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Silver Certificates - History From 1878 to the June 24, 1968 Redemption Deadline - Legal Tender Status, Wartime Notes, and the Laws That Ended Them - Money Metals

Mon, 09 Nov 2026 00:00:00 EST

Silver certificates could once be traded for silver. That ability came to an end in June 24, 1968. The notes remain legal tender to this day. Their face value remained valid for use, but that face value is all they are worth as money.

This page explains where the notes came from. It covers how their issuing ended, why the redemption window closed, and what the government said at the end. It also explains why the notes still spend as money. For what a note is worth to a collector, see our https://www.moneymetals.com/buy/paper-money/silver-certificates";>silver certificate value guide.

What the Certificate Was

The Bland-Allison Act of 1878

A silver certificate started as a receipt that you could redeem for a requisite amount of silver coin. This was established as law when Congress passed the Bland-Allison Act on February 28, 1878. Specifically, Section 3 let people deposit silver dollars with the Treasury. Each deposit had to be at least $10. In return, the depositor received certificates (https://documents.law.yale.edu/bland-allison-act-coinage-silver-see-coinage-act-silver-dollar";>20 Stat. 25).

The law tied the paper to the metal. The coin stayed in the Treasury. The statute says the coin “shall be retained in the Treasury for the payment of the same on demand.” The paper stood for coin held in the vault.

The paper also had a practical purpose. Silver dollars were heavy and not popular with most people. Paper certificates were easier to carry and move (https://www.bep.gov/media/1051/download?inline";>BEP history fact sheet). Some historians link the law to the “Free Silver” movement. That movement drew support from western silver mine owners, farmers, and debtors. The BEP says some believe the first certificates came from that movement (https://www.bep.gov/media/1051/download?inline";>BEP).

The $1 Note Arrives in 1886

The early certificates came in large sizes, from $10 up to $1,000. On August 4, 1886, Congress authorized $1, $2, and $5 silver certificates (https://www.bep.gov/media/1051/download?inline";>24 Stat. 227). The $1 note became the most common of the group. The BEP reports that it printed about $38.5 billion in $1 silver certificates between 1878 and 1965 (https://www.bep.gov/media/1051/download?inline";>BEP).

The Promise Printed on the Note

The Original Wording

Early notes made a direct promise. The 1935 note reads, “One dollar in silver payable to the bearer on demand.” A holder could ask for silver in return.

How the Wording Changed

Later notes dropped that promise. The change in wording reflects the change in the law. The notes were no longer a claim on silver. The law that ended the claim is covered in the 1968 section below.

Wartime and Special Notes

Hawaii Notes and Brown Seals

The Bureau of Engraving and Printing produced special currency during World War II. Hawaii notes came first. They were introduced in August 1942 and used in the territory from 1942 to 1944, due to fears of a Japanese invasion (https://www.bep.gov/media/1056/download?inline";>BEP fact sheet).

Hawaii notes carried the word “HAWAII” overprinted on the front and back. They also had brown seals and distinctive serial numbers. The BEP explains that these features made the notes easy to tell apart. The notes could be “declared valueless if they fell into the hands of the enemy” (https://www.bep.gov/media/1056/download?inline";>BEP fact sheet).

The set included $1 silver certificates. It also included $5, $10, and $20 Federal Reserve notes with the same overprint. About 64 million Hawaii notes were delivered (https://www.bep.gov/media/1056/download?inline";>BEP fact sheet).

Yellow Seal Dollars and North Africa

Yellow Seal Dollars were silver certificates with yellow Treasury seals. American forces used them in North Africa from November 1942 until 1944. Their yellow seals set them apart from regular blue-seal silver certificates (https://www.bep.gov/media/1056/download?inline";>BEP fact sheet).

The notes also served in the Allied invasion of Sicily in July 1943. They stayed in use until Allied military lire arrived. About 131 million Yellow Seal Dollars were delivered (https://www.bep.gov/media/1056/download?inline";>BEP fact sheet).

Seal Colors at a Glance

The color of a seal can help you identify the issue. However, the color does not show value.

Seal color	Note type	Period noted by the BEP
Blue	Standard silver certificates	Main series
Brown	Hawaii notes	1942 to 1944
Yellow	Yellow Seal Dollars (North Africa, Sicily)	November 1942 to 1944

Not Every Wartime Note Was a Silver Certificate

The BEP also printed Allied Military Currency. This currency used several different local money names, such as lire, francs, marks, yen, and shillings. It was designed for the Allies to use in countries they entered. Notably, it was not a silver certificate (https://www.bep.gov/media/1056/download?inline";>BEP fact sheet).

How Issue Ended, 1963 to 1964

The 1934 Silver Purchase Act

The Silver Purchase Act of 1934 told the Treasury to buy silver. It also told the Treasury to issue silver certificates. The purchases continued until silver equaled 25 percent of the gold the United States held (https://www.bep.gov/media/1051/download?inline";>BEP history fact sheet). Congress later repealed that act.

Public Law 88-36 (June 4, 1963)

Public Law 88-36 repealed the previously existing laws that regulated silver purchases and reserves. The BEP says that silver certificates “were gradually discontinued and replaced with Federal Reserve Notes” (https://www.bep.gov/media/1051/download?inline";>BEP history fact sheet). The law also authorized $1 and $2 Federal Reserve notes (https://library.cqpress.com/cqalmanac/document.php?id=cqal63-1315937";>CQ Press).

Three Dates, Three Events

Three dates describe three different steps in how silver certificates rose and fell. First, Congress authorized silver certificates in 1878.

Then, printing silver certificates ceased in November 1963. This did not mean, however, that people could not use them or acquire them; it simply meant that no new certificates were printed.

The Treasury stopped releasing them in early October 1964. Historian Peter Huntoon gives these dates in Paper Money, September and October 2021. He also gives an additional date, stating that the last $1 deliveries were made on November 6, 1963, for Series 1957B.

Other sources give different dates for the end. The BEP says silver certificates were not issued after 1965. The New York Fed says they were no longer printed by 1964 (https://libertystreeteconomics.newyorkfed.org/2015/01/historical-echoes-the-demise-of-silver-certificates/";>NY Fed). This page uses Huntoon’s dates because they separate printing from release.

