The idea that gold and silver (or bitcoins) are "real" money and currency like the modern US dollar, etc isn't? Utterly absurd. Sure, gold and silver do have practical uses, but so what? They became a medium of exchange thousands of years ago, and that has fueled a great deal of their valuation.
In general, your post demonstrates you've absorbed quite a bit of misinformation from various sources, regrettably.
It wasn't and isn't 'historical practice' that gives precious metals their valuation. It's the other way round - their historical use as money was due to their having attributes that makes them ideal as a medium of exchange and a store of value:
- They are in limited supply. No one can easily just make more of them. At any given time, mining capacity can only increase the total amount of the metals in refined form by a tiny fraction of a percent per year.
- They are inert. Don't get eaten by mice, catch fire, rust, etc.
- They can be made in standard sized pieces, to provide a uniform money system. (Unlike, say, diamonds. Which are a glut anyway, only price-maintained by a cartel.)
The 'practical uses' are mostly irrelevant - the primary economic use is as a token of value. Though, not quite true of silver since it has many industrial uses that actually do consume a lot of the annual production.
Now, the price is propped up by people who believe that the doomsayers hawking gold are less crazy than the Fed.
This one phrase demonstrates you know virtually nothing about this topic. The present valuations of gold and silver are not 'propped up' by anyone, but rather are artificially and severely suppressed. The mechanism of price suppression is well known and proven - entities like the London Bullion Exchange issue paper tradeable certificates representing gold and silver. Trades of these certificates set the official bullion price, ie pricing has nothing at all to do with distributed transactions worldwide involving buying and selling bullion. If you'd ever bought or sold any, you'd know that the sale is conducted at that moment's 'spot price', plus or minus your dealer's fixed buy/sell margin. The spot price is set hour to hour by the London & NY paper bullion markets. It's proven these certificates have effectively no backing by actual metal, meaning they print and sell them in effectively unlimited quantities. It's estimated by bullion market experts that there are at least 100 to 140 times as many paper certificates for gold ounces, as there are physical ounces in the LBM vaults. The situation with silver is similar if not worse, since the historical value ratio between silver and gold is roughly a constant, but over the last decade or two has silver very much undervalued per that ratio. You can find endless information on the gold and silver spot price rigging mechanism. It survives because few who trade the certificates ever 'stand for delivery' of physical metal. To own the paper costs much less than to take delivery of the actual metal. However at some point this rigging mechanism is going to fail - just no one knows when.
I think in those links I posted before, I forgot to include
http://everist.org/archives/links/__Silver_links.txtOh and incidentally, the FED are anything but crazy. Bastards, but not crazy. Do please read Creature from Jekyll Island. It's free online. Or work through some of the links I posted.
Here is the thing, money, it started as clay tablets with chicken scratches on it representing stored grain. You know what happens when you store grain? Mice and bugs eat it. Moreover, if you don't keep the roof up, the rain gets in and it rots or molds. To some extent, that extra cost is worthwhile, because the alternative, not having enough grain in lean years, famine, is worse.
Now this is really confused. You're conflating official book keeping about taxes, tithes, warehouse records and such, with money. Nothing like the same thing. Also an analogy about losses of grain, and laying in supplies for future use, is not in any way applicable to understanding the nature of money. The purpose of money (and its tokens) is to avoid having to barter physical goods & services directly for each other. It's a convenience, and a very important one.
But at the end of the day, inflation has always been a fundamental property of money.
This too is flatly false. Inflation is a feature of all money systems
in which someone has the ability to create unlimited amounts of the token of exchange. It really doesn't occur in monetary systems where that is not the case. In fact the opposite - economies can expand by virtue of constructive work people do, increasing manufacturing and population, etc. But with a constrained money supply (eg because there's no more gold or silver available) the existing money has to spread more thinly - which is known as deflation. In which a given unit of money gains buying power over time.
The need to avoid that 'horrible limitation' (from the govt and banker's point of view) was presented as the argument for abandoning the gold standard. Actually the reason was just so the banks and government could print and issue as much money as they wanted, to pursue goals which benefited no one but them. And is why a US dollar today has about the same buying power today as a cent or two of US money around 1900. (Same for other currencies that move in rough alignment.)
Incidentally, you'll never really get an instinctive feel for how nice it is to own some gold and silver, till you hold some in your hand and realize... oh,
this is what real money is. Pic below is some I had at the time I retired. All gone since, and no I didn't make much profit. But profit wasn't the primary intention. If I had a couple of hundred thou today I'd immediately convert at least half to bullion. And NOT keep it in a bank safe deposit box (all such will be confiscated in any economic upset.)
The bits of printed plastic/paper in my wallet are not real money. They are only accepted as a trading medium by convention, and because the government says they are. Convention and governments are fickle, while an ounce of silver or gold is never going to be anything but what it is. Rare, desired, and therefore useful as a token of exchange. Unlike those Zimbabwe 100 trillion notes. Same goes for any other fiat paper.
Edited: numerous typos.
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