Before this question is answered, it is important to understand what the proper ‘supply’ of money means.

As many Western economists incorrectly point out, the benefits of fiat currency is the ability to for the money supply to ‘expand’ or ‘grow’. Many sorts of criteria have been put forward: that money should move in accordance with the population, with the ‘volume of trade’, with the ‘increase in GDP’, so as to keep the ‘price level’ constant etc. The reason for this rests on the understanding that when the supply of any other goods in society increases, this will generally confer a societal benefit. But money differs from other commodities in one essential fact. Grasping this difference furnishes the key to understanding monetary matters.

When the supply of consumer goods increase, there is general rejoicing. When new natural resources are discovered, there is the promise of increased living standards, present and future. But the same does not apply to the supply of money. Consumer goods are used up the consumer; capital goods and natural resources are used up in the process of producing consumer goods. But money is not ‘used’ up; its function is to act as a medium of exchange – to enable goods and services to travel more expeditiously from one person to another. It is a startling fact to some, but money is only useful for its exchange value. Other goods have various ‘real’ utilities, so that an increase in their supply satisfies the consumers’ wants. Money though is valued according to its ‘purchasing power’. Where increasing the supply of money acts on reducing the effective purchasing power of money itself, meaning that no societal benefit is conferred. It said we all want more money, but it really means is that we want more money that has more value. After all, I can give you a billion Dollars in Zimbabwean currency, but you are not richer than if you were holding a hundred Dollars in US currency.

So to answer the question ‘is there enough supply of gold and silver to establish a gold and silver standard?’ The answer is not an issue of constantly increasingly supply to match the growth of societies (in attempting to do so, we would likely mine all of the earth’s stock of gold and silver), but in seeing whether the current stocks of gold and silver are sufficient for currency to be effective. This means whether there is enough gold and silver to be utilised in trade by a nation. Importantly the consideration here is gold and silver. Both metals globally exist as large stocks and should be used in the form of a parallel or bimetallic standard. In fact, it was the British in the 1800s, who in an effort to placate the independence of the US, banned the use of silver dollars, making it easier for them to monopolise the gold in circulation.

Both gold and silver by their nature are durable metals that are rarely consumed. Largely the same amount of gold and silver that was first mined many thousands of years ago still exists today. Both gold and silver do not only exist as bullion stored away in the vaults of central banks, but also in various guises of jewellery and ornaments. It is only the form of gold and silver that changes.

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