Precious Metals News & Analysis - Gold News, Silver News from Money Metals Exchange

The Flow of Gold from West to East in One Picture

Thu, 12 Nov 2026 00:00:00 EST

I’ve written quite a bit about the movement of gold from the East to the West.

Here’s the story in one picture:

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The picture needs no explanation.

Over the last couple of years, Hong Kong and Singapore have built out infrastructure to support the growing gold trade. Last summer, Hong Kong launched https://www.moneymetals.com/news/2026/07/09/hong-kong-launches-gold-settlement-system-to-challenge-western-dominance-005050";>a gold settlement system, hoping to challenge Western dominance of the gold trade. And just this week, the Monetary Authority of Singapore announced plans for ‌a vaulting service to hold bullion for foreign central banks.

As you can see from global gold flows, these efforts seem to be paying off.

We also see it playing out in gold demand data. Asian and Indian investors continue to buy gold, even as Westerners, particularly Americans, sell.

Chinese bar and coin demand rose 7 percent year-on-year in Q3 to 79 tonnes. Year-to-date demand of 393 tonnes ranks as the highest on record, 11 percent above the 2013 high.

Chinese physical gold demand is even more impressive in value terms. Year-to-date spending of $59 billion already exceeds every full year in the World Gold Council data series. Q3 demand alone surged by 32 percent to 11 billion.

Indian demand has been muted due to government efforts to limit imports, including https://www.moneymetals.com/news/2026/05/13/india-hikes-gold-and-silver-import-duties-to-support-rupee-004917";>a significant increase in import duty. However, demand picked up early in the fall festival season despite the higher price.

Meanwhile, U.S. bar and coin demand fell 40 percent year-on-year to 8 tonnes. It was the weakest quarter for coin and bar demand since Q4’19.

This isn’t anything new. Even during last year’s spectacular gold bull market, American investors generally stayed on the sidelines until late in the year. https://www.moneymetals.com/news/2026/01/30/gold-demand-topped-5000-tonnes-for-the-first-time-in-2025-004647";>Physical gold investment surged in 2025, with coin and bar demand hitting a 12-year high of 1,374.1 tonnes. More than half of the global coin and bar demand came from two countries – China and India.

The split between East and West becomes even starker when looking at the data for the first half of last year.

Chinese bar and coin demand grew by 44 percent year-on-year in H1 last year as investors snapped up 115 tonnes of gold bars and coins in the second quarter alone. It was the strongest H1 for physical gold buying since 2013.

Meanwhile, Americans continued selling. Year-on-year bar and coin sales plummeted by 53 percent in H1. Second-quarter demand was only 9 tonnes, the lowest quarterly level since Q4 2019.

You can https://www.moneymetals.com/news/2026/07/12/a-strange-dichotomy-gold-up-on-the-year-in-asian-markets-down-big-in-the-west-005059";>see this phenomenon play out in daily trading data.

During Asian trading hours, gold was up 12.9 percent through the first six months of the year. During North American trading hours, the yellow metal was down 15 percent. European sessions split the difference, with gold falling modestly by 1.3 percent.

The World Gold Council called Asia “the engine of price support.”

"Interestingly, intraday analysis suggests that the bulk of gold’s movements have been linked to activity during Asian and U.S. trading hours. Many of the pullbacks occurred during US hours and, conversely, gold’s rebounds generally occurred during Asian hours."

It will be interesting to see what happens when Western investors figure out what the Asians see in gold.

Bipartisan SILVER Act Gains Strong Momentum in Congress as Lawmakers Eye National Defense Bill

Thu, 12 Nov 2026 00:00:00 EST

WASHINGTON, D.C. (November 12, 2026) — The bipartisan SILVER Act is gaining momentum with the addition of a dozen more House and Senate cosponsors as an effort gets underway to incorporate the commonsense legislation into the National Defense Authorization Act (NDAA) during the lame-duck session.

The System Integrity through Licensed Vault Expansion and Resilience (SILVER) Act (S. 4621 and H.R. 8007) would address a longstanding national security and supply chain vulnerability in America's precious metals markets: the extraordinary geographic concentration of exchange-approved depositories for https://www.moneymetals.com/gold-price";>gold, silver, platinum, and palladium in and around New York City.

The legislation is also drawing growing support from the https://www.moneymetals.com/uploads/content/SILVER-Act-Industry-Coalition-Letter-6-11-26.pdf";>Precious Metals Industry Coalition for Market Security & Access, whose members span every major segment of the nation's precious metals supply chain, e.g., wholesale and retail distributors, mints, depositories, banks, refineries, mining companies, and industry trade groups.

The SILVER Act was introduced in the Senate by Jim Risch (R-ID) and Catherine Cortez Masto (D-NV), and has attracted additional support from important Senate cosponsors such as Senators Mike Crapo (R-ID), Jacky Rosen (D-NV), Ted Budd (R-NC), Mike Lee (R-UT), and Cynthia Lummis (R-WY).

In the House, the legislation was introduced by Rep. Russ Fulcher (R-ID) and has received formal support from other key cosponsors, including Reps. Mark Harris (R-NC), Susie Lee (D-NV), Mary Miller (R-IL), Mark Amodei (R-NV), Shri Thanedar (D-MI), Harriet Hageman (R-WY), John Rose (R-TN), Addison McDowell (R-NC), Tim Moore (R-NC), Pete Sessions (R-TX), Michael Cloud (R-TX), and Pat Harrigan (R-NC).

The expanding bipartisan and bicameral support comes as Congress prepares to address national defense priorities that include vulnerabilities in critical mineral supply chains and financial market infrastructure.

National Security Concerns Drive NDAA Effort

Lawmakers are embracing the SILVER Act because they recognize that a single terrorist attack, natural disaster, cyber incident, or major infrastructure failure in the New York region could severely disrupt precious metals delivery and settlement functions, with potentially far-reaching consequences for financial markets and critical supply chains.

Gold, silver, platinum, and palladium are not merely investment assets but also essential materials used in electronics, aerospace, energy systems, medical technologies, and defense manufacturing, which is why supporters of the SILVER Act highlight that geographically diversified storage and delivery infrastructure is essential for American national security and financial stability.

Current exchange practices reflect an outdated framework dating back to the 1970s, when precious metals trading and settlement relied heavily on physical paperwork, countersignatures, and proximity to New York’s financial markets. Despite significant advances in technology, logistics, and market infrastructure, depositories serving federally regulated precious metals futures markets remain concentrated in and around New York City, underscoring the need to modernize longstanding exchange practices.

"Congress has an opportunity through the National Defense Authorization Act to address a glaring vulnerability in our nation's financial infrastructure while promoting competition, reducing costs, and strengthening domestic supply chains," said Stefan Gleason, Chief Executive Officer of https://www.moneymetals.com/silver-gold-storage";>Money Metals Depository and a member of the industry coalition.

SILVER Act Corrects Outdated Exception to Established Commodity Market Practices

Unlike other commodity futures markets, including agricultural products and base metals that already use geographically dispersed delivery facilities to ensure safer and more efficient operations, precious metals depositories remain heavily concentrated in and around New York.

This concentration departs from established commodity market practices and raises concerns about competition, supply chain resilience, operational disruptions, and national security, particularly given the importance of precious metals to financial markets as well as defense and critical industries.

The SILVER Act would address this disparity by requiring systemically important derivatives clearing organizations to establish objective approval standards and transparent application procedures that provide for the inclusion of qualified depositories across the nation's four continental time zones.

The legislation would not guarantee approval of any depository or dictate where metals must be stored. Instead, it would simply expand opportunities for qualified facilities that meet rigorous security, operational, and financial safeguards to provide services to commodity futures markets.

Industry Support for SILVER Act Spans Entire Precious Metals Supply Chain

The growing congressional support is matched by an expanding industry coalition representing businesses across the full spectrum of precious metals production, processing, distribution, financing, storage, and risk management.

Coalition members include major national bullion dealers, commercial depositories, precious metals refiners, private mints, mining-related companies, banks, logistics providers, insurers, financing companies, and industry trade associations.

The Coalition’s membership extends across the entire country, from the Northeast and Southeast to the Midwest, Texas, Mountain West, and Pacific states, reflecting the broad geographic reach of America’s precious metals industry and its diverse stakeholders specializing in mining, refining, minting, manufacturing, trading, and storage infrastructure.

"We have competing businesses from across the precious metals industry coming together behind the https://www.soundmoneydefense.org/news/2026/11/09/jp-cortez-discusses-the-silver-act-gold-repatriation-and-sound-money-victories-000703"; target="_blank" rel="noopener">SILVER Act because these outdated geographic restrictions are driving up costs, limiting competition, and creating unnecessary risks for everyone throughout the country," said Steven Reiner, Executive Vice President of Gold.com, a publicly listed (NYSE: “GOLD”), Fortune 500 company with substantial precious metal operations (including wholesale distribution, DTC retail, finance, minting and depositories) throughout North America, Europe and Asia.

https://www.moneymetals.com/uploads/content/SILVER-Act-Industry-Coalition-Letter-6-11-26.pdf";>In its letter to Congress, the industry coalition warned that the existing geographic restrictions also discourage investment in precious metals infrastructure outside the New York region, suppress competition, increase transportation and storage costs, and limit physical market liquidity.

CFTC Chairman Welcomes Attention to Geographic Concentration Risks

The legislation has also received favorable attention from the Commodity Futures Trading Commission (CFTC), the federal regulator responsible for overseeing U.S. commodity derivatives markets.

During an April House Agriculture Committee hearing, CFTC Chairman Michael Selig acknowledged the importance of evaluating concentration risks in precious metals delivery infrastructure and welcomed congressional attention to the issue.

"We applaud your leadership on this issue, and we'd be happy to work with your office on it," Selig told Rep. Mark Harris.

The Treasury Department’s Financial Stability Oversight Council (FSOC) has designated certain derivatives clearing organizations as Systemically Important Financial Market Utilities (SIFMUs), reflecting their critical role in the U.S. financial system.

Often characterized as “too big to fail,” these entities are subject to heightened risk management standards, including expectations to address geographic concentration risks arising from critical market infrastructure clustered in a single region.

Since SIFMUs are foundational to the American financial system, they may qualify for special government privileges, including access to Federal Reserve services and emergency liquidity assistance. These potential benefits further underscore the importance of addressing geographic concentration risks that could threaten financial stability and increase taxpayer exposure during a crisis.

"Clearing organizations that benefit from special government privileges certainly have an obligation to address known risks, including those targeted by the SILVER Act," concluded Gleason.

Can Debt-Riddled American Consumers Stomach Another Fed Rate Hike?

