Poking Holes in Gold and Silver

As the more philosophical economists recognize, money is a myth. We arbitrarily assign value to things, and then collectively agree to pass them back and forth in return for the goods we need or want. There are unfortunately ample historical examples of what happens when this myth fails, when we abstract the concept of money so far from its basic function that it can longer bind us in a social contract. During these crises we tend to moralize about how money should never have been divorced from the gold or silver standard, since those metals hold stable, intrinsic value. But do they?

liberty-gold-coin2007 $50 1 Oz. Gold American Eagle

As we introduce a Single-Owner Coin & Bullion Collection, and prepare for next week's auction of sterling silver tableware and accessories, we find ourselves wondering "why gold and silver?" Of all the elements on the periodic table, all of which of course occur naturally, and to which we've had access for all of human history, why did we single out gold and silver to carry such symbolic importance and monetary value? As it turns out, Goldilocks (no pun intended), could easily tell us how gold and silver rose above their elemental kin to become the universal symbols for all that is precious. They are, essentially, "just right."

Unfortunately for us, we will never know what happened when the first human found the first flake, or nugget, of gold or silver, and if he or she was immediately taken with its luster, or if it languished as just another rock to be thrown at the nearest advancing saber-toothed tiger. But we do know that the first solid evidence of humans using the metals decoratively is from Egypt around 3000 BC. The code of Menes, the founder of the first Egyptian dynasty, is the earliest record of a gold and silver standard: it stated that "one part of gold is equal to two and one half parts of silver." Gold and silver were used by the Minoans, the Sumerians, and early South Americans cultures.

The first gold coins were actually made from the naturally occurring gold/silver alloy, electrum, which is 63% gold and 27% silver. They were made in Lydia (modern day western Turkey) around 700 BC, and were simple lumps stamped with lions. The last king of Lydia was Croesus of Mermnadae, and it is to him that the first pure gold coins are attributed, as well the phrase "rich as Croesus."
fullsizeoutput_24Lydian coin

So was it simple shininess that drew early humans to gold and silver? Well, partly. Their brilliance must have been part of what made them desirable. They are much more attractive than iron or aluminum, for instance. But probably as important is the metals' stability. Unlike some other elements, gold and silver are relatively durable and nonreactive. It wouldn't do to decorate a king's headdress with something that bubbled or burst into flame when exposed to air. And gold's resistance to tarnish may be why it came to symbolize strength, power, and endurance.

fullsizeoutput_2612th dynasty Egyptian crown

Gold and silver are also easy to mine and manipulate. They both occur more often than other metals in a pure state, and so don't as often require smelting. They are soft, but not so soft that they can't hold their shape. And, crucially, they are rare enough to be precious, but not so rare that they could only be found in such tiny amounts that using them as decor or money was impractical. Their relative availability is also why both gold and silver persisted as currency. As Menes figured out, tying silver's value to gold's allowed for making smaller trades in silver, where the amount of gold required would be so small that it would be hard to measure and easy to lose.

Byzantine-coinsByzantine silver coins
Silver has the added benefit of being antibacterial, which is most likely why people started to make "silverware" rather than "goldware" or "copperware." Utensils and dishes made from silver could safely be put in one's mouth and food over and over again. Silver has also been used medicinally for thousands of years. Recent research even shows that bacteria cells exposed to silver not only die themselves, but keep killing other bacteria cells after they're dead.

fullsizeoutput_25A Group of American Coin Silver Flatware from the upcoming Collection of Sterling Silver

For millennia, we have managed to perpetuate the myth that gold and silver have rock-solid value to us. It's in our own best interest that we continue to do so - even when the economists tell us that the monetary sky is falling, we can take comfort that those of us with the forethought to pad our nests with gold and silver feathers will be safe from the impact. And yet, stranger things have happened than the human race slowly, collectively, deciding that gold and silver are throw-away materials and that only numbers in the air have value. Bitcoin, anyone?

Content created by the Leland Little editorial team