How Did Gold and Silver Become Money?

money, cash, value, wealth 

Q: How did gold & silver come to be seen as valuable and used as money?

A: Some other metals like tin and zinc are useful for industrial purposes, but they don’t fit the requirements of money. The combination of scarcity, usefulness, and human psychology all contribute to gold’s and silver’s use as money. These two metals have a stronger and longer track record than anything else in history.

Warren Buffet hates gold, but he bought over one hundred million ounces of silver in 1998. Why did he do that? Because at a deep and fundamental level, he understands the value of precious metals. He might try to convince himself that precious metals are a barbaric investment that doesn’t pay dividends, but he didn’t spent a half billion dollars on silver because he hates his money and wants to decrease his wealth. He knows what any savvy precious metals investor knows. Metals have inherent market-driven value today, just as they have for thousands of years.

Anyone can argue that gold and silver are just dumb metal and shouldn’t be valuable. The market disagrees. Arguing with the market is generally a bad and expensive idea. The market has been saying gold and silver are money for thousands of years. The trend is your friend on this one.