Thu, 12 Nov 2026 00:00:00 EST

Everybody is convinced that the Federal Reserve will raise interest rates again in December. With https://www.moneymetals.com/news/2026/11/10/beyond-the-cpi-the-complete-inflation-story-october-2026-005362";>October’s hot CPI print, some analysts even think the central bank will bump rates by 50 basis points.

Meanwhile, Americans are leaning on high-interest credit cards to make ends meet as rising prices strain budgets.

One has to wonder how long consumers can hold out as the central bank pushes their borrowing costs even higher.

This raises a question: can American consumers stomach more rate hikes?

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Gasoline prices skyrocketed 9.1 percent, driving the CPI up by 0.6 percent in September. Americans apparently coped with this sudden price surge by running up their credit cards.

Consumer debt surged by $27.84 billion in September, a 6.4 percent increase, according to https://www.federalreserve.gov/releases/g19/current/"; target="_blank" rel="noopener">the latest Federal Reserve data.

Americans are currently buried under $5.22 trillion in consumer debt.

The Federal Reserve consumer debt figures include credit card debt, student loans, and auto loans, but not mortgages. When you include mortgages, U.S. households are buried under record debt levels. As of the end of Q3 2026, https://www.newyorkfed.org/microeconomics/hhdc"; target="_blank" rel="noopener">total household debt stood at $19.105 trillion.

Revolving debt, primarily reflecting credit card balances, grew by $16.3 billion, a 14.5 percent increase. It was the biggest jump in revolving debt since 2022.

Non-revolving debt now stands at $1.37 trillion.

Non-revolving credit grew more modestly in September, rising by 11.54 billion, a 3.6 percent increase. This reflects borrowing for automobiles, student loans, and other big-ticket items.

Non-revolving credit growth has been tepid for a couple of years. It averaged around 5 percent before the pandemic but has averaged between 2 and 3 percent in recent months. Non-revolving credit growth indicates that consumers have cut back on big-ticket spending to cover the surging cost of day-to-day necessities.

Many analysts claim the big jump in credit card spending proves the resiliency of the American consumer. And while that is plausible, it more likely signals desperation. With gasoline suddenly 9 percent more expensive and other prices rising as well, Americans were forced to turn to Visa and Mastercard to make ends meet.

We’ve seen this pattern repeat multiple times over the last several years. Credit card borrowing surges along with price inflation. As price inflation moderates, consumers try to slow spending and pay down balances, only to be hit by another wave of price inflation.

Flush with stimulus and locked in their homes during the pandemic, Americans paid down credit card debt and built up savings. When the post-COVID inflation wave hit, consumers burned through that savings and turned to plastic. Credit card balances surged as Americans coped with rapidly rising prices. However, credit card spending began slowing in late 2024.

Over the last two years, credit card spending has trended lower, signaling credit stress. But we still see occasional surges in credit card use, generally corresponding with price shocks.

A healthy economy doesn’t run on credit cards. They have this inconvenient thing called a limit. At some point, Americans will hit that limit.

American consumers who lean on credit cards face a double whammy from rising debt and interest rates. https://www.bankrate.com/credit-cards/advice/current-interest-rates/"; target="_blank" rel="noopener">The average annual percentage rate (APR) currently stands at 19.71 percent, with some companies still charging rates as high as 28 percent. The average is only slightly down from the record high of 20.79 percent set in August 2024.

A Big Problem for the Federal Reserve

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This brings us back to those rate hikes.

There is a strong case for raising interest rates given persistent inflation. But there is also a case for rate cuts given $1.4 trillion in revolving credit. Every time the interest rate nudges higher, credit card payments creep up right along with it.

On top of that, the federal government is drowning under $40.5 trillion in debt, and its interest costs have eclipsed $1 trillion annually. Uncle Sam pays more interest expense each month than it spends on national defense.

Meanwhile, corporations are leveraged to the hilt.

Most analysts seem to forget this massive https://www.moneymetals.com/news/2025/11/15/debt-black-hole-putting-increasing-stress-on-american-consumers-004483";>Debt Black Hole when they forecast a higher-interest-rate environment over the longer term. At some point, higher rates will pop the debt bubble, and the economy will roll over.

The bottom line is an economy built on debt and addicted to easy money doesn’t function in a higher-interest-rate environment.

Simply put, the Federal Reserve is in https://www.moneymetals.com/news/2026/03/19/gold-the-federal-reserve-and-a-catch-22-004773";>a Catch-22 and has been for months. It needs to cut rates to support the debt bubble, and it needs to raise rates to slay price inflation. It can’t do both,

If you wonder why the Fed has slow-walked rate hikes despite CPI remaining above the mythical 2 percent target for 68 months, look no further than the debt black hole. The central bankers over at the Fed won’t say it out loud, but they know every upward nudge to interest rates increases the risk of an economic crash and a financial crisis.

The Fed may well raise rates in December. It may even go “big” with a 50-basis-point hike. But it’s only a matter of time before the wheels fall off and the Fed is cutting. I think 0 percent rates in a year are far more likely than 5 percent.

Keep this in mind when you’re tempted to sell gold because yields are rising.

Gold Is Falling on Hot Inflation, But Can the Fed Keep Raising Rates?

Thu, 12 Nov 2026 00:00:00 EST

Hot inflation is usually seen as bad news for gold. When prices rise faster than expected, investors anticipate higher interest rates, which can pressure gold and silver. But on the latest Money Metals Midweek Memo, host Mike Maharrey argued that markets may be overlooking a bigger question. Can the Federal Reserve keep raising rates when government debt already exceeds $40 trillion?

Maharrey’s answer is doubtful. He believes the Fed is caught between fighting inflation and protecting a debt-heavy economy, and that the tension could eventually bring rate cuts and renewed money creation, even as inflation persists.

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Hot CPI Data Keeps Rate Hike Fears Alive

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The https://www.moneymetals.com/news/2026/11/10/beyond-the-cpi-the-complete-inflation-story-october-2026-005362";>latest Consumer Price Index report showed prices rising 0.4% in October, above the 0.3% forecast. Core CPI, which excludes food and energy, increased 0.3%, also above expectations of 0.2%. It was the third consecutive month with a 0.3% core increase, a pace that annualizes to about 3.7%.

The Bureau of Labor Statistics did not publish a year-over-year CPI comparison because the government shutdown prevented it from releasing an October report the previous year. Monthly figures nevertheless showed price pressure across several categories.

Energy prices rose 0.7% in October after jumping 5.2% in September. Gasoline climbed another 1%, following a 9.3% increase the month before. Shelter rose 0.3%, while food prices gained 0.5%. Beef increased 0.9%, snacks 1%, and poultry, fish, and eggs 0.5%. Transportation services rose 0.8%, and new vehicle prices increased 0.2%.

Maharrey said the report helps explain why investors expect more Fed rate hikes and why gold recently came under pressure. But he argued that CPI captures only changes in consumer prices, not the full picture of inflation.

Money Supply Growth Points to More Inflation

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Maharrey focused on the growth of the M2 money supply, describing monetary inflation as an increase in the supply of money and credit. From September 2025 to September 2026, he said, M2 climbed from $22.15 trillion to $23.41 trillion, an annual increase of 5.7%.

The money supply grew by $13 billion in September. So far in 2026, it has increased by an average of $136 billion per month, 89% more than the average monthly increase in 2025. Maharrey warned that monetary expansion may eventually push consumer prices higher or appear in asset prices such as stocks and real estate.

He also pointed to the Federal Reserve’s balance sheet, which began rising again in December 2025. It increased by about $5 billion in October and stood at $212.4 billion above its December 1 low. Maharrey characterized the Fed’s bond purchases as quantitative easing, arguing that they add money to the economy and help hold down government borrowing costs.

The Chicago Fed’s National Financial Conditions Index added another piece to his case. For the week ending October 30, the index stood at negative 0.45, which Maharrey said signaled historically loose financial conditions. It never turned positive during the Fed’s tightening cycle. Its high was 0.09 in October 2022.

The Fed’s Rate Hike Dilemma

Hot CPI data has fueled expectations of another rate hike in December, with some analysts discussing a possible 50-basis-point increase. Maharrey considered a 25-basis-point hike more likely, though he said stronger employment data could raise the possibility of a larger move.

But he questioned whether rate hikes can meaningfully slow inflation while money-supply growth and the Fed’s balance sheet continue to expand. Higher interest rates could also strain the government and broader economy, given the https://www.moneymetals.com/news/2026/10/29/fed-hits-pause-button-announces-new-meeting-format-005329";>more than $40 trillion national debt and rising borrowing costs.

Maharrey described the Fed as caught in a policy trap. It could raise rates to fight inflation, but doing so risks recession or financial instability. If a crisis follows, he expects the Fed to cut rates and expand its balance sheet to support the economy, even if that means accepting more inflation.

He also doubted that new Fed leadership would allow a deep economic downturn in pursuit of lower inflation. In his view, central bankers have repeatedly chosen easier money when financial stress threatens the economy.

Why Gold Is Falling and Why Maharrey Sees Opportunity

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Gold had climbed back above $4,100 https://www.moneymetals.com/news/2026/11/05/why-gold-crashed-below-4000-and-what-the-feds-rate-pause-means-for-gold-and-silver-005344";>after dropping below $4,000 in the weeks before the midterm elections. As Maharrey prepared the episode, gold was down about $120 and nearing https://www.moneymetals.com/gold-price";>the $4,000 level again. He said a move below $4,000 would not surprise him.

The immediate pressure came from expectations of higher interest rates, which can weigh on gold because it does not pay interest. Maharrey argued, however, that investors may be focusing too closely on rate forecasts and the latest headlines while overlooking the longer-term risks of money creation, debt, and currency debasement.

Even if the Fed managed to control inflation without triggering a crisis, Maharrey said, cash would continue to lose purchasing power. At 2% annual inflation, money loses more than 10% of its purchasing power over five years. He presented physical gold and silver as potential long-term hedges against that erosion.

The episode also highlighted a Money Metals offer on https://www.moneymetals.com/1-oz-american-silver-eagle-random-year/262";>American Silver Eagles at $7.97 over melt value. Maharrey described the coins as .999 fine silver, with their weight and purity backed by the U.S. government. He also cited a report that about 60% of Paraguay’s population could not access their https://www.moneymetals.com/news/2026/11/09/paraguay-banking-crisis-a-lesson-in-counterparty-risk-005353";>money during a banking crisis, arguing that physical silver can provide a backup when electronic banking is unavailable.

Midterm Elections Add to Gold and Silver Uncertainty

Maharrey said Democrats had won control of https://www.moneymetals.com/news/2026/11/05/what-does-the-blue-wave-mean-for-gold-and-silver-005347";>both chambers of Congress, with some races still outstanding. He cited a 54–44 Democratic advantage in the Senate and a 254–165 lead in the House. He expected divided government, with President Donald Trump able to veto legislation and Congress able to constrain parts of his agenda.