What Is Commodity Money - Definition and Historical Examples From Salt to Silver - Advantages, Disadvantages, and Why Gold and Silver Won - Money Metals

Mon, 09 Nov 2026 00:00:00 EST

Commodity money is money made from a good that has intrinsic value. This means it would still be worth something even if nobody used it as money. Several commodities have served as commodity money through the centuries, including gold, silver, salt, cattle, and even cigarettes!

Nevertheless, while several items have been considered commodity money, gold is the quintessential example. Its value comes from the gold itself. The stamp on the coin certifies its weight.

Commodity money is not the same as a “commodity currency.” That is a forex term, and we explain the difference below.

Here is a short overview of how commodity money works:

Commodity money is worth something on its own. You could eat it, wear it, smoke it, or melt it down.
People have used salt, shells, dried cod, tobacco, cattle, and cigarettes as money.
Gold and silver won out because they last, are easily divisible, and easy to check.
Representative money is a paper claim on a good. Fiat money has value because the law says so.
The U.S. dollar is fiat money today.

Commodity Money Definition

Commodity money has one simple test: take away its use as money. Now, is the thing still worth something? If the answer is yes, it is commodity money.

Commodity Money Definition in Economics

In economics, commodity money is money with intrinsic value. That means its value comes from the material it is made of. Since the material has uses of its own, people want it even if it is not used in trade.

A commodity is a basic good that people buy and sell. Examples include wheat, copper, or silver. One unit is much like any other. When a society begins to pay for other things using the same commodity as payment, that commodity becomes money.

Commodity money does the same jobs as any other money. For example, in a World War II prison camp, cigarettes served as a unit of account, a measure of value, and a store of value. The economist who studied that camp said they “performed all the functions of a metallic currency” (https://gwern.net/doc/economics/1945-radford.pdf";>Radford, 1945).

Commodity Money vs Commodity Currency

The terms sound similar, but they have different meanings.

Commodity money is money made of a valuable good, like a silver coin.
A commodity currency is a modern paper currency from a country that exports a lot of raw goods. The Canadian, Australian, and New Zealand dollars tend to move with commodity prices (https://www.imf.org/external/pubs/ft/wp/2002/wp0227.pdf";>IMF).
Commodity-backed money is paper you can trade in for a good, like an old silver certificate. Economists call this representative money. It is a claim on the good, not the good itself.

What Gives Commodity Money Its Value?

Commodity money gets its value from two kinds of demand. People want the good for its own sake. They also want to use it for trading and transactions.

Intrinsic Value: Useful Even When It Isn't Spent

The first kind of value is called intrinsic value. Salt keeps food from spoiling. Cattle give milk and meat. Gold and silver make jewelry and tools. People smoke cigarettes.

The British economist William Stanley Jevons postulated that this immediate use is always the one that comes first. In 1875, he wrote a book in which he examined oxen, skins, tobacco, salt, and cacao. Each one of these possessed “independent utility and value” before people used it as money (https://www.econlib.org/book-chapters/chapter-chapter-v-qualities-of-the-material-of-money/";>Jevons, 1875). People had a reason to want them before they came into use as money.

The Coin Is the Metal

With metal money, the coin and the metal are one and the same. Jevons explained it as follows: “the value of any piece of gold or silver is simply proportional to the weight of fine metal which it contains.”

So, you can melt down a commodity coin and retain its value. The mint’s stamp does not add any real value; it simply certifies the coin’s weight and https://www.moneymetals.com/measurement/what-is-24k-gold";>purity. Adam Smith made the same point in 1776. He compared mints to the officials who stamped cloth to prove its quality (https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book01/ch04.htm";>Smith, 1776).

Commodity Money in U.S. Law: The Coinage Act of 1792

The first U.S. coinage law wrote commodity money into the rules. That happened with the https://www.gold.org/sites/default/files/documents/1792apr2.pdf";>Coinage Act of 1792, which defined the silver dollar by weight. Each one had to hold “three hundred and seventy-one grains and four sixteenths parts of a grain of pure” silver. In practical terms, this means a dollar was a set weight of silver. (For scale, there are 480 grains in a https://www.moneymetals.com/measurement/what-is-a-troy-ounce";>troy ounce.)

The law established a clear relationship between coin and metal in three ways:

Anyone could bring gold or silver to the Mint and have it coined “free of expense” (Section 14).
Light coins counted only “at values proportional to their respective weights” (Section 16).
Mint workers who debased coins for profit could be put to death (Section 19).

Our article on the https://www.moneymetals.com/news/2025/04/01/the-coinage-act-of-1792-then-and-now-003952";>Coinage Act of 1792 covers the law in more detail.

Examples of Commodity Money

People have used dozens of goods as money. The table below starts with the list Adam Smith gave in The Wealth of Nations (1776). It then adds well-documented cases from later sources. To learn how trade moved from barter to money in the first place, listen to our episode https://www.moneymetals.com/podcasts/2025/05/21/what-is-money-004071";>What Is Money?

Commodity	Where and when	Why it worked	Drawback	Source
Cattle and oxen	Ancient Greece, in Homer's poems	Everyone valued them	Can't be split without loss	https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book01/ch04.htm";>Smith
Salt	Abyssinia (now Ethiopia)	Keeps food from spoiling	Bulky to carry	https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book01/ch04.htm";>Smith
Cowrie shells	Coasts of India and Africa	Small, durable and easy to count	Too small in value for big deals	https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book01/ch04.htm";>Smith; https://nmaahc.si.edu/cowrie-shells-and-trade-power";>Smithsonian
Dried cod	Newfoundland	The main local product	Spoils and gets eaten	https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book01/ch04.htm";>Smith; https://www.econlib.org/book-chapters/chapter-chapter-v-qualities-of-the-material-of-money/";>Jevons
Tobacco	Colonial Virginia	The main cash crop	Bulky to store and ship	https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book01/ch04.htm";>Smith
Sugar	British West Indies	The main export crop	Bulky to store	https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book01/ch04.htm";>Smith
Hides and leather	Other countries in Smith's list	Useful for clothes and gear	Lose value when cut	https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book01/ch04.htm";>Smith; https://www.econlib.org/book-chapters/chapter-chapter-v-qualities-of-the-material-of-money/";>Jevons
Nails	A village in Scotland, 1700s	Every home and trade used them	Heavy for their value	https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book01/ch04.htm";>Smith
Cacao beans	Maya and Aztec lands	A highly prized crop	Perishable	https://www.si.edu/object/cacao-beans%3Anmah_867620";>Smithsonian
Beaver pelts	Hudson's Bay Company fur trade	The trade's main product	Each pelt had to be graded	https://thecanadianencyclopedia.ca/en/article/made-beaver";>The Canadian Encyclopedia
Cigarettes	World War II prison camps	Uniform, durable and easy to count	Got smoked; supply swung	https://gwern.net/doc/economics/1945-radford.pdf";>Radford
Cans of mackerel	U.S. federal prisons, 2000s	Uniform and widely wanted	Only works inside the prison	https://www.wsj.com/articles/SB122290720439096481";>Wall Street Journal
Gold and silver coins	Trading nations; the U.S. from 1792	Durable, divisible and easy to check	Costly to store and guard in bulk	https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book01/ch04.htm";>Smith; https://www.gold.org/sites/default/files/documents/1792apr2.pdf";>Coinage Act

