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Why don’t humans use gold coins as Money?

November 5, 2012 in Gold, Gold Coins, Mexico Coins, Precious Metals, Silver, Silver Coins

26/October/2012

On the use of gold coins as money

Hugo Salinas Price (http://www.plata.com.mx)

The answer is quite simple: because they don’t want to, under present circumstances.

The attachment of humans to gold is remarkable; I suspect there is something metaphysical about gold that attracts human beings. Perhaps gold is part of the natural order of things, part of the Rerum Natura, and the relationship of humans to gold is “built-in” into human nature, like sexual attraction. I won’t insist upon this, but I think about it.

But getting back to the question and the answer I give. The next question is: Why don’t humans choose to use gold coins as money, under the present circumstances?

The answer is equally simple: because we humans value gold so highly (the most significant material gift a man can give a woman he loves is gold in some form) we will use anything else available to make a payment, rather than part with gold.

If you have dollars, you will use dollars instead of gold. If you have euros, you will use euros instead of gold. British pounds, Russian rubles, Chinese yuan, Japanese Yen, and even that unlikely monetary unit, the Zambian kwatcha, any one of these will be used for payments rather than giving up a gold coin.

I read that the Swiss are thinking about allowing gold to have a monetary role. Someone has quipped that this is like wanting to re-hydrate water. The Swiss will achieve exactly nothing with this measure. Do they want to use gold as money? For that to happen, there would have to be no other currency available to the Swiss.

Gold will once again be used as money (it actually is money) when nobody will take anything else in payment or when there isn’t anything but gold (or silver) available with which to make payments. That was the situation back in the 19th Century and before. Gold was used because there was no alternative but silver, and that situation would have continued except for the fact that the ratio of silver to gold was a fixed ratio, and was not allowed to fluctuate with the market.

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