Gold and silver https://www.moneymetals.com/news/2026/11/09/the-precious-metals-sectors-impressive-relative-breakout-and-what-it-portends-005355";>rose after the election results. Gold recovered above $4,000, and silver climbed above $53 an ounce. Maharrey cautioned that these post-election market moves may be short-lived.

Citing the World Gold Council, he said the election’s lasting effect on gold will depend on whether policy changes are significant enough to outweigh broader global forces. He also referenced Metal Focus, which described the results as a new source of uncertainty for precious metals.

Congressional gridlock could limit additional fiscal stimulus and temper expectations for further rate hikes, potentially supporting gold. But continued government borrowing could keep long-term yields high, while slower growth could weaken industrial demand for silver and platinum-group metals.

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Maharrey said meaningful deficit reduction remains unlikely given existing spending commitments, rising interest costs, and the difficulty of agreeing on tax increases or spending cuts. He also discussed the ongoing U.S.–Iran war, saying its direction could affect inflation expectations, interest rates, and precious metals. An escalation could intensify inflation concerns and rate pressure, while a lasting resolution could remove some headwinds for gold and silver.

Maharrey’s Gold and Silver Outlook

Maharrey described himself as short-term and midterm bearish on gold and silver. He said the metals could remain under pressure until the war’s direction becomes clearer or markets recognize that the Fed may be unable to keep raising interest rates. Still, he viewed lower prices as a potential buying opportunity for long-term investors.

His central argument is that inflationary pressure is likely to persist because of money-supply growth, government debt, and the Fed’s response to financial stress. He sees physical gold and silver as potential https://www.moneymetals.com/programs/monthly-program";>hedges against currency debasement and useful parts of a broader investment strategy, while cautioning against putting everything into precious metals.

What Is Gresham’s Law? The Truth Behind “Bad Money Drives Out Good”

Wed, 11 Nov 2026 00:00:00 EST

If you were to ask someone, “What is Gresham’s Law?”, their answer, if they give one at all, will probably be “Bad money drives out good money.” This is not Gresham’s Law.

Gresham’s Law holds that when two or more currencies are held by law to be equal when they are not, then people will purchase the undervalued currency with the overvalued currency, and they will hoard the undervalued and spend the overvalued. This leads the undervalued to disappear from circulation, and the overvalued to dominate.

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The https://www.investopedia.com/terms/g/greshams-law.asp"; target="_blank" rel="noopener">familiar version of Gresham’s Law implies that people use bad currency for the sake of it being a bad currency, as if people were irrational, but people are rational. The real Gresham’s Law gives a rationale for why bad currencies sometimes dominate.

Bad money dominates because of government-determined rates of exchange that depart from the market rate of exchange. If you remove the government-determined exchange rates, the familiar version of Gresham’s Law—that the bad drives out the good—no longer holds. There simply would be no incentive to hoard the undervalued money.

An implication of this is that the fiat dollar in the US is not the bad money in Gresham’s Law. It may be bad for many reasons—not backed by a commodity, controlled by a central authority, monopolized—but it is not necessarily bad in the Gresham’s Law sense. It would be bad in the Gresham’s Law sense if the government determined exchange rates between the USD and other fiat monies. The value of monetary metals such as gold and silver freely fluctuates against the USD.

Where does Gresham’s Law matter?

It matters in foreign exchange markets where the US government and foreign powers seek to establish exchange rates between currencies.

Gresham’s Law also helps explain why we do not find https://www.moneymetals.com/bullion/what-is-junk-silver";>silver quarters or dollars anymore. For example, a silver quarter has an equal face value to modern quarters, which have zero silver content. The government has effectively established an exchange rate between silver quarters and the material in modern quarters. The silver quarter is undervalued in this case. People hoard the silver quarters by buying them with modern quarters, and the silver quarters disappear from circulation. This might theoretically happen with copper pennies as well, but the cost of searching for copper pennies likely outweighs the minuscule benefit of acquiring the copper.

What other common errors do people make about Gresham’s Law? Some economists make Gresham’s Law about asymmetric information. Asymmetric information occurs when one party of an exchange knows more than the other person. Economist George Akerlof used Gresham’s Law as an analogy for his famous https://www.sfu.ca/~allen/Ackerlof.pdf"; target="_blank" rel="noopener">market for lemons.

In the market for lemons paper, Akerlof runs through a hypothetical where bad cars (lemons) drive down the average quality of cars, and when there is asymmetric information, the bad cars drive down the price, and the owners of good cars take their cars off the market.

As a result, the average quality of cars falls, and the process repeats until there are only lemons on the market. In this case, bad cars drove out the good because of imperfect information.

Akerlof recognizes that this is not actually Gresham’s Law because, as he notes, the “buyer and seller can tell the difference between good and bad money.”

Despite Akerlof making this caveat, other economists have https://www.jstor.org/stable/30022760"; target="_blank" rel="noopener">referred to Akerlof’s paper as “the generalization of Gresham’s law” (emphasis mine).

Why is this important?

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It is important because ignorance does not lead bad money to drive out good money. Holders of money are being completely rational. In Gresham’s Law, they are responding to government policy. It may be the case that if the quality of money is unknown, and if so, then lower-quality money dominates precisely because of Akerlof’s point, but this is different from Gresham’s Law.

The two misconceptions covered above, that (1) bad money (unconditionally) drives out good and that (2) Gresham’s Law is an ignorance problem, contribute to broader misconceptions about consumer behavior in the market. It contributes to the misconception that consumers are irrational or ignorant, especially in the market for money, and require government assistance. Combating these two misconceptions is necessary for avoiding this greater error of government meddling in the market for money.

If we do not want “bad money to drive out good,” then we must avoid any and all regulations that impose a rate of exchange on monies/currencies. Consumers are perfectly capable of selecting good money. Without government exchange rates, they have less of an incentive to select the bad.

How can we escape the regime of bad money we are currently in?

Without government meddling in general, fiat money will be abandoned for money that has some backing of gold and silver. We must eliminate laws that establish a monetary monopoly. Under a metal-backed currency, we must be further vigilant against attempts to devalue this currency through debasement.

Inflation Heats Up and It's Worse Than You Think!

Wed, 11 Nov 2026 00:00:00 EST

The October CPI came in hot.

Unsurprisingly, gold and silver sold off on the news, as expectations for further Federal Reserve rate hikes increased.

In this episode of the Midweek Memo podcast, host Mike Maharrey argues that the inflation picture is even worse than the CPI reveals and provides additional data to support the claim. But he doesn't think this is necessarily bearish for precious metals in the long term, and he explains why.

In this episode, Mike also speculates on how the shift in political power in Washington, D.C. may impact the gold and silver markets.

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Mike opens the show by remembering the Soviet Union.

"I was a Cold War kid. I was taught to hate and fear the mighty Soviet Union. When I think back to the late 70s and early 80s, it was just a given that the Soviets were a threat. It was a powerful bloc. A force to be reckoned with. And then, almost overnight, it was gone.

"For you younger folks, trust me when I tell you virtually nobody foresaw the rapid collapse of the Soviet empire. Even into the late 80s, we couldn’t imagine a world without an Iron Curtain. And then the Berlin Wall came down, and the rest of the Soviet Bloc soon crumbled right along with it.

"I kind of feel like there is a similar dynamic in play today when it comes to interest rates. Everybody is certain that the Fed is going to hike. Nobody can imagine a scenario where the central bank is cutting rates in the next few years. But I think rate cuts are a lot closer than most people imagine. And no, it’s not because I think the Fed is going to win the inflation fight. Quite the opposite – I think the Fed surrendered to inflation a long time ago."

Mike notes that inflation has been above the Fed's 2 percent target for 68 straight months.

"That’s 5.6 years for folks like me who struggle to do math in their head."

Persistent inflation and expectations of a more aggressive Fed fight have been headwinds for gold and silver for months, and they sold off yet again after the October CPI came in hotter than expected.

"Make no mistake, inflation did come in hot. In fact, it’s worse than the CPI indicates. Today, we’re going to take a deep dive into the inflation story."

Mike sets the stage by pointing out that gold got a boost from the midterm election results.

"After falling below the $4,000 support the prior week, the yellow metal recovered that level and moved above $4,100. But as I’m prepping for the show early Tuesday afternoon, gold is down $120 and getting close to challenging that support again. I’m going to record the show early because I have an appointment tomorrow morning, but I would not be at all surprised if we’re back to sub-$4,000 gold when you listen to this show."

Mike asserts that interest rate expectations have driven persistent gold market bearishness over the last several months.

"The Fed has a job to do. And it’s about to step up to the plate and get it done. Is it, though? I mean, there’s been an inflation problem for over five years. They haven’t dealt with it yet."

However, the markets aren't wrong about inflation. It's elevated and seems to be accelerating.

"But the fact is the Fed’s hands are tied by more than 40-trillion ropes. Of course, I’m talking about the national debt – and more generally the broader Debt Black Hole. It’s tied the Fed’s hands nicely. They’ll never say it out loud, but the central bankers are well aware of their Catch-22. Their actions reveal this, even as they try to talk their way around it."

Mike says the inflation situation is even worse than the CPI indicates.

"The CPI captures past monetary inflation in the economy, but it can’t predict inflation's trajectory. That means we need to consider other metrics to understand the entire inflation story. With that in mind, I publish a more comprehensive inflation report each month using four metrics – CPI, changes in the M2 money supply, changes in the Federal Reserve balance sheet, and the Chicago Fed National Financial Conditions Index."

!!--Product-Random-Best-All--!!

Mike runs through the data, showing that every metric points to more inflationary pressure in the pipeline. The money supply is increasing by 5.6 percent annually. Meanwhile, the Federal Reserve is running https://youtu.be/ipaQAgOCJBk"; target="_blank" rel="noopener">quantitative easing (QE).

"I can’t overstate the fact that the Fed is easing monetary policy through its balance sheet operations, even as it claims to be fighting inflation. Sure, the balance sheet increase is modest. But if you’re serious about an inflation fight, why isn’t the balance sheet shrinking?"

Mike points out that there is no indication inflation will ease anytime soon. That's because https://www.moneymetals.com/news/2024/02/15/the-fed-hasnt-done-enough-to-beat-price-inflation-002991";>the central bank never did enough to slay the inflation dragon.

Now, everybody expects the Fed to go all-in on the inflation fight. Some analysts now think the central bank will hike by 50 basis points in December. But Mike says it's not that simple.