Adam Smith's List (1776)

Smith listed the goods that served as money before metal took over. “Salt is said to be the common instrument of commerce and exchanges in Abyssinia,” he wrote. He also listed shells in parts of India, ‘dried cod at Newfoundland; tobacco in Virginia,’ sugar in the West Indies and hides in other places (https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book01/ch04.htm";>Smith, 1776).

His most famous example is nails. In one Scottish village, Smith wrote, it was “not uncommon” for a worker “to carry nails instead of money to the baker’s shop or the alehouse.”

Cigarettes in a WWII Prison Camp

The best modern example comes from R. A. Radford. Radford was a British officer held in prisoner-of-war camps in Italy and Germany. In 1945 he wrote about how the prisoners built a market from scratch (https://gwern.net/doc/economics/1945-radford.pdf";>Radford, 1945).

At first, prisoners swapped food and cigarettes from their Red Cross parcels. Before long, though, everyone priced goods in cigarettes. This was true even for non-smokers. “Cigarettes became the normal currency, though, of course, barter was never extinguished,” Radford wrote.

This raises the question: why cigarettes? Radford said they were “homogeneous, reasonably durable, and of convenient size” for small trades. In packets, they worked for large transactions, too. They also had a use of their own, since a smoker could always smoke his money. Later on, we will discuss how that turned out to be a weakness.

Salt, and the "Salary" Story That Isn't True

You may have heard that the word “salary” comes from Roman soldiers who were paid in salt. It is an often-repeated story about money, but there is no evidence for it.

The Latin word salarium does come from sal, which means salt. But “how salt is connected to monetary payments is simply not known,” says the word-history site Wordorigins. It adds that the soldier story “appears to be a nineteenth-century fabrication” (https://www.wordorigins.org/big-list-entries/salary";>Wordorigins).

Characteristics of Commodity Money

What makes one commodity better at being money than another? Jevons answered that question with a list.

Jevons' Seven Qualities of Money

In 1875, Jevons named seven qualities that good money should have. He listed them in descending order of their importance:

Utility and value. People want it for its own sake.
Portability. It packs a lot of value into a small, light piece.
Indestructibility. It doesn’t rot, rust, or evaporate.
Homogeneity. Every piece of the same weight is worth the same.
Divisibility. You can split it and join it again without losing value.
Stability of value. Its buying power doesn’t swing much.
Cognizability. People can easily tell the real thing from a fake.

Jevons was blunt about goods that fail these tests. Eggs, dried codfish, cattle, and oil “have certainly been used as currency,” he wrote. But “what is treated as money one day must soon afterwards be eaten up.”

How Different Commodities Measure Up

The table below rates six forms of commodity money against Jevons' seven qualities. These are our ratings, based on what Smith, Jevons and Radford wrote. Jevons did not score these goods himself.

Quality	Cattle	Salt	Tobacco	Cigarettes	Silver	Gold
Utility and value	Strong	Strong	Strong	Strong	Strong	Strong
Portability	Weak	Weak	Weak	Strong	Fair	Strong
Indestructibility	Weak	Fair	Weak	Fair	Strong	Strong
Homogeneity	Weak	Fair	Weak	Fair	Strong	Strong
Divisibility	Weak	Strong	Fair	Fair	Strong	Strong
Stability of value	Fair	Fair	Fair	Weak	Fair	Fair
Cognizability	Fair	Fair	Fair	Fair	Strong	Strong

Why Gold and Silver Won

By Adam Smith’s time, most trading nations had settled on metal. Ancient Sparta used iron. The early Romans used copper. Smith writes that “gold and silver [are used] among all rich and commercial nations” (https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book01/ch04.htm";>Smith, 1776). There are two reasons for this that stand out.

Kept and Divided Without Loss

Smith said metals “can not only be kept with as little loss as any other commodity,” but “can likewise, without any loss, be divided into any number of parts.” Melt the parts, and they join back together.

The same does not hold for cattle. Smith’s example is a man who wants salt but only has an ox to trade. He must buy a whole ox’s worth of salt or none at all. With metal, he can pay for just the amount he needs.

Easy to Recognize, Hard to Fake

Gold and silver also do well on Jevons’ last quality, cognizability. Refined metal is uniform. As a result, equal weights have equal value. Metal also takes a stamp. A coin with a trusted mark can pass from hand to hand without anyone weighing or testing it (https://www.econlib.org/book-chapters/chapter-chapter-v-qualities-of-the-material-of-money/";>Jevons, 1875).

The two metals also split the work. Under the 1792 law, gold coins ran from $2.50 to $10. Silver coins covered the dollar down to the half disme, which is worth five cents (Coinage Act of 1792). How the two metals were tied together is its own story. Our https://www.moneymetals.com/gold-silver-ratio";>gold-to-silver ratio page shows how that ratio has moved over time.

Advantages and Disadvantages of Commodity Money

Commodity money has real strengths and real flaws. People on both sides of the debate accept most of the facts below. What they disagree about is how much the disadvantages matter.

Advantages

No one can print more. New supply has to be mined, grown, or made, which takes work.
It doesn’t depend on a government. Silver coins keep their silver even if the government that struck them falls.
It travels well. Jevons wrote that gold and silver “have been admired and valued by all tribes which have been lucky enough to procure them” (https://www.econlib.org/book-chapters/chapter-chapter-v-qualities-of-the-material-of-money/";>Jevons, 1875).
It has a floor. If it stops being money, it remains useful.

