tax? Now the silver does emerge as the preferred option and as the newly reinstated medium of exchange. Will the producer happily accept silver instead of electronic fiat? You bet he will.
Ipso facto, nothing will bring silver out of its hoards faster than a fiat cash ban. Governments are desperate to gouge more tax out of ‘their’ people and will go ahead and bring in a cash ban. As a Gold/silver aficionado, I enthusiastically welcome such a ban and, more importantly, its unintended consequence.
As mentioned, Gold is the one and only money (see Stock-to-Flow Ratio) with the unique quality of being a store a stable value over (through) time. As such, its primary use is a/ to inspire surplus production, b/ to securely store the wealth created by that production, c/ to supply capital for new production, and d/ to produce an income for its owner (via c/).
Monetary Metals is a US based company that is producing an income on Gold, in Gold. You can deposit your Gold with them and, instead of paying a storage fee, receive interest on your Gold – paid in Gold. Monetary Metals is into its sixth year and is going gangbusters. Why wouldn’t it? It has just put together the first Gold bond since 1933, which is paying 13 percent interest. Now let’s see – should I put my money in the savings account at my bank for 0.45% interest – paid in dollars, or should I put it with Monetary Metals for 13% – paid in GOLD?
These are revolutionary times.
Gold and silver are coming out of their hoards.
Western Civilization has desperately missed them.
* In the 19th century (UK and US), even houses prices were quoted in silver.
** Gold in monetary form (a known weight and fineness of Gold) is not the most marketable good. It is neither very marketable (useful in the marketplace), nor is it a good.