"Don’t forget that a massive https://www.moneymetals.com/news/2025/11/15/debt-black-hole-putting-increasing-stress-on-american-consumers-004483";>Debt Black Hole restrains the Fed. The central bankers may want to hike aggressively, but they know an economy supported by debt won’t do well in a higher-interest-rate environment. The Fed is in https://www.moneymetals.com/news/2026/03/19/gold-the-federal-reserve-and-a-catch-22-004773";>a Catch-22. It needs to raise rates. The inflation data makes that clear. But one could also argue for rate cuts given the debt. This is why the Fed has tried to walk a tightrope by raising rates – but not too much. In all likelihood, the Fed will hike by 25 basis points in December and continue with its hawkish stance. However, another small rate hike won’t be enough to stop money supply growth nearing 6 percent. It won’t stop Fed money printing. But it may be enough to pop the debt bubble."

Mike says at this point, "All roads lead to inflation."

"So, why are investors selling their inflation hedge? Because they are tunnel-visioned on the current situation and they can’t seem to see past the latest headlines. I mean, I get it. I can’t expect the markets to respond to my macro theorizing. However, if your investment horizon is longer than about three weeks, you probably should take some macro theorizing into account. And even if you believe that the Fed can walk this tightrope, get inflation under control, and keep the economy from imploding under the influence of the Debt Black Hole, you still have to remember that inflation is the plan. Even if they get it right, your money is losing more than 10 percent of its purchasing power every five years."

Mike wraps up the show speculating on how the midterm "Blue Wave" might impact the gold and silver markets.

In a word -- gridlock.

"The bottom line is that we can expect more policy uncertainty in the weeks and months ahead. There will be a lot of bickering and arguing, but how much actually gets done remains to be seen.

"Probably not much.

"That means the Fed and the aforementioned macro environment will continue to be the primary drivers for the gold and silver markets. And as I already said, all roads ultimately lead to inflation."

Mike ends the show with a call to action, urging listeners to protect their wealth from currency debasement with gold and silver by calling 800-800-1865 and talking with a Money Metals precious metals specialist today.

Articles Mentioned During the Show

https://www.moneymetals.com/news/2026/11/09/paraguay-banking-crisis-a-lesson-in-counterparty-risk-005353";>Paraguay Banking Crisis: A Lesson in Counterparty Risk

https://youtu.be/lmvFyBBJORM?si=ldGhbPRTcU1ypPp0"; target="_blank" rel="noopener">Inflation Properly Defined

What Is Bimetallism - Bimetallic Standard, Coinage Act of 1792, and the 15 to 1 Legal Ratio - Gresham’s Law, the 1834 Ratio Change, and Why It Ended - Money Metals

Tue, 10 Nov 2026 00:00:00 EST

Bimetallism is a money system that defines a currency in fixed weights of both gold and silver. Under this system, the gold-silver ratio is set by law. In a bimetallic system, anyone can have either metal made into coins, and both coins count as legal tender money.

The United States operated under a bimetallic system from 1792 until 1873. Many readers find the idea of two metals to be intuitive. Indeed, many nations operated under a similar system at the time. That leads to an obvious question: why was the system abandoned?

The short answer is that a ratio set by law can’t keep up with a continuously moving market. This guide covers how the system worked, why it broke, and when it ended.

Keep in mind that bimetallism is not the same thing as the gold standard: in fact, the gold standard is what replaced our bimetallic system. Under bimetallism, both metals backed the dollar. Under the gold standard, only gold did. Our https://www.moneymetals.com/guides/shell-game-how-americas-money-devolved-from-gold-to-fiat";>guide to the gold standard covers how it worked, through Bretton Woods, and why it ended.

What Is Bimetallism?

Bimetallism (or bimetalism, as it is sometimes spelled) has three working parts. If you remove any of these factors, the system stops being bimetallic.

A legal ratio. The law determines how much silver equals one unit of gold in value.
Free coinage of both metals. Anyone can bring gold or silver to the mint and have it struck into coins.
Legal tender for both. Gold coins and silver coins both settle debts at face value.

The most important factor in this list is the second one. Under the https://www.usmint.gov/learn/history/historical-documents/coinage-act-of-april-2-1792";>Coinage Act of 1792, the law stated “it shall be lawful for any person or persons to bring to the said mint gold and silver bullion” to be coined. Anybody from any walk of life could walk into the Mint with metal and leave with money for little or no charge. That open door of exchange is what tied the value of coins to the value of the metal inside them.

Bimetallism vs. the Gold Standard vs. a Silver Standard

The three systems differ in how many metals back the currency. The table below shows how they all compare.

	Bimetallism	Gold Standard	Silver Standard
Metals that define the currency	Gold and silver	Gold only	Silver only
Needs a legal ratio between metals	Yes	No	No
What tends to circulate	Whichever metal the law overvalues	Gold coins and paper backed by gold	Silver coins and paper backed by silver
U.S. example	1792 to 1873	1900 to 1933 (in law)	None as a formal system

A bimetallic standard is simply another name for bimetallism. For the later system, see our https://www.moneymetals.com/guides/shell-game-how-americas-money-devolved-from-gold-to-fiat";>guide to the gold standard. For what counted as coin money, see https://www.moneymetals.com/news/2023/08/17/specie-money-the-forgotten-currency-002797";>what is specie.

Bimetallism vs. Bimetallic Coins

The word “bimetallic” has a second meaning. A bimetallic coin is a single coin made of two metals, such as a coin with a gold-colored ring surrounding a silver-colored center. The 2 euro coin is a common example. Those coins have nothing to do with bimetallism as a money system. This guide covers the money system only.

The Coinage Act of 1792: How the U.S. Set Its First Legal Ratio

The 1792 Act grew out of an economic plan devised by Treasury Secretary Alexander Hamilton. In his https://founders.archives.gov/documents/Hamilton/01-07-02-0334-0004";>Report on the Establishment of a Mint (January 28, 1791), Hamilton argued against choosing a single metal to back the currency.

In his words, “To annul the use of either of the metals, as money, is to abridge the quantity of circulating medium.” Put a little more simply, using one metal would necessarily shrink the money supply.

Hamilton also tracked how the market was moving. He found that the ratio between the two metals in the United States was “about as 1 to 15.” Congress wrote that figure into law.

You can see the exact wording in Section 11 of the https://www.usmint.gov/learn/history/historical-documents/coinage-act-of-april-2-1792";>Coinage Act of April 2, 1792, which states that the ratio of gold to silver “shall be as fifteen to one, according to quantity in weight, of pure gold or pure silver.” In other words, the legal ratio was 15 to 1. Today, the ratio fluctuates more: we track how that ratio has moved since 1792 in our https://www.moneymetals.com/gold-silver-ratio";>guide to the gold-silver ratio.

How the Coin Weights Produced the Ratio

The ratio was not just a sentence in the law. It was built into the coins themselves. You can check it with simple math using the weights in https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=23#book-reader";>Section 9 of the Act.

Coin	Value	Pure metal	Pure metal per dollar
Silver dollar	$1	371 4/16 grains of silver	371.25 grains of silver
Gold eagle	$10	247 4/8 grains of gold	24.75 grains of gold

Divide 371.25 by 24.75 and you get exactly 15. One dollar in silver held 15 times as much metal by weight as one dollar in gold.

A Common Error About the 1792 Ratio

Some summaries, including AI-generated answers, say the 1792 Act set a ratio of “15:1 or 16:1.” That is not what the law says, however. The 1792 statute names one ratio, and it names it explicitly in Section 11. The ratio did increase, but that did not happen until 42 years later. The change came from new coin weights, not from any ratio clause.

Gresham’s Law: Why One Metal Always Disappeared

https://www.britannica.com/money/Greshams-law";>Gresham’s law identifies the weakness that is inherent in a bimetallic system. The law says “bad money drives out good.”

When two coins have the same face value, but their metal is worth different amounts, people spend the cheaper coin and hoard the more expensive one. Other times, they melt it or ship it abroad to profit on the coin’s metal.

The law is named after Sir Thomas Gresham, a financial agent and advisor to Queen Elizabeth I. Under bimetallism, it works like this:

The law fixes the ratio between gold and silver.
The market ratio moves as mines open, trade shifts, and other nations change their own rules.
One metal is now worth more as bullion than as coin. That is the “good” money.
People melt or export the good money and spend the “bad” money.
Only one metal stays in circulation, even though the law still allows both.

In other words, a bimetallic system often ends up working like a single-metal system in practice. The only difference is which metal becomes the dominant one.

Gresham’s Law in Action: Gold Leaves America

The U.S. did not set its ratio in a vacuum. Starting in 1803, France valued https://en.wikipedia.org/wiki/Latin_Monetary_Union";>gold and silver at 15.5 to 1, and silver kept losing value in world markets. Gold was worth more abroad than the U.S. Mint paid for it.

The result was what Gresham’s law predicts. U.S. gold coins left the country or went into the melting pot. Economist J. Laurence Laughlin, in https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=5#book-reader";>The History of Bimetallism in the United States, cites a report that “gold had disappeared from circulation by 1818.” For years, Americans used silver coins, foreign coins, and bank notes. The country was bimetallic on paper and on silver in practice.

The 1834 Act: A Lighter Gold Eagle and a New Ratio

Congress tried to bring gold back into everyday circulation. The https://govinfo.gov/link/statute/4/699";>Act of June 28, 1834 changed the weight of the gold eagle. It did not change the silver dollar.

The 1834 Act cut the gold eagle to 232 grains, and that put the legal ratio at about 16 to 1. The math works the same way as before:

Coin	Value	Pure metal	Pure metal per dollar
Silver dollar (unchanged)	$1	371.25 grains of silver	371.25 grains of silver
Gold eagle (1834)	$10	232 grains of gold	23.2 grains of gold

Divide 371.25 by 23.2 and you get 16.0. Note that the 1834 statute contains no ratio clause. The new ratio came from the coin weights alone. A follow-up law, the https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=23#book-reader";>Act of January 18, 1837, set U.S. coins at 90% pure metal and fixed the eagle at 258 grains total weight. That left the ratio almost unchanged.

Gresham’s Law in Reverse: Silver Leaves America

The new ratio solved one problem, but it also introduced a new one. Gold was now overvalued at the Mint, so gold flowed in. Silver was now the “good” money.

The shift grew sharper after gold was found in California in 1848. New gold flooded the market and its value fell against silver. https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=7#book-reader";>According to Laughlin, by 1853 a silver dollar held about 104 cents’ worth of metal when measured in gold. As a result, silver coins used for small change “disappeared from circulation.” The result was that many shops struggled to make change for their customers.

Once again, Congress responded by passing a new coinage act. The Act of February 21, 1853 cut the silver in half dimes, dimes, quarters, and half dollars by about 7%. These coins were now worth less as metal than their face value. This move eliminated people’s reason for melting or hoarding the coins.