Disadvantages

Other uses can drain the money supply. Radford said the main weakness of cigarette money was a “strong demand for non-monetary purposes.” In plain terms, people smoked it. When Red Cross deliveries stopped, smokers used up the money supply. Prices fell, and trade slowed (https://gwern.net/doc/economics/1945-radford.pdf";>Radford, 1945).
Supply shocks move prices. Radford wrote that when a big shipment arrived, “Prices soared.” Then they fell as stocks ran out.
Bad money drives out good. This rule is called https://www.britannica.com/money/Greshams-law";>Gresham’s law. In the camp, people spent their worst cigarettes and smoked the best ones. Some re-rolled the tobacco into thinner cigarettes. “For a time we suffered all the inconveniences of a debased currency,” Radford wrote. Our guide to https://www.moneymetals.com/bullion/what-is-junk-silver";>junk silver shows how the same law played out with U.S. coins.
It is costly to store, move, and test. Before coins, Smith noted, people faced “the trouble of weighing” metal and of testing its purity (https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book01/ch04.htm";>Smith, 1776).
The supply can’t grow on demand. Critics say this is the biggest flaw. A money supply tied to mining can’t expand just because the economy wants more money. Supporters say that limit is the whole point.

Commodity Money vs Representative Money vs Fiat Money

Commodity money is easiest to understand next to the other two main types of money. The key difference is where the value comes from.

Feature	Commodity money	Representative money	Fiat money
What it is	A valuable good used as money	Paper or a token you can trade in for a good	Money set by law, with no backing
Where its value comes from	The material itself	The promise to pay out the good	Trust in the issuer and https://www.law.cornell.edu/uscode/text/31/5103";>legal tender laws
Who controls the supply	Miners, farmers and makers	The issuer, limited by its reserves	A central bank or government
Can you redeem it?	No need. It is the good.	Yes, for the good it stands for	No (https://www.federalreserve.gov/faqs/currency_12770.htm";>Federal Reserve)
U.S. example	1792 silver dollar	https://www.moneymetals.com/buy/paper-money/silver-certificates";>Silver certificate	Federal Reserve note
Other example	Prison camp cigarette	Hudson's Bay brass token	The euro
Main risk	Supply swings and competing uses	The issuer stops paying out	Too much money gets created

Commodity Money vs Fiat Money

A commodity coin is worth its metal. A fiat note is worth what it can buy. The law makes it https://www.law.cornell.edu/uscode/text/31/5103";>legal tender, and people trust it. The Federal Reserve says its notes “are not redeemable in gold, silver, or any other commodity” (https://www.federalreserve.gov/faqs/currency_12770.htm";>Federal Reserve).

Our guide https://www.moneymetals.com/guides/shell-game-how-americas-money-devolved-from-gold-to-fiat";>Shell Game: How America’s Money Devolved from Gold to Fiat tells the story of how the U.S. moved from one system to the other.

Where Representative Money Fits

Representative money sits between the two. It is a paper claim on a real good.

A U.S. silver certificate promised silver to whoever held it. The silver coin was the metal itself. The certificate was only a promise to pay metal, and the Treasury ended that promise on June 24, 1968 (https://www.usmint.gov/learn/history/historical-documents/treasury-publishes-procedures-exchanging-silver-certificates-for-silver-bullion";>U.S. Mint). That is why https://www.moneymetals.com/buy/paper-money/silver-certificates";>silver certificates count as representative money, not commodity money.

Quick Check: Commodity, Representative, or Fiat?

Test yourself. Here is how six real examples sort out:

A 1792 U.S. silver dollar: Commodity money. The coin was its silver.
A silver certificate from the 1950s: Representative money. It was a claim on silver.
A $20 Federal Reserve note: Fiat money. You can't trade it in for gold or silver.
A cigarette in Radford's camp: Commodity money. You could smoke it.
A Hudson's Bay Company brass token: Representative money. It stood for one beaver pelt (https://thecanadianencyclopedia.ca/en/article/made-beaver";>The Canadian Encyclopedia).
A modern quarter: Fiat money. Since the Coinage Act of 1965, dimes and quarters contain no silver (https://www.usmint.gov/news/inside-the-mint/one-hundred-years-of-silver-dollar-coinage-1878-1978";>U.S. Mint). Its value comes from law, not metal. See https://www.moneymetals.com/measurement/silver-content-of-us-coins";>silver content of U.S. coins for which years still hold silver.

Is Commodity Money Still Used Today?

No country uses commodity money as its everyday currency today. Today, the world operates according to a fiat money system. The chief example of fiat money is the U.S. dollar.

In 1933 and 1934, the United States stopped redeeming dollars for gold at home (https://www.federalreservehistory.org/essays/gold-reserve-act";>Federal Reserve History). It stopped for foreign governments in 1971 (https://www.federalreservehistory.org/essays/gold-convertibility-ends";>Federal Reserve History).

Commodity money comes back when official money fails or is banned:

In U.S. federal prisons, a can of mackerel became “the standard currency” after smoking bans (https://www.wsj.com/articles/SB122290720439096481";>Wall Street Journal).
In wartime Sarajevo in 1993, cigarettes became a “means of exchange” while the local money was “nearly worthless” (https://www.tampabay.com/archive/1993/09/05/for-many-in-sarajevo-cigarettes-more-vital-than-food/";>Tampa Bay Times).

Gold and silver still trade on their metal. U.S. American Eagle bullion coins are even, technically, legal tender. However, their face value is a fraction of their metal value; nobody would use a Silver Eagle as a $1 dollar coin in a transaction. Still, their legal tender status makes these bullion coins the closest thing to commodity money most people can own today.

You can compare American Silver Eagles and American Gold Eagles, or browse all silver coins and gold coins. Our Sound Money Index tracks how each state treats gold and silver.

Commodity Money FAQs

The commodity theory of money states that money grew out of trade rather than law. The Austrian economist Carl Menger made this case in his 1892 essay “On the Origins of Money.” In his view, traders settled on the goods that were easiest to trade, and those goods became money. “Money has not been generated by law,” he wrote (https://mises.org/library/book/origins-money";>Mises Institute).

No. The dollar is fiat money. Federal Reserve notes have not been redeemable in gold since January 30, 1934. They have not been redeemable in silver since the 1960s (https://www.federalreserve.gov/faqs/currency_12770.htm";>Federal Reserve).

