Gold and its Relationship with Silver

Abstract

Gold has been used as money, along with copper, bronze, silver and various other metals and commodities. With the development of civilization, specialization and mechanization in manufacturing, the coming of responsible national governments, and international trade, metals and other commodities ceased to be useful as money. The amount of gold or any other commodity has no bearing on the amount of money needed for transactions. When a commodity being used as money becomes more plentiful, such as happened with silver in the 16th and 19th centuries, and with gold in the 19th century, it causes inflation. When it is scarce it is necessary to debase the commodity, for example by adding other metals to the alloys used as coins or by reducing the amount held as backing for the printing of paper money.