The Act also limited them to legal tender for debts of $5 or less. Laughlin called the Act “a practical abandonment of the double standard in the United States.” From 1853 on, the United States ran on gold for large payments and token silver for small change.

Bimetallism Outside the United States

The U.S. was not alone. Several European nations ran bimetallic systems in the 1800s, and their choices shaped what happened in America.

France set its ratio at 15.5 to 1 in 1803, under Napoleon. Because France was a large economy, its ratio helped steady world markets for decades.

The Latin Monetary Union formed on https://en.wikipedia.org/wiki/Latin_Monetary_Union";>December 23, 1865. France, Belgium, Italy, and Switzerland agreed to coin gold and silver to shared standards. Greece joined in 1867.

Germany moved the other way. After the Franco-German War of 1870 to 1871, the new German Empire adopted the gold mark through laws passed in 1871 and 1873. Germany then sold off large amounts of silver.

Those sales added to the fall in silver value. In 1874, the Latin Monetary Union agreed to limit how much silver its members would coin, and in 1878 it suspended silver coinage entirely. Some histories end the story of bimetallism with the Franco-German War, since it set off this chain of events. In the United States, though, the story ran longer.

Why Bimetallism Ended

Bimetallism ended for two linked reasons. The first is that Gresham’s law played out; one metal pushed out the other. A fixed legal ratio could never track a moving market for long. Second, once Germany moved to gold, the nation set a trend that many other countries followed. Any nation that stayed bimetallic risked being flooded with cheap silver from everyone else.

In the United States, the end came in two steps.

In 1873, in practice. The https://en.wikipedia.org/wiki/Coinage_Act_of_1873";>Coinage Act of 1873, signed on February 12, 1873, left the standard silver dollar off the list of coins. Silver owners could no longer have their metal struck into full legal tender dollars. That closed the open door of free silver coinage and left gold as the only standard. Silver supporters later called the law the https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=9#book-reader";>Crime of 1873.

In 1900, in law. The https://en.wikipedia.org/wiki/Gold_Standard_Act";>Gold Standard Act of March 14, 1900, made gold the formal standard of value for the dollar.

The years between those dates were not quiet. The free silver movement pushed hard to restore unlimited silver coinage. Congress passed the silver purchase acts, which had the Treasury buy silver without bringing back full bimetallism.

Arguments For and Against Bimetallism

Economists still debate bimetallism. Here are the main arguments on each side.

Arguments For	Arguments Against
Two metals give a larger money supply than one, as Hamilton argued.	A fixed ratio can’t follow the market, so one metal tends to vanish.
Prices may be more stable, since a shortage of one metal can be offset by the other.	Gresham’s law turns the system into a single-metal standard in practice.
A country depends less on the output of gold mines alone.	The system works best only when many large nations use the same ratio.
It kept silver, the metal of everyday trade, in use as money.	Changes to coin weights, as in 1834 and 1853, were needed again and again.

Some economists argue that France’s long run with a steady ratio shows a large enough group of nations could have held bimetallism together. Others argue the system was bound to fail once silver supply and demand shifted. Both views have support in the historical record.

How Bimetallism Connects to Today’s Money

Bimetallism shaped the early U.S. dollar. Its weights defined what a dollar was, and its failures led to the gold standard. The coins it produced were specie, money made of the metal itself.

The relationship between gold and silver did not end with the system. Investors still track how many ounces of silver it takes to buy one ounce of gold. Our https://www.moneymetals.com/gold-silver-ratio";>gold-silver ratio page shows how that ratio compares with the legal ratios of the 1700s and 1800s.

Frequently Asked Questions

Bimetallism is a money system where both gold and silver back the currency. The law sets how much silver equals one unit of gold, and both metals can be made into legal coins.

A bimetallic standard is another name for bimetallism. It means the currency is defined by both gold and silver at a fixed legal ratio.

Yes. Section 11 of the Coinage Act of 1792 set the ratio in plain words. The later 1834 ratio did not appear in the text of that law. It came from a lighter gold eagle. See the sections above for the exact figures.

Gresham’s law says that “bad money drives out good.” When two coins have the same face value but different metal value, people spend the cheaper one and keep or melt the more valuable one.

Fixed legal ratios could not keep up with changes in market conditions and the value of gold and silver. One metal kept leaving circulation. Once major nations such as Germany moved to gold in the 1870s, it became hard for any one country to stay bimetallic.

The Coinage Act of 1873 ended free coinage of the standard silver dollar, which ended bimetallism in practice. The Gold Standard Act of 1900 made gold the legal standard.

No. Bimetallism uses two metals to define the currency. The gold standard uses only gold. The United States moved from bimetallism to the gold standard in the late 1800s.

Conclusion

Bimetallism did not fail because of some flaw in silver and gold. The reason it ultimately failed is that no law can fix a price that the market continues to change. That lesson continues to apply to the https://www.moneymetals.com/gold-silver-ratio";>gold-silver ratio to this day.

The Crime of 1873 - How the Coinage Act of 1873 Ended Free Silver Dollar Coinage - Coins Kept and Dropped, Conspiracy Claims vs the Record, and What Historians Conclude - Money Metals

Tue, 10 Nov 2026 00:00:00 EST

The Coinage Act of 1873 was a law that rewrote the rules for the https://www.govinfo.gov/content/pkg/STATUTE-17/pdf/STATUTE-17-Pg424.pdf";>U.S. Mint. It left the standard silver dollar off the list of coins the Mint could make. That ended the right to bring silver to the Mint and have it made into dollars.

Critics later called that law the “Crime of 1873.” Silver lost value soon after the law passed, and once it took effect, silver owners could no longer turn their metal into money.

Most summaries of this law repeat each other, so this guide goes back to the source. It quotes directly from the text of the law, lists all the coins kept and dropped, and explains why people referred to it as a crime. It also explores what historians and economists think about the law today.

Key facts about the Coinage Act of 1873:

Other names: https://en.wikipedia.org/wiki/Coinage_Act_of_1873";>Mint Act of 1873, Fourth Coinage Act, or the Crime of ’73
Citation: https://www.govinfo.gov/content/pkg/STATUTE-17/pdf/STATUTE-17-Pg424.pdf";>17 Stat. 424, chapter 131 of the 42nd Congress
Signed: https://www.govinfo.gov/content/pkg/STATUTE-17/pdf/STATUTE-17-Pg424.pdf";>February 12, 1873, by President Ulysses S. Grant
In force: https://www.govinfo.gov/content/pkg/STATUTE-17/pdf/STATUTE-17-Pg424.pdf";>April 1, 1873, under Section 65
Written by: Treasury official https://www.ebsco.com/research-starters/history/crime-1873/";>John Jay Knox, with help from Henry Linderman

What the Coinage Act of 1873 Did

The Coinage Act of 1873 was a full rewrite of U.S. mint law, and it ran to https://www.govinfo.gov/content/pkg/STATUTE-17/pdf/STATUTE-17-Pg424.pdf";>more than 60 sections. Most of those sections dealt with how the mints were run. They covered the staff, the testing of metal, and the striking of coins.

Section 1 set up the Mint “as a bureau of the Treasury Department,” with a director based in Washington. Henry Linderman, who helped write the bill, took charge of the new bureau in April 1873.

Three changes mattered most when it came to money in people’s pockets:

The gold dollar became “the unit of value.”
The standard silver dollar was left off the list of coins.
A new silver coin, the trade dollar, was added for trade in Asia.

The rest of this guide explains each of these changes and why they sparked a fight that lasted for decades.

What the Law Actually Says

Few summaries quote the law, yet the change to silver comes down to a handful of short clauses. Here they are, taken from the act as printed in the https://www.govinfo.gov/content/pkg/STATUTE-17/pdf/STATUTE-17-Pg424.pdf";>Statutes at Large.

Section	What the law says	What it meant
1	“the mint of the United States is hereby established as a bureau of the Treasury Department”	The Mint became its own bureau inside the Treasury.
14	A gold “one-dollar piece... shall be the unit of value”	Gold, not silver, now defined the dollar.
15	“a trade-dollar, a half-dollar... a quarter-dollar... a dime”	These were the only silver coins. The standard silver dollar was not on the list.
17	No coins “other than those of the denominations, standards, and weights herein set forth”	The Mint could not make any coin that was left off the list.
21	“no deposit of silver for other coinage shall be received”	Silver owners could get bars or trade dollars, but not standard dollars.
65	“this act shall take effect on the first day of April, eighteen hundred and seventy-three”	The law took effect on April 1, 1873.

Read together, these clauses did the work. No line in the law says that silver is demonetized. Instead, the law left the silver dollar off the list and then barred every coin that was not on it.

The Five-Dollar Limit and Which Coins It Covered

Section 15 also limited how far the new silver coins could go as money. The act made its https://www.govinfo.gov/content/pkg/STATUTE-17/pdf/STATUTE-17-Pg424.pdf";>new silver coins legal tender only up to five dollars in any one payment. In plain terms, nobody had to accept more than $5 of these coins at one time.

The limit itself was not new. Smaller silver coins had carried the same cap since 1853. Notably, the 1873 act said nothing about the older silver dollars already in existence.

The wider rule came a year later in a law called the https://dheller.org/Timeline-files/US-Statutes/v18-1a/Revised-Statutes/Title-39-Legal-Tender.pdf";>Revised Statutes of 1874. Section 3586 capped “the silver coins of the United States” at five dollars “in any one payment.” That wording covered all U.S. silver coins.

There are some sources that mix these laws up. The U.S. Mint’s history page credits the limit to the Resumption Act of 1875. Others report that the 1873 act capped every silver coin. The text of each law says something different.

Silver Coins Kept, Changed, and Dropped in 1873

The 1873 act trimmed the list of U.S. coins. Some coins stayed, some changed, and some were dropped for good. The table below shows what happened to each one, based on https://www.govinfo.gov/content/pkg/STATUTE-17/pdf/STATUTE-17-Pg424.pdf";>Sections 14 to 16 of the act.

Coin	Metal	What the 1873 act did
Standard silver dollar	Silver	Dropped. Under the https://www.govinfo.gov/link/statute/5/136";>1837 law, it weighed 412½ grains.
Trade dollar	Silver	Added. Set at 420 grains and made for trade in Asia.
Half dollar	Silver	Kept. Weight set at 12.5 grams.
Quarter dollar	Silver	Kept. Set at half the weight of the half dollar.
Dime	Silver	Kept. Set at one-fifth the weight of the half dollar.
Half dime	Silver	Dropped.
Three-cent piece	Silver	Dropped.
Three-cent piece	Copper and nickel	Kept.
Five-cent piece	Copper and nickel	Kept.
Two-cent piece	Bronze	Dropped.
One-cent piece	Bronze	Kept.
Gold coins, $1 to $20	Gold	Kept. The gold dollar became the unit of value.