Two presidents are generally considered to have ended the gold standard. First was Franklin Roosevelt, who restricted private gold ownership in 1933. The Gold Reserve Act of 1934 then stopped the redemption of dollars for gold (https://www.federalreservehistory.org/essays/gold-reserve-act";>Federal Reserve History).

Richard Nixon closed the “gold window” on August 15, 1971. After that, foreign governments could no longer trade dollars for gold (https://www.federalreservehistory.org/essays/gold-convertibility-ends";>Federal Reserve History). You can read more about this subject in https://www.moneymetals.com/news/2024/03/26/fixing-fdrs-biggest-blunder-from-gold-standard-to-fiat-folly-and-back-003077";>Fixing FDR’s Biggest Blunder.

Not in the economic sense. U.S. regulators do treat Bitcoin as a commodity. In 2015 the CFTC found that Bitcoin and other virtual currencies “are properly defined as commodities” (CFTC). But that is a legal label for trading rules. Commodity money must be useful apart from its role as money, like salt or silver. Bitcoin’s value does not rest on a use like that, so it doesn’t fit the classic definition.

Sources

Adam Smith, https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book01/ch04.htm";>The Wealth of Nations, Book I, Chapter 4, "Of the Origin and Use of Money" (1776)
W. Stanley Jevons, https://www.econlib.org/book-chapters/chapter-chapter-v-qualities-of-the-material-of-money/";>Money and the Mechanism of Exchange, Chapter V, "Qualities of the Material of Money" (1875)
R. A. Radford, https://gwern.net/doc/economics/1945-radford.pdf";>"The Economic Organisation of a P.O.W. Camp," Economica (1945)
https://www.gold.org/sites/default/files/documents/1792apr2.pdf";>Coinage Act of 1792 (World Gold Council copy)
Wordorigins, https://www.wordorigins.org/big-list-entries/salary";>"Salary"
Yu-chin Chen and Kenneth Rogoff, https://www.imf.org/external/pubs/ft/wp/2002/wp0227.pdf";>"Commodity Currencies and Empirical Exchange Rate Puzzles," IMF Working Paper 02/27
Carl Menger, https://mises.org/library/book/origins-money";>"On the Origins of Money" (1892), Mises Institute edition

SILVER Act Gains Momentum: Sound Money Policy Expert Discusses Gold Repatriation and Sound Money Reforms

Mon, 09 Nov 2026 00:00:00 EST

https://www.soundmoneydefense.org/"; target="_blank" rel="noopener">Sound Money Defense League Executive Director Jp Cortez joined Charlotte McLeod of the Investing News Network at the 2026 New Orleans Investment Conference to discuss the growing momentum behind the SILVER Act, recent sound money legislative victories, and the global movement toward physical gold ownership.

https://www.youtube.com/embed/ID8IGa70Ikg?si=6FghSm1VlxHmUJlx"; title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen="allowfullscreen">

Cortez, who leads sound money policy initiatives supported by Money Metals, highlighted the company's involvement in advancing precious metals legislation and expanding opportunities for Americans to own and use physical gold and silver.

One of the interview's central topics was the https://www.moneymetals.com/news/2026/05/06/cftc-and-the-silver-act-new-york-vault-concentration-raises-alarms-004894"; rel="noopener">SILVER Act, bipartisan federal legislation aimed at strengthening America's precious metals markets by reducing geographic concentration, encouraging competition, and addressing national security vulnerabilities.

Cortez explained that current exchange-approved depository arrangements concentrate important precious metals market infrastructure in the northeastern United States, despite much of the country's mining, minting, and refining activity taking place elsewhere.

This arrangement creates unnecessary transportation, insurance, and storage costs while limiting opportunities for depositories throughout the country to participate in major financial markets.

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The SILVER Act seeks to address these problems by expanding opportunities for qualified depositories outside the New York area, improving market access and making the nation's precious metals infrastructure more geographically resilient.

Money Metals and the Sound Money Defense League have been involved in building support for the legislation, helping bring together a coalition of more than 40 organizations representing over 100 participants across the precious metals supply chain, including miners, refiners, bullion dealers, insurance firms, and sound money policy organizations.

At the time of the interview, the legislation had been introduced in both chambers of Congress, with supporters also pursuing its inclusion in the National Defense Authorization Act.

Gold Repatriation and the Growing Importance of Physical Ownership

The conversation also examined the growing international trend of governments bringing gold reserves closer to home.

Cortez discussed recent decisions by France, the Netherlands, and Germany to reduce their reliance on gold stored abroad, particularly in New York.

These developments reflect growing concerns about geopolitical uncertainty, counterparty risk, and the importance of maintaining direct access to sovereign reserves.

Cortez noted that similar developments are occurring at the state level in the United States, where Money Metals and the Sound Money Defense League have worked to advance legislation establishing physical gold reserves.

Wyoming authorized $10 million in physical gold reserves, Utah holds approximately $180 million in gold, and Tennessee has enacted legislation permitting the state to establish its own reserves.

These efforts reflect growing interest among state governments in diversifying public assets through direct ownership of physical precious metals.

State Sound Money Victories Continue

Cortez also highlighted recent legislative successes by the Sound Money Defense League, working with Money Metals and other allies across the country.

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In Maryland, lawmakers restored a longstanding sales tax exemption on precious metals purchases. Alaska and Idaho advanced legislation reaffirming gold and silver as constitutional money, while California reduced burdensome regulations affecting precious metals dealers.

These reforms are part of a broader effort to remove taxes and regulatory barriers that discourage Americans from acquiring, holding, and using gold and silver.

Fort Knox, Gold Revaluation, and the Outlook for 2027

The interview also addressed renewed calls for a comprehensive audit of America's gold reserves, including the need to determine whether any holdings have been leased, swapped, pledged, or otherwise financially encumbered.

Cortez discussed the possibility of revaluing U.S. Treasury gold holdings from their official book value of $42.22 per fine troy ounce to current market prices, cautioning that such an accounting maneuver would do little to address the country's underlying fiscal problems.

Looking ahead to 2027, the Sound Money Defense League will continue supporting sound money reforms, including efforts to repeal Washington state's recently imposed sales tax on precious metals.

