I get RSS feeds from a number of finance- and economy-oriented blogs, many of them carrying multiple ads for sites that sell gold and silver. More than one of these blogs actively promote gold ownership as the ultimate hedge against what is perceived as a doomed financial system based on paper or 'fiat' currency.
The thinking appears to be that when the global debt-based financial system collapses in the not-too-distant future, anyone who is holding assets denominated in a fiat or government-backed currency will see those stocks, bonds, bank accounts become worthless. Only 'hard' assets like gold and silver will be of any value in a future economy where paper money is no longer accepted.
There is an element of the survivalist mindset at work here, and, to be sure, many of the same sites that carry advertisements for gold bullion also carry ads for sites where one can purchase a year's supply of dehydrated food.
But, back to the 'gold is money' idea. Gold for a good part of history was money.
The first large-scale, private issuance of pure gold coins was under King Croesus (560-546 B.C.), the ruler of ancient Lydia, modern-day western Turkey. Stamped with his royal emblem of the facing heads of a lion and a bull, these first known coins eventually became the standard of exchange for worldwide trade and commerce.
he UK adopted a gold standard after the Napoleonic wars in the early part of the 19th century. In the second half of that century, a number of nations in Europe and elsewhere followed suit, though some for a time based their currencies on a bimetallic gold/silver standard. The United States adopted the gold standard de facto in 1879, by making the "greenbacks" that the Government had issued during the Civil War period convertible into gold. By 1914, the gold standard had been accepted by a large number of countries, although it was certainly not universal.
The U.S. had a bi-metal standard from about the 1820's on - bi-metal meaning that both gold and silver coins were minted. The country - the Union, that is - adopted more of a gold standard during the Civil War as European arms manufacturers were requiring payment in gold. However, the
Coinage Act of 1873 placed the U.S. on the gold standard which had been adopted by many other countries.
The battle between those who favored the gold standard and those who championed silver came to a head in 1896, following the very deep Depression of 1893, which saw thousands of farmers go bankrupt.
The Democratic Party Convention of 1896 saw one of the most famous political speeches in American History - William Jennings Bryan's Cross of GoldSpeech.
Jennings won his party's nomination but lost to McKinley in the general election. Subsequently, Congress passed the Gold Standard Act in March, 1900 which basically said that a paper dollar was redeemable in gold only.
Silver advocates, however, were able to get passed the Bland-Allison Act in 1878 which allowed the government to issue 'silver certificates' - paper money backed by government-owned silver.
World War I began in August, 1914. All of the belligerent governments believed that the war would be of short duration, as countries could simply not afford to maintain armies of millions in the field for an extended period. They were, wrong, of course, as trench warfare and stalemate ensued. By the second year of the War, all of the countries involved were borrowing money to finance it - money in amounts far in excess of the gold reserves on which their currencies were based. In effect, then, all of the major countries at war were forced off of the gold standard.
The war ended in 1918 with the global financial system in shambles. In 1925 then Chancellor of the Exchequer, Winston Churchill, determined to put the U.K. back on the gold standard, a move which he later call "the greatest mistake" of his life. (One could argue that he made far greater mistakes, but that is a tale for another day). Most economists and historians now believe that by forcing Britain back onto the gold standard the subsequent Great Depression was made longer and more severe.
On April 5, 1933, Roosevelt ordered all gold coins and gold certificates in denominations of more than $100 turned in for other money. It required all persons to deliver all gold coin, gold bullion and gold certificates owned by them to the Federal Reserve by May 1 for the set price of $20.67 per ounce.
On June 5, 1933, the United States went off the gold standard, a monetary system in which currency is backed by gold, when Congress enacted a joint resolution nullifying the right of creditors to demand payment in gold.
History.com
Finally, in August, 1971, President Nixon ended the convertibility of the dollar into gold for foreign transactions, thereby effectively ending the Bretton Woods international monetary system that had been in place since 1945.
So much for the history of gold as money in and of itself or as the basis on which paper currency is issued.
Which brings us back to the original question: "Is gold money"
No, it is not. Or is it?
Many governments around the world, including the U.S. mint gold coins. Here is the statement on the U.S. Mint regarding these coins.
Authorized by the Bullion Coin Act of 1985, American Eagle Gold Bullion Coins quickly became one of the world's leading gold bullion investment coins. Produced from gold mined in the United States, American Eagles are imprinted with their gold content and legal tender "face" value. An American Eagle's value is based on the market price of its metal content, plus a small premium to cover coinage and distribution.
So, the American Eagle is not used to 'pay all debts public and private' but is viewed by the U.S. Mint as an investment.
Ever since its discovery 5,000 years ago, gold has been treasured for its unmatched luster, beauty and intrinsic value. Today, gold continues to enjoy widespread appeal as an investment and storehouse of value. Gold is an internationally recognized monetary and financial asset held in reserve by major governments. It is so rare that all the gold ever mined could fit into a cube measuring just 20 yards on each side. Most importantly, gold can play a role in diversifying an investment portfolio, since it can move independently of stocks and bonds. What's more, gold is a tangible asset - one whose beauty and artistry you can literally hold in your hands. When purchased in the form of legal tender bullion coins, gold can be affordable, as well as easy to buy and store. Americans purchase more American Eagle Gold Bullion Coins than any other gold coin. Produced by the United States Mint, Department of the Treasury, these coins are available in four denominations.
The Mint has said that their Golden Eagle is legal tender - a golden legal Eagle. Sorry. Lost my head. And the State of Utah has recently passed a bill into law which says that gold and silver coins are legitimate forms of money in that state.
Except, not really. Thus this dialogue between Kai Ryssdal of Marketplace (NPR) and Craig Franco, who runs Utah Gold and Silver Depository.
Ryssdal: So I can have some 1792 gold, double-eagle, walking liberty coin, whatever they call 'em -- because you guys do special stuff, right? -- and plop it down on the counter?
Franco: Theoretically, yes. Now practically, that's impossible to do. So what we've done at the Utah Gold and Silver Dispository is we have developed a debit card that allows for people to deposit their gold and silver like you would deposit cash in a bank. And we can issue a debit card against the value of your gold or silver holdings.
Marketplace
So, is gold money?