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Thursday, March 17, 2011


Above you can see a run of the first inscribed gold coinage. (Click on the image to view a larger image.) These coins were recently discovered in present day Turkey, taken to Germany and then sold to some US coin dealers. They are part of a small horde that is showing up at major auctions. These coins will be quickly bought by world collectors who understand the significance and value of these artifacts and they will henceforth return to the open market on very rare occasions.

They date to about 625 BCE. At that time international trade deals that involved goods such as wine and olive oil, were often settled for quantities of weighed precious metal such as gold and silver. The jugs of olive oil and wine were stamped with an image and a word (usually a word such as Melek which meant "Of the King."). This stamp guaranteed that the jugs contained a certain weight and purity of content.

It occurred to King Alyattes of Lydia (present day Turkey) to stamp the quantities of gold and silver in a similar fashion. He used the image of a lion and stamped a word that is generally interpreted as "Walwel" - though this interpretation is certainly speculative. See the image above.

This was the origin of coinage. This invention spread quickly down from Lydia through Persia and down through Greece. It became an integral facet of the movement from Tyrany to democracy, as power moved from the Tyrant into the hands of individual traders, farmers, shopkeepers, etc.

But why gold and silver? Because even at that early date, these had been used as mediums of exchange for several millennia. This may seem arbitrary to some. Aristotle thought about this issue and came up with this answer: "Gold is durable, not like wheat, divisible, not like diamonds, convenient, not like lead, constant, not like real estate, and best of all, as jewelry, it has intrinsic value."

Whether or not this answer satisfies you, the fact is, in recorded history, it has always been thus with humans. In recent history it only since Richard Nixon closed the gold window (the convertibility of paper money into precious metal) in 1971 that the world has left off the use of gold as money. And once again power - and wealth - is being concentrated in the hands of central governments - or Tyrants.

But there have been many such experiments in the history of humanity and they have all ended the exact same way. Paper money always ends up returning to its intrinsic value - which is close to nothing. And gold always regains its status as real money.

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