Other priorities include advancing the SILVER Act and publishing the next edition of the Sound Money Index, which ranks all 50 states based on their tax and regulatory treatment of gold and silver.

Watch the full interview to hear Cortez discuss the SILVER Act, gold repatriation, and the legislative developments shaping the future of sound money.

Gold and Silver Bounce Back as Tech Stocks Stumble

Mon, 09 Nov 2026 00:00:00 EST

Gold and silver are showing renewed strength after snapping a three-week losing streak. Early Monday trading put gold around $4,140 an ounce and silver above $53, extending last week’s recovery.

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Gold gained roughly 5% last week, while silver rose 5.6%. Both still have ground to recover, but the rebound came amid a sharp selloff in technology shares. Oil and copper also fell, making precious metals’ resilience especially noteworthy.

The election helped change the mood. Democrat Party victories in both chambers of Congress raised expectations of constraints on the Trump administration and a better chance of easing the conflict with Iran.

Oil prices responded sharply, with Brent crude falling about 13% last week to roughly $98 a barrel. Monday brought further softening after President Trump indicated that additional attacks on Iran were highly unlikely while negotiations continued.

Cheaper oil gives gold and silver some breathing room. It eases inflation pressure, potentially reducing the need for further interest-rate increases. It also lowers costs for businesses and consumers.

Meanwhile, some major buyers have kept accumulating through the correction.

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Gold investment funds attracted another $2.7 billion in October, their fourth consecutive month of inflows. Their gold holdings reached a record high, despite the month’s falling prices.

Central banks also remain substantial buyers. The World Gold Council estimates they purchased 321 tonnes during the third quarter, up 42% from a year earlier.

China added another 25.8 tonnes in October, extending its reported buying streak to two full years.

These buyers clearly see reasons to own gold beyond the next Fed announcement.

Silver’s recovery is still less convincing. It has bounced from below $49, but a sustained move above $55 would provide stronger evidence that the worst of the correction is behind it.

Tomorrow’s inflation report is the immediate test. Cooler numbers could help gold and silver extend their gains. Another hot reading could revive fears of higher rates and trigger fresh selling.

Last week nevertheless offered a useful reminder: when Wall Street’s favourite trades stumble, precious metals can move to a different beat.

A change in Congress does not erase Washington’s debts or restore purchasing power already lost to inflation. Gold and silver will remain volatile, but the broader reasons for owning physical metal have not gone away.

The Precious Metals Sector’s Impressive Relative Breakout—and What It Portends

Mon, 09 Nov 2026 00:00:00 EST

Last week brought dramatic developments across the markets. The plunge in technology stocks, particularly those tied to artificial intelligence, did not surprise us. Recognizing a bubble in search of a pin, we had been expecting it to burst for some time. When it finally began to do so last week, it dragged the broader market down with it.

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The catalyst was https://www.moneymetals.com/news/2026/11/07/rhona-oconnell-examines-golds-crosscurrents-005350";>the Democratic Party’s substantial election gains and the resulting fears that the party would put the brakes on the data center buildup.

What was surprising, however, was the resilience of the precious metals sector. It not only held its ground but actually rose, suggesting that some of the money fleeing technology stocks is rotating into the downtrodden precious metals sector as a safe haven.

The significance becomes even clearer when we compare the sector’s performance with that of the broader market, particularly technology stocks. Before examining that relative performance, we will briefly review the chart for the VanEck Gold Miners ETF (GDX).

On GDX’s two-year chart, we can see that the head-and-shoulders continuation pattern we identified earlier lies within a large symmetrical triangle. Both patterns are now approaching completion.

Last week, GDX began rallying from the triangle’s lower boundary on good volume.

An especially important point is that, during the substantial correction from the late-August peak, the accumulation line did not decline. Instead, it actually advanced.

This is a very bullish divergence. On that basis alone, it is reasonable to expect a sizable uptrend to develop from here. In addition, we have just entered the most bullish time of year for the sector.

https://www.moneymetals.com/uploads/content/gdx2year061126--1-.jpg"; width="800" height="1005" class="mx-auto p-3" alt="" />

Last week’s gains in precious metals stocks were somewhat muted and overshadowed by the heavy declines in technology stocks and the broader market.

We can highlight the extent and significance of the sector’s outperformance by plotting GDX against the Nasdaq Composite Index. A three-month chart allows us to focus on recent developments.

https://www.moneymetals.com/uploads/content/gdxovercompq3month061126--1-.jpg"; width="800" height="968" class="mx-auto p-3" alt="" />

The chart shows a dramatic breakout last week from a relative double bottom that formed during October.

Given that GDX rose while technology stocks and the broader market plunged, it appears that some of the money fleeing the technology sector flowed into precious metals stocks as a safe haven.

This raises an important question: Would that outperformance continue during an all-out market crash?

We may now be in an environment where such a crash does not happen at all. Here is why…

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The stock market is now largely owned by big institutional investors, with BlackRock, State Street, and Vanguard alone owning 70% of it. If these institutions can get society at large to foot the bill for keeping the market propped up, they will.

The Federal Reserve does not answer to the American people; it serves the interests of big money. Furthermore, it can create trillions of dollars out of thin air, with no accountability or oversight.

That gives it the ability to inject enormous quantities of money into the market to keep it elevated or arrest a decline. It can also buy Treasuries to hold down interest rates.

The general population ultimately pays the bill through inflation and a weakening currency.

The dollar remains strong relative to other currencies because similar policies are being pursued around the world. Even if the dollar looks like “the cleanest shirt in the laundry basket,” it continues to lose purchasing power at a rapid rate.

Rather than a massive market crash, we may therefore see occasional “crashlets,” such as the one we witnessed last week. Abrupt changes in sentiment can create buying opportunities for traders.

Meanwhile, persistently high inflation—even with deflationary forces also at work—should favor investments with intrinsic value, such as gold and silver.

Another positive factor for markets is the decisive breakdown in oil prices, which look set to fall further.

The Republicans’ electoral drubbing last week has curbed their enthusiasm for another assault on Iran. The election result in Israel is thought likely to have a similar effect.

If oil prices continue to ease, they could help stabilize markets already supported by ongoing central bank money creation. Together, these conditions could create a favorable environment for the precious metals sector to advance.

This article was originally published on https://www.clivemaund.com/article.php?id=7298"; target="_blank" rel="noopener">November 8, 2026.

