What's in the Coin--Does it Matter?
My, new, thought for today is that there's no difference between the paper modern dollars are printed on and the gold the old ten dollar and twenty dollar coins were minted with. Whether one is printing or minting, one at base just needs some material to make it with. Making a coin with gold helps prevent counterfeiting, one assumes; that can be a discussion in itself--how does one know a gold coin is not lead inside, with the requisite ten percent copper to make it weigh the same as a coin, as gold is so soft it can be guilded as thin as one likes. This thinness capacity can also serve as a basis of the Goldbacks alternative currency discussed some time ago on Sovren.
Yet my thought today is that the base value of gold comes from its traditional use as currency and not its value as currency from the characteristics of gold, as congenial as they are to use as physical material for coinage and even for general commodity money-like exchange and use.
Gold is just one physical material among many--there is no alchemy to gold other than what cold fusion provides as to production thereof (note the, quiet, experiments by Mitsubishi Heavy Industries around the transmutation of elements). If any other material (silver, copper, oil) were chosen as currency, its value would, as with gold's begin to ride on its use as-currency rather than as at first its value as itself alone. Such value as currency comes from value-in-use and not, primarily, from factors inherent to die-ding-an-zicht, gold's resistance to rust, its shinynesd, its potential for thinness (useful in goldbacks), or its resistance to mining. Take mining as ensample: putting aside that the vast hoarding of gold by the United States Department of the Treasury, and by other governments is likely a major reason for the current ever-increasing price of gold, putting aside also that gold no longer has its price pegged to a real currency (hence perhaps the extremely unstable price of gold bullion); take just the example of rarity: The United States dollar coin itself was silver, not, Spanish, gold.