Some summaries say the act ended the three-cent piece, but technically this is not true. Section 16 included a “three-cent piece.” However, the act kept the copper-nickel alloy three-cent piece in circulation. The previous https://en.wikipedia.org/wiki/Coinage_Act_of_1873";>silver version was dropped, along with the half dime and the two-cent piece.

Why 1873 and 1874 Dimes, Quarters, and Halves Have Arrows at the Date

The act set silver coin weights in grams. The half dollar became 12.5 grams, and the quarter and dime followed in step. The result was that each coin became just a little heavier than before.

The Mint needed a way to distinguish the coins. To that end, it placed small arrows on both sides of the date on dimes, quarters, and half dollars. The arrows https://coinweek.com/education/numismatic-history/numismatic-history-crime-of-1873-creates-coinage-chaos/";>appeared for only two years and were dropped at the end of 1874. Collectors still call these the “arrows at date” coins, and they remain a small, lasting mark of the 1873 law.

The Trade Dollar: The Only Silver Dollar Left

The trade dollar was the one silver dollar the act allowed. It weighed 420 grains, a bit more than the 412½-grain dollar it replaced. The Mint built it to compete with https://coinweek.com/education/numismatic-history/numismatic-history-crime-of-1873-creates-coinage-chaos/";>Spanish and Mexican dollars in trade with China and the Far East.

At first, the trade dollar also counted as legal tender up to $5, but that did not last. On July 22, 1876, Congress https://www.pcgs.com/books/garret/chapter08/21";>took away its legal tender status. From then on, it was a coin for export rather than for spending at home.

What “Demonetized Silver” Means

To demonetize something is to strip it of its status as money. People often say the 1873 act demonetized silver. That is true in a very narrow sense. In order to be correct, though, we have to be very exact about what that means.

Prior to 1873, anyone could bring silver to the Mint. There, they could have their silver struck into standard silver dollars. Those minted dollars were legal tender for any amount. This open door is called https://www.moneymetals.com/history/bimetallism";>free coinage. The 1873 act ended free coinage of the standard silver dollar.

That does not mean that people no longer spent silver coins. The Mint continued minting silver half dollars, quarters, and dimes. Owners could also still bring in silver for https://www.govinfo.gov/content/pkg/STATUTE-17/pdf/STATUTE-17-Pg424.pdf";>bars or trade dollars. What silver lost was its role as full legal tender money that anyone could have coined.

Gold took over that role when Section 14 made the gold dollar “the unit of value.” Even so, the act did not put the country on a formal gold standard. That step came later, with the https://www.moneymetals.com/history/what-is-the-gold-standard";>Gold Standard Act of 1900.

Why Congress Dropped the Silver Dollar

The silver dollar was dropped for a simple reason: almost no one was using it. Prior to the Coinage Act of 1873, the silver in a dollar was worth more as metal than as money. Many people tried to capitalize on that silver value by https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=9#book-reader";>melting silver dollars or shipping them abroad for a profit.

This is Gresham’s law at work. https://www.moneymetals.com/history/bimetallism";>Our guide on bimetallism explains how that played out in the decades leading up to 1873. Economist J. Laurence Laughlin later wrote that the coin had not circulated for https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=9#book-reader";>more than 25 years before the law passed.

The plan was no secret inside the Treasury. Knox’s report on the bill stated that “the coinage of the silver dollar piece … is https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=9#book-reader";>discontinued in the proposed bill.”

Events abroad pushed in the same direction. After 1871, the new German Empire moved to gold and began selling silver. Following that shift, other nations in Europe soon limited how much silver they would coin. Our https://www.moneymetals.com/history/bimetallism";>bimetallism guide covers those moves.

Meanwhile, silver mining at home was booming. The Western states produced several new mines, the foremost being Nevada’s Comstock Lode. These mines added significantly to the silver supply.

When Knox wrote the bill that ended the silver dollar’s coinage, the silver dollar was https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=9#book-reader";>worth more as metal than as currency. That flipped in just a few years. By 1874, new mines and German sales had pushed silver’s value down. You can learn more about this in our silver price history guide.

That means that in 1874, a miner could have profited by having his silver made into dollars. The problem was that under Knox’s new law, the Mint could no longer make that silver into dollars.

The timing turned what would otherwise have been a quiet law change into a real fight.

How the Bill Passed: Three Years in Congress

Several videos online depict the Coinage Act of 1873 as a law that stealthily slipped past public view and became law. The record reveals something much more mundane. The law followed a slow and public process.

The bill went to Congress in April 1870 and did not become law until February 1873. Laughlin noted that it was “https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=9#book-reader";>printed thirteen times by order of Congress” and taken up during five sessions.

The timeline below is based on the https://en.wikipedia.org/wiki/Coinage_Act_of_1873";>act’s legislative history.

Date	What happened
January 1870	Treasury Secretary George Boutwell asks John Jay Knox to draft a new mint law.
April 25, 1870	The bill goes to Congress.
April 28, 1870	Senator John Sherman brings it to the Senate.
January 10, 1871	The Senate passes an early version.
May 27, 1872	The House passes a version from Rep. Samuel Hooper, 110 to 13.
January 17, 1873	The Senate passes its version.
February 6 and 7, 1873	Both chambers accept the final version from a conference committee.
February 12, 1873	President Ulysses S. Grant signs the act.
April 1, 1873	The act takes effect.

A handful of men shaped the bill. Knox co-wrote the bill with help from Linderman. Sherman chaired the Senate Finance Committee and led the bill through the Senate. Hooper led it through the House. Rep. William D. Kelley chaired the House Coinage Committee. You can see what each of their roles entailed in the https://en.wikipedia.org/wiki/Coinage_Act_of_1873";>act’s history.

Why It Was Called the “Crime of 1873”

The law did not draw much attention to itself when it passed. https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=9#book-reader";>Few people used silver dollars, so few noticed they were gone. The anger came later, once silver began to fall.

Where the Word “Crime” Came From

The word “crime” came three years after the law passed. On March 2, 1876, George M. Weston wrote a letter that “attached the word ‘crime’ to the federal law for the first time,” https://www.ebsco.com/research-starters/history/crime-1873/";>according to EBSCO. That letter fired the first shot in a long battle over silver.

The phrase later reached Congress. The earliest known use in debate came from Senator Henry M. Teller of Colorado on July 10, 1890. He referred to the law as “https://en.wikipedia.org/wiki/Coinage_Act_of_1873";>the blunder or the crime of 1873.” Proponents of silver often shortened the phrase to the “Crime of ‘73.”

Who Felt Cheated, and Why

The anger came from the people who lost the most when silver fell. Silver miners in the West lost the right to turn their metal into money at the Mint. Farmers and others in debt wanted more money in use. Their hope was that it would lift crop prices and make it easier to pay debts. Free silver coinage promised both of these things, and that hope later fueled the https://www.moneymetals.com/history/free-silver-movement";>free silver movement.

The timing made things worse. The Panic of 1873 began that September upon the https://coinweek.com/education/numismatic-history/numismatic-history-crime-of-1873-creates-coinage-chaos/";>failure of a major bank. It did not take long for many people to link the panic to the coinage law.

Some lawmakers added fuel to the fire by saying they had missed the change in the law. In 1878, Representative Kelley said, “https://en.wikipedia.org/wiki/Coinage_Act_of_1873";>I was ignorant of the fact it would demonetize the silver dollar.” Remarks like this made the law look sneaky, despite the fact that the change sat in the bill for nearly three years.

The Claims vs. the Record

Online videos often tell this story as though it were a secret plot against silver. Here is how some of the most common claims compare to the actual historical record.

Claim	What the record shows
“Congress passed it in secret.”	The bill was before Congress for nearly three years. It was https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=9#book-reader";>printed 13 times, and the House passed one version 110 to 13.
“The act banned silver money.”	The Mint kept making silver half dollars, quarters, and dimes. Owners could still bring silver in for https://www.govinfo.gov/content/pkg/STATUTE-17/pdf/STATUTE-17-Pg424.pdf";>bars and trade dollars.
“A British banker bribed Congress.”	The story named Ernest Seyd. Kelley denied it, and Seyd in fact https://en.wikipedia.org/wiki/Coinage_Act_of_1873";>favored keeping silver as money.
“Nobody knew what the bill did.”	Knox’s report said the silver dollar was “https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=9#book-reader";>discontinued in the proposed bill.” Some lawmakers later said they missed it.
“The act put the U.S. on the gold standard.”	It made the gold dollar the unit of value. The formal standard came with the https://www.moneymetals.com/history/what-is-the-gold-standard";>Gold Standard Act of 1900.

What Historians and Economists Conclude

Historians have studied this law for more than a century. Today, they usually have two parts to their views.

First, most reject any notion of a plot. EBSCO sums it up this way: “https://www.ebsco.com/research-starters/history/crime-1873/";>most modern scholarship continues to reject the conspiracy thesis.”

Second, many agree that the change was not an accident. Historian Walter Nugent argued that the men behind the bill knew what dropping the dollar would mean. He named Sherman, Knox, Linderman, and Boutwell. In his words, “https://en.wikipedia.org/wiki/Coinage_Act_of_1873";>It is inconceivable that they were not.”

Economist Milton Friedman went further. In a https://www.journals.uchicago.edu/doi/abs/10.1086/261730";>1990 paper, he took on the common view that the act “was a piece of good fortune.” He called it “a mistake that had highly adverse consequences.” In his view, the damage was done in 1873, and by the time of Bryan’s 1896 campaign, it was too late to undo.

Others have since tested Friedman’s idea. François Velde, an economist at the Chicago Fed, modeled what might have happened if the United States had stuck to a bimetallic system. His findings suggested that the https://www.chicagofed.org/publications/working-papers/2002/2002-29";>system could have survived for approximately twenty more years.

It is always important to keep in mind that this story is not solely an American one. Many other nations likewise abandoned silver coinage in favor of a gold standard. For example, economist Marc Flandreau used the same moniker for a 1996 paper, “https://www.cambridge.org/core/journals/journal-of-economic-history/article/french-crime-of-1873-an-essay-on-the-emergence-of-the-international-gold-standard-18701880/A7F5DA972467791942E2361DD4111151";>The French Crime of 1873.” His paper examines how Europe moved to gold in the same decade as the United States.