Bank of Poland Hits Gold Reserve Goal, Hints at Plans to Buy More

Mon, 09 Nov 2026 00:00:00 EST

In January, the National Bank of Poland announced plans to buy another 150 tonnes of gold, bringing its reserves to 700 tonnes.

Last week, National Bank of Poland (NBP) Governor Adam Glapiński said he would leave the door open for additional purchases now that it has reached that 700-tonne goal.

Poland purchased more gold than any other central bank in 2025 (based on officially reported data), and it continues to lead all buyers in 2026. So far this year, the National Bank of Poland has increased its gold reserves by 123 tonnes. As of the end of September, it held 673 tonnes of the yellow metal.

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At a press conference last Thursday, Glapiński said the NBP hit its 700-tonne goal last month, implying it bought 27 tonnes of gold in October.

“We had set a target of 700 tonnes, and we have achieved it, though the world is, of course, changing. We monitor what other countries are doing and monitor potential threats to Poland.”

The official October data has not been released.

Last year, https://www.moneymetals.com/news/2025/05/19/poland-has-more-gold-than-the-european-central-bank-004053";>Poland’s gold holdings eclipsed those of the European Central Bank. Officials say Poland’s gold reserves are valued at 356 billion zlotys ($91.4 billion).

To put the country's gold reserves in context, the NBP only held 14 tonnes of gold in 1996.

When asked what comes next, Glapiński said, “We need to sit down and think it through calmly.”

“I see no reason why we should stop buying gold. I believe that our gold reserves should grow in line with our overall reserves.”

Poland has raised its gold reserve target three times in the last few years. It initially announced an increase in its gold holdings in 2021. Then, in 2024, Glapiński indicated the central bank planned to increase its gold holdings to 20 percent of its reserves.

"This makes Poland a more credible country; we have a better standing in all ratings, we are a very serious partner, and we will continue to buy gold.”

When he initially announced plans to expand Poland’s gold reserves, Glapiński called gold “the only safe investment for state reserves,” in these “difficult times of global turmoil and the search for a new financial order.”

In a 2024 interview, Glapiński emphasized that gold is not directly tied to any national economic policies, is a safe haven during crises, and retains real value over the long term.

“It is a symbol of stability that enhances our credibility in the eyes of investors and foreign partners.”

According to the NBP’s website, gold is not a liability and carries no https://www.moneymetals.com/news/2024/02/29/buy-gold-and-silver-to-hedge-against-counterparty-risk-003015";>counterparty risk.

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When he announced the initial plan to expand its gold reserves in 2021, Glapiński said holding gold was a matter of financial security and stability.

"Gold will retain its value even when someone cuts off the power to the global financial system, destroying traditional assets based on electronic accounting records. Of course, we do not assume that this will happen. But as the saying goes – forewarned is always insured.

“And the central bank is required to be prepared for even the most unfavorable circumstances. That is why we see a special place for gold in our foreign exchange management process."

Glapiński also pointed out that “gold is free from credit risk and cannot be devalued by any country’s economic policy."

"Besides, it is extremely durable, virtually indestructible.”

Poland has also brought some of its gold home. In 2019, the Polish central bank covertly moved 100 tonnes of gold from London vaults to a facility in Warsaw.

Glapiński said most of the country’s gold is in London. Ultimately, he wants to store a third in New York, one-third in London, and the rest in a vault in Poland.

“The issue with our own vault is that we do not currently hold that one-third share there, because these rapid acquisitions take place in London and that’s where the majority is.”

Glapiński said the bank will increase the amount of gold held at home after it completes the renovation of a Warsaw building that will house “a state-of-the-art, large-scale vault.”

Paraguay Banking Crisis: A Lesson in Counterparty Risk

Mon, 09 Nov 2026 00:00:00 EST

The Paraguayan banking crisis is a cautionary tale of https://www.moneymetals.com/news/2024/02/29/buy-gold-and-silver-to-hedge-against-counterparty-risk-003015";>counterparty risk.

The collapse of Ueno Bank left nearly 3 million customers unable to access their bank accounts. That is roughly 60 percent of Paraguay’s adult population.

The bank had grown so large that Paraguayan businesses report an 80 percent drop in business since the government shut the bank down.

The Paraguayan central bank shut down Ueno after investigators discovered questionable loans to companies with inadequate collateral and weak documentation. According to the Guardian, Ueno had half the solvency necessary to meet its obligations.

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The crisis has worked its way up to the highest level of Paraguayan politics, leading to the impeachment of President Santiago Peña, his house arrest, and, as of the most recent update, his being held in pretrial detention at a military facility. Authorities charged the president with “breach of trust and administration for personal gain.”

Shortly after taking office in 2023, Peña appointed Ueno’s CEO to head up Paraguay’s central bank. A short time later, Carlos Carvallo Spalding authorized Ueno, then a finance company, to become a digital bank.

Historian and political analyst Fabián Chamorro https://www.theguardian.com/world/2026/nov/07/paraguay-ueno-bank-collapse-santiago-pena"; target="_blank" rel="noopener">told the Guardian the bank received special treatment under the Peña administration.

“During Peña’s administration, Ueno began receiving various benefits, and the government relaxed the rules to allow public funds to be invested in the bank."

Chamorro said an estimated $800 to $860 million in state and pension funds were invested in Ueno.

About 32,000 pensioners whose funds were invested in the bank aren’t receiving payments.

Meanwhile, millions of everyday people cannot access their money.

Pedro Volpe said when he opened his app last week, he couldn’t even see his account balance.

“Now I’m having to work miracles to pay my bills. A lot of people can’t even afford basic everyday things like food; luckily, I still had some money saved elsewhere, but that has only got me this far. I don’t know what I’ll do next week.”

Giovanni Catolino told El Economista that he fears he’s lost 16 years of work. He said between $15,000 and $16,000 is now frozen at the bank.

Leila Cosini is a 28-year-old student. She said her savings account remains inaccessible.

“It leaves me very uncertain; it makes me very anxious.”

She said she chose Ueno because it was easy to open an account and she liked the online accessibility.

The government has a guarantee fund that covers deposits up to $38,000. About 90 percent of individual account holders have less than that amount.

That's great, but it doesn't help people who need money to pay bills now.

