What Do We Mean When We Say Gold Is Money?
You've probably heard it said that "gold is money."
What do we mean by this?
First, it's important to define "money."
In simplest terms, it is anything that serves the following three functions.
- - As a store of value
- As a unit of account
- As a medium of exchange
- Gold serves all three functions.
- Not only is gold money, it is sound money.
- In other words, it is not a fiat currency, and therefore it is not subject to government inflation and monetary manipulation.
- Aristotle listed four characteristics of sound money: it must be durable, portable, divisible, and have intrinsic value. Gold possesses all of these characteristics, which is why gold has served as money for thousands of years.
- As Goldmoney founder James Turk put it in an article published by the Mises Wire:
Every natural element with which the earth has been endowed has a usefulness—a purpose. If we listen to gold, its message is loud and clear—gold is money. To serve as natural money is gold’s highest purpose.”