What Came Next

The fight over the Coinage Act of 1873 shaped U.S. money for the remainder of the century. Each of the next steps has its own guide:

Specie: In the 1870s, the U.S. worked to make its paper money payable in coin again. Learn https://www.moneymetals.com/history/what-is-specie";>what specie is and why it mattered.
Silver purchases: The Bland-Allison Act of 1878 had the Treasury buy silver and coin silver dollars again. See our guide to the https://www.moneymetals.com/history/silver-purchase-acts";>silver purchase acts.
Free silver: Farmers and miners pushed for unlimited silver coinage. Their push peaked with William Jennings Bryan’s “Cross of Gold” speech in 1896. Read about the https://www.moneymetals.com/history/free-silver-movement";>free silver movement.
The gold standard: The Gold Standard Act of 1900 made gold the legal standard. Learn https://www.moneymetals.com/history/what-is-the-gold-standard";>what the gold standard is.

Where to Read the Coinage Act of 1873

You can read the law, and the laws around it, for free:

The act itself: https://www.govinfo.gov/content/pkg/STATUTE-17/pdf/STATUTE-17-Pg424.pdf";>17 Stat. 424 on govinfo, the official U.S. government copy.
A second copy: The https://fraser.stlouisfed.org/title/coinage-act-1873-1095";>Federal Reserve Bank of St. Louis’s FRASER archive.
The 1837 law that set the old silver dollar’s weight: https://www.govinfo.gov/link/statute/5/136";>5 Stat. 136.
The 1874 legal tender rule: https://dheller.org/Timeline-files/US-Statutes/v18-1a/Revised-Statutes/Title-39-Legal-Tender.pdf";>Revised Statutes, Title 39.

Frequently Asked Questions

The law is not in effect under its original form. Its rules were subsequently folded into the Revised Statutes in 1874, and later laws changed its list of coins. One idea from it lives on, though. The U.S. Mint is still “https://www.law.cornell.edu/uscode/text/31/304";>a bureau in the Department of the Treasury,” under a law that Congress rewrote on September 13, 1982.

The act did not formally put the U.S. on a gold standard. The text of the law only made the gold dollar the unit of value. Furthermore, it ended free coinage of the standard silver dollar.

In practice, that essentially meant the United States was on a gold standard. That did not become official law, however, until the passing of the https://www.moneymetals.com/history/what-is-the-gold-standard";>Gold Standard Act of 1900.

No. Several silver coins remained in circulation. These included silver half dollars, quarters, dimes, and trade dollars. What did come to an end was free coinage of the standard silver dollar. That coin had been legal tender for any amount.

It is a nickname for the Coinage Act of 1873. Silver backers used it to claim that the law was passed by trickery. George M. Weston first tied the word “crime” to the law in a https://www.ebsco.com/research-starters/history/crime-1873/";>letter dated March 2, 1876.

It set off a silver fight that shaped American politics for more than 20 years. That fight ran from the Bland-Allison Act of 1878 to Bryan’s run for president in 1896. Our guide to the free silver movement tells that part of the story.

Conclusion

The Coinage Act of 1873 did not ban silver. It simply dropped one coin, the standard silver dollar, from a long list of legal tender coins. That small change had large consequences, though. It ended free coinage of the silver dollar just before silver fell in value.

Many people lost out because of that change. To them, the law change looked like a crime. To most historians today, the law was a deliberate choice that followed the standard protocols of legislation, rather than a conspiracy.

Regardless of the view you take, the fact remains that this law set the terms for the money fights that followed. You can trace how silver has moved since then in our https://www.moneymetals.com/silver-price-history";>silver price history.

Beyond the CPI: The Complete Inflation Story -- October 2026

Tue, 10 Nov 2026 00:00:00 EST

Here we go again.

The Bureau of Labor Statistics (BLS) released the https://www.bls.gov/news.release/cpi.nr0.htm"; target="_blank" rel="noopener">October Consumer Price Index (CPI) data today. It was hotter than expected.

Persistent price inflation has once again raised expectations for a December rate hike. In fact, many analysts now think the Fed may hike 50 basis points.

The CPI data certainly paints a gloomy inflation picture, and it’s even worse.

Each month, the Bureau of Labor Statistics releases the Consumer Price Index (CPI) report. Policymakers, pundits, and economists use this data to gauge the current inflation situation.

But relying solely on CPI data to gauge inflation is a little like looking at the temperature and claiming you know the weather.

CPI tracks price inflation – more specifically, changes in the price of a basket of goods. But historically, https://youtu.be/lmvFyBBJORM"; target="_blank" rel="noopener">inflation was defined as an increase in the supply of money and credit. Rising consumer prices are one impact of this monetary inflation. In other words, the CPI measures a symptom of monetary inflation.

The CPI captures past monetary inflation in the economy, but it can’t predict inflation's trajectory. That means we need to look at other metrics to understand the complete inflation story.

With that in mind, I publish a more comprehensive inflation report each month using four metrics – CPI, changes in the M2 money supply, changes in the Federal Reserve balance sheet, and the Chicago Fed National Financial Conditions Index.

October CPI

Prices rose 0.4 percent last month. The forecast was a 0.3 percent increase.

The BLS did not release annual CPI data this month. The government didn’t publish a report last year due to the government shutdown, so there are no numbers to compare.

CPI was above the Fed’s mythical 2 percent target for 68 straight months.

Stripping out more volatile food and energy prices (something real people can’t do), core CPI increased by 0.3 percent. The forecast was for a 0.2 percent gain.

It was the third straight month with a 0.3 percent core CPI increase. That annualizes to 3.7% compounded.

Energy prices continued to push the overall CPI higher last month. The energy index rose 0.7 percent month-on-month, following a 5.2 percent monthly gain in September.

Gasoline prices rose another 1 percent in October, following a 9.3 percent price surge in September.

Meanwhile, shelter prices drifted up another 0.3 percent. Food prices surged 0.5 percent, driven by a 1 percent increase in the price of snacks, a 0.9 percent rise in beef costs, and a 0.5 percent rise in poultry, fish, and egg prices. Transportation services jumped 0.8 percent month on month, while new vehicle costs increased 0.2 percent.

https://www.moneymetals.com/uploads/content/oct-26-cpi-breakdown.png"; width="800" height="344" class="mx-auto p-3" alt="" />

M2 Money Supply

The money supply has been growing for months, and the pace is accelerating.

That is, https://www.youtube.com/watch?v=lmvFyBBJORM&;amp;list=PLYdILhg0SvdQ&index=1&pp=iAQB" target="_blank" rel="noopener">by definition, inflation. However, we won’t see its impact on the general price level for months.

Between September 2025 and September 2026, the money supply surged from $22.15 trillion to $23.41 trillion.

https://www.moneymetals.com/uploads/content/m2-oct-26.png"; width="700" height="368" class="mx-auto p-3" alt="" />

In other words, the actual inflation rate is 5.7 percent.

The M2 money supply increased by $113 billion in September alone, a 0.49 percent m-o-m gain.

So far this year, the money supply has grown by an average of $136 billion per month. That is 89 percent higher than the average monthly increase in 2025.

This monetary inflation will eventually find its way into consumer prices. (It could also manifest in rising asset prices such as real estate and equities.)

The Federal Reserve Balance Sheet

One reason the money supply is increasing is due to central bank money printing.

While Warsh & Co. talk tough on inflation, the Fed is running https://youtu.be/ipaQAgOCJBk"; target="_blank" rel="noopener">quantitative easing (QE) operations to create artificial demand for Treasuries and hold yields lower than they otherwise would be. That means the central bank is buying U.S. Treasuries on the open market and holding them on its balance sheet. To run this operation, the Fed creates money out of thin air to pay for these bonds. That new money gets injected into the economy. Again, that is, by definition, inflation.

The Fed will never admit to running QE. It will tell you it is just a technical operation to keep the financial system’s plumbing clear. But no matter what you call it, the practical impact is the same. The Fed’s balance sheet expands, and new money flows into the economy.

The https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm"; target="_blank" rel="noopener">central bank’s balance sheet began ticking higher last December, and the upward trend continues. The balance sheet rose about $5 billion in October. It is up $212.4 billion since its December 1, 2025 low.

https://www.moneymetals.com/uploads/content/fed-balance-sheet-oct-26.png"; width="700" height="498" class="mx-auto p-3" alt="" />

Keep in mind the Fed must run QE just to keep the balance sheet steady. Bonds mature and roll off the balance sheet monthly. The central bank must buy new securities to replace the old ones.

I can’t overstate the fact that the Fed is easing monetary policy through its balance sheet operations, even as it claims to be fighting inflation. Sure, the balance sheet increase is modest. But if you’re serious about an inflation fight, why isn’t the balance sheet shrinking?

The answer is the evolving bond bear market. With rising yields driving up the federal government’s interest costs, the Fed has no choice but to step in and support the Treasury market.

National Financial Conditions Index

While everybody imagines monetary policy is currently tight, it remains loose from a historical perspective.

The Chicago Fed’s own https://www.chicagofed.org/research/data/nfci/current-data"; target="_blank" rel="noopener">National Financial Conditions Index (NFCI) reveals this.

As of the week ending October 30, the NFCI stood at −0.46. The minus sign indicates financial conditions remain historically loose.

Surprisingly, the NFCI never went positive, even during the height of the Fed’s tightening cycle. Its highest level was -0.09 in October 2022.

https://www.moneymetals.com/uploads/content/nfci-aug-26.png"; width="800" height="364" class="mx-auto p-3" alt="" />

Again, this reveals the Federal Reserve inflation fight wasn’t nearly as aggressive as advertised. It maintained a historically loose monetary policy through the entirety of this inflation cycle.

It also reveals that the economy is addicted to easy money. The fact that the central bank never drove financial conditions tight for fear of collapsing the debt-riddled bubble economy is telling. It certainly wasn’t because inflation was under control.

Conclusion

The CPI paints a concerning inflation picture, and based on these other data points, we shouldn’t expect inflationary pressure to ease anytime soon.

https://www.moneymetals.com/news/2024/02/15/the-fed-hasnt-done-enough-to-beat-price-inflation-002991";>The Federal Reserve never did enough to slay the inflation dragon unleashed during the pandemic, and despite all the talk about a hawkish Fed, monetary policy remains historically loose.

Most analysts expect the Fed to hike rates again in December. As I mentioned earlier, some even think Warsh & Co. will get even more aggressive and hike by a half-percent. https://www.moneymetals.com/news/2026/09/18/higher-rates-are-bad-for-gold-and-silver-or-are-they-005215";>Gold sold off sharply, as investors anticipate rising interest rates.

However, don’t forget that a massive https://www.moneymetals.com/news/2025/11/15/debt-black-hole-putting-increasing-stress-on-american-consumers-004483";>Debt Black Hole restrains the Fed. The central bankers may want to hike aggressively, but they know an economy supported by debt won’t do well in a higher-interest-rate environment. The Fed is in https://www.moneymetals.com/news/2026/03/19/gold-the-federal-reserve-and-a-catch-22-004773";>a Catch-22. It needs to raise rates. The inflation data makes that clear. But one could also argue for rate cuts given the debt.

This is why the Fed has tried to walk a tightrope by raising rates – but not too much.

In all likelihood, the Fed will hike by 25 basis points in December and continue with its hawkish stance.

However, another small rate hike won’t be enough to stop money supply growth nearing 6 percent. It won’t stop Fed money printing.

But it may be enough to pop the debt bubble.

If that happens, it will almost certainly drive the economy into a recession, and it could precipitate another financial crisis. If history is any indication, the Fed will go all in on rate cuts and QE when that happens. It always chooses to prop up the economy with easy money in a "crisis" – inflation be damned. A Warsh-led Fed could respond differently, but I’ll need to see it to believe it.

At this point, all roads seem to lead to inflation.

Gold Supply Fell in Q3 Despite Record Mine Production; What Happened?

Tue, 10 Nov 2026 00:00:00 EST

Gold mine output set a record in the third quarter. However, gold supply fell by 1 percent.

What happened?

Gold mines globally produced 1,071 tonnes of gold in Q3. It was the highest third-quarter mine output in the World Gold Council’s data series dating to 2000.

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Gold mine production is up 2 percent year-on-year and is on pace for an annual record.

Several of https://www.moneymetals.com/news/2026/08/15/top-10-gold-producing-countries-in-2025-005143";>the world’s top gold producers reported significantly increased output.

Canadian mines reported a 22 percent increase in gold output. Analysts say production from recently commissioned mines, coupled with elevated output from existing mines, drove the increase.

Indonesia’s gold production increased 21 percent. According to the World Gold Council (WGC), the growth was primarily due to improved ore grades and higher production volumes at PT Amman Resources’ Batu Hijau operation.

Chile and Ghana reported 19 percent and 13 percent increases in gold production, respectively.

While mines are producing more gold, the cost of digging it out of the ground is rising rapidly. Average all-in sustaining costs (AISC) reached a record high of US$1,930 per ounce in Q2. That was an 8 percent quarterly increase and a 22 percent rise in costs over the last year.

According to the World Gold Council, it was the steepest annual rise in AISC since Q1 2013. Analysts noted that price inflation in the mining industry is accelerating much faster than the 5 percent five-year average.

“Gold miners have faced pressures from higher energy and consumable prices over the past year, while sustaining capex cost has also increased rapidly.”

If Mines Are Producing More Gold, How Did Supply Drop?

If gold production increased, how did total supply fall?

Recycling fell 8 percent in Q3 to 314 tonnes as gold prices dipped.

According to the World Gold Council, recycling trends continued into Q3 with European and U.S. recycling volumes remaining elevated, while volumes in other regions mostly declined in line with lower prices. The World Gold Council noted, “Expectations of higher gold prices over the medium to longer term also contributed to depressed recycling levels.”

“Anecdotal evidence suggests that holders of gold expect prices to recover or, in countries with weak currencies, that gold will continue to help protect them from further economic turmoil.”

Recycling in India remained depressed. Quarterly volumes were flat but fell 12 percent on an annual basis. WGC analysts say weak recycling volumes were due to lower gold prices, preference for pledging gold as collateral, and an increasing number of customers trading in old jewelry for new.

Exchanging old jewelry for new has no net impact on supply, and recycling data does not capture it.

Chinese recycling also dipped, falling 12 percent quarter-on-quarter and 20 percent annually. A 7 percent VAT on jewelry sales has incentivized trading old jewelry.

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Meanwhile, recycling rose by 12 percent annually in Europe and by 8 percent in the U.S.

World Gold Council analysts said recycling trends reinforce their view that activity is more sensitive to recent price movements than to year-on-year comparisons.

“Though the average gold price in the quarter remained 23 percent above its Q3’25 level, it fell by 5 percent from the previous quarter. Recycling volumes have duly followed the more recent price direction, declining by 2 percent q/q and 8 percent y/y, consistent with the pattern seen in recent quarters.”

Producer de-hedging also dropped the gold supply by 17 tonnes in Q3.

Many gold miners hedge by entering into contracts to sell future output at a predetermined price. Hedging gives gold producers greater revenue certainty and protects them against unexpected drops in gold prices. However, miners forfeit additional profits if the gold price rises above the hedge price.

The Q3 hedging decline will likely reduce outstanding positions from 109 tonnes at the end of Q2 to approximately 92 tonnes.

According to the WGC, “The continued contraction is consistent with producers having limited appetite to lock in future prices, particularly where existing hedges are well below current spot levels.”

Looking ahead, World Gold Council analysts expect supply to contract slightly in 2026. While mine output is on pace for a new record, lower recycling volumes are expected to persist in Q4.

“Despite higher inflation and some signs of unemployment, there is still little evidence of distress-driven selling. While an uptick in recycling is likely, should Q4 see a strong price recovery, the risk of a sharp release of recycled gold seems low.”

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Hot CPI Data Keeps Rate Hike Fears Alive

Money Supply Growth Points to More Inflation

The Fed’s Rate Hike Dilemma

Why Gold Is Falling and Why Maharrey Sees Opportunity

Midterm Elections Add to Gold and Silver Uncertainty

Maharrey’s Gold and Silver Outlook

What Is Gresham’s Law? The Truth Behind “Bad Money Drives Out Good”

Inflation Heats Up and It's Worse Than You Think!

Articles Mentioned During the Show

What Is Bimetallism - Bimetallic Standard, Coinage Act of 1792, and the 15 to 1 Legal Ratio - Gresham’s Law, the 1834 Ratio Change, and Why It Ended - Money Metals

What Is Bimetallism?

Bimetallism vs. the Gold Standard vs. a Silver Standard

Bimetallism vs. Bimetallic Coins

The Coinage Act of 1792: How the U.S. Set Its First Legal Ratio

How the Coin Weights Produced the Ratio

A Common Error About the 1792 Ratio

Gresham’s Law: Why One Metal Always Disappeared

Gresham’s Law in Action: Gold Leaves America

The 1834 Act: A Lighter Gold Eagle and a New Ratio

Gresham’s Law in Reverse: Silver Leaves America

Bimetallism Outside the United States

Why Bimetallism Ended

Arguments For and Against Bimetallism

How Bimetallism Connects to Today’s Money

Frequently Asked Questions

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Did the Coinage Act of 1792 set a ratio in law? http://www.w3.org/2000/svg"; viewbox="0 0 24 24" fill="none" stroke-width="2" stroke="currentColor" class="size-5 shrink-0 transition" aria-hidden="true" x-bind:class="isExpanded ? 'rotate-180' : ''">

What is Gresham’s law? http://www.w3.org/2000/svg"; viewbox="0 0 24 24" fill="none" stroke-width="2" stroke="currentColor" class="size-5 shrink-0 transition" aria-hidden="true" x-bind:class="isExpanded ? 'rotate-180' : ''">

Why was bimetallism abandoned? http://www.w3.org/2000/svg"; viewbox="0 0 24 24" fill="none" stroke-width="2" stroke="currentColor" class="size-5 shrink-0 transition" aria-hidden="true" x-bind:class="isExpanded ? 'rotate-180' : ''">

When did the U.S. abandon bimetallism? http://www.w3.org/2000/svg"; viewbox="0 0 24 24" fill="none" stroke-width="2" stroke="currentColor" class="size-5 shrink-0 transition" aria-hidden="true" x-bind:class="isExpanded ? 'rotate-180' : ''">

Is bimetallism the same as the gold standard? http://www.w3.org/2000/svg"; viewbox="0 0 24 24" fill="none" stroke-width="2" stroke="currentColor" class="size-5 shrink-0 transition" aria-hidden="true" x-bind:class="isExpanded ? 'rotate-180' : ''">

Conclusion

The Crime of 1873 - How the Coinage Act of 1873 Ended Free Silver Dollar Coinage - Coins Kept and Dropped, Conspiracy Claims vs the Record, and What Historians Conclude - Money Metals

What the Coinage Act of 1873 Did

What the Law Actually Says

The Five-Dollar Limit and Which Coins It Covered

Silver Coins Kept, Changed, and Dropped in 1873

Why 1873 and 1874 Dimes, Quarters, and Halves Have Arrows at the Date

The Trade Dollar: The Only Silver Dollar Left

What “Demonetized Silver” Means

Why Congress Dropped the Silver Dollar

How the Bill Passed: Three Years in Congress

Why It Was Called the “Crime of 1873”

Where the Word “Crime” Came From

Who Felt Cheated, and Why

The Claims vs. the Record

What Historians and Economists Conclude

What Came Next

Where to Read the Coinage Act of 1873

Frequently Asked Questions

Is the Coinage Act of 1873 still in effect? http://www.w3.org/2000/svg"; viewbox="0 0 24 24" fill="none" stroke-width="2" stroke="currentColor" class="size-5 shrink-0 transition" aria-hidden="true" x-bind:class="isExpanded ? 'rotate-180' : ''">

Did the Coinage Act of 1873 put the U.S. on the gold standard? http://www.w3.org/2000/svg"; viewbox="0 0 24 24" fill="none" stroke-width="2" stroke="currentColor" class="size-5 shrink-0 transition" aria-hidden="true" x-bind:class="isExpanded ? 'rotate-180' : ''">

Was silver completely demonetized in 1873? http://www.w3.org/2000/svg"; viewbox="0 0 24 24" fill="none" stroke-width="2" stroke="currentColor" class="size-5 shrink-0 transition" aria-hidden="true" x-bind:class="isExpanded ? 'rotate-180' : ''">

What does “Crime of ‘73” mean? http://www.w3.org/2000/svg"; viewbox="0 0 24 24" fill="none" stroke-width="2" stroke="currentColor" class="size-5 shrink-0 transition" aria-hidden="true" x-bind:class="isExpanded ? 'rotate-180' : ''">

Why does the Crime of 1873 matter in U.S. history? http://www.w3.org/2000/svg"; viewbox="0 0 24 24" fill="none" stroke-width="2" stroke="currentColor" class="size-5 shrink-0 transition" aria-hidden="true" x-bind:class="isExpanded ? 'rotate-180' : ''">

Conclusion

Beyond the CPI: The Complete Inflation Story -- October 2026

October CPI

M2 Money Supply

The Federal Reserve Balance Sheet

National Financial Conditions Index

Conclusion

Gold Supply Fell in Q3 Despite Record Mine Production; What Happened?

If Mines Are Producing More Gold, How Did Supply Drop?