According to the Guardian, last week, the central bank began repaying customers with up to $1,565, no outstanding debts, and an existing account at another institution. However, Paola Benítez said she met all the criteria but hasn't received any of the money she was saving for her wedding.

“This has made me a bit anxious, a bit desperate too, because honestly, who am I supposed to go to and ask about this? It’s very strange, very confusing, very sad.”

Counterparty Risk Rears Its Ugly Head

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This is an extreme example of counterparty risk coming home to roost.

This risk stems from the possibility that the party on the other side of a transaction might not fulfill its obligation.

For instance, if I loan you $200, you might never pay me back. That possibility represents counterparty risk that I’m taking on.

Most transactions and investments involve some level of counterparty risk. If I invest in a stock, the company could go belly-up. If I buy a government bond, there is a chance that the issuing country could collapse politically. If I rent out my house, the tenant might stop paying.

And while you might not realize it, putting money in the bank comes with counterparty risk.

Paraguayans just found this out the hard way.

It’s easy to look at the Paraguayan situation and conclude that something like that can’t happen here. Of course, it can. And it has. And even if we’re not talking about a systemic bank failure, a natural disaster could easily take your bank offline. If you don’t have power and internet, your cool app is useless. You’re functionally broke.

This is why it’s imperative to have an easily accessible emergency fund. You should always have enough cash on hand to survive at least a couple of weeks with no access to your bank accounts.

Of course, holding cash comes with its own counterparty risk. The government that issues your money https://www.moneymetals.com/podcasts/2025/11/05/inflation-is-the-plan-004459";>constantly devalues it as a matter of policy. If all goes as planned, that cash in your safe will have about 10 percent less purchasing power in five years than it does today.

That’s why your best bet is to hold silver for barter transactions.

https://www.moneymetals.com/buy/silver/junk-silver";>Junk silver is ideal for this job.

Junk silver consists of dimes, quarters, and half-dollars minted before 1965.

Of course, junk silver isn’t junk. It would be more accurate to call their modern equivalents junk.

Junk silver coins are 90 percent silver and worth far more than their face value. At the current spot price of silver ($52.56), https://www.ngccoin.com/price-guide/coin-melt-values.aspx"; target="_blank" rel="noopener">a 1964 quarter’s melt value is about $9.41.

You can see why junk silver would serve as a perfect barter currency. Virtually everybody recognizes silver's value. It is also easy to transport, and the coins are uniform in shape and weight.

You could almost certainly barter on the fly using junk silver. However, you’d be even more secure if you established barter networks before a crisis.

One thing is certain: you don’t want to count on the bank to protect your money. While it might seem unlikely, you could lose access to your money at any time. All it would take is a natural disaster, political malfeasance, or a broad-scale financial crisis.

Protect yourself. Keep hard money where you have access to it. Don’t wait for the crisis. You don’t want to find yourself in Volpe’s situation, wondering how you’re going to pay your bills.

Rhona O’Connell Examines Gold’s Crosscurrents

Sat, 07 Nov 2026 00:00:00 EST

On the Money Metals podcast, host Mike Maharrey spoke with https://www.stonex.com/en-us/market-experts/rhona-o-connell/"; target="_blank" rel="noopener">Rhona O’Connell, StoneX’s head of market analysis for Europe, the Middle East, Africa, and Asia. O’Connell discussed the shifting U.S. political landscape, interest rates, debt, private credit, and the changing structure of Asia’s precious metals market.

O’Connell described StoneX as a global financial services company that began in Chicago in 1923, when founder F.C. Stone sold eggs door to door. The company now employs about 5,000 people, reports billions in revenue, and serves roughly 50,000 corporate clients and more than a quarter-million retail clients.

https://www.youtube.com/embed/a6Gsn94AgbE?si=jIPA4ZKbZ1UDYio6"; title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen="allowfullscreen">

O’Connell’s Career Began in Mining

O’Connell’s https://www.linkedin.com/in/rhona-oconnell-5612987/";>precious metals experience stretches back to the early 1980s, when she worked in corporate development at Consolidated Gold Fields, then the world’s second-largest gold producer behind Anglo. Her work included a 10-year silver-market outlook prepared in 1982 for a feasibility study and a later study of platinum-group metals.

After leading the GFMS team at Thomson Reuters, O’Connell joined StoneX in 2019 to build its London-based metals analysis team. StoneX covers precious and base metals alongside agricultural commodities, energy, foreign exchange, and other financial services.

Election Uncertainty Could Weigh on the Dollar

The interview took place after a U.S. election https://www.moneymetals.com/news/2026/11/05/what-does-the-blue-wave-mean-for-gold-and-silver-005347";>that appeared likely to give Democrats a majority of at least four seats in the Senate and close to 100 seats in the House. O’Connell said the immediate market reaction included a https://www.moneymetals.com/news/2026/10/27/how-could-the-midterm-elections-impact-the-gold-market-005323";>weaker dollar and somewhat lower yields, as investors anticipated that fiscal stimulus could be constrained.

She said the dollar and interest rates could soften in the medium term, but the outlook depends on how effectively the new Congress acts. A smooth transition to workable policies could limit further dollar weakness. If lawmakers fail to establish a clear direction, uncertainty could return and put additional pressure on the dollar.

Inflation and the Fed Remain Key Risks

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O’Connell said the https://www.moneymetals.com/news/2026/10/29/fed-hits-pause-button-announces-new-meeting-format-005329";>Federal Reserve’s decisions will depend on inflation, the labor market, and events in the Gulf. Unemployment was around 4.2%, which she described as close to full employment, while inflation had remained above the Fed’s 2% target for 67 consecutive months.

StoneX’s strategy team expected a rate increase in December and another in the first quarter. O’Connell also heard a somewhat more hawkish tone from Kevin Warsh at the October Fed press conference than in the prior two meetings. She said two more rate increases were possible, depending in part on energy prices and supply disruptions.

Even if Gulf tensions ease, O’Connell cautioned that oil prices and inflation may not fall immediately. Disruptions to crude, distillates, jet fuel, and other supply chains could take time to unwind. She also pointed to an approximately 2.5-percentage-point gap between CPI and PPI measures, warning that manufacturers and others in the supply chain may eventually pass some cost pressures to consumers.

“The lead time for inflation to be brought under control in the States is probably a good six months longer than some people think it is,” O’Connell said.

High Yields Could Limit Gold’s Gains

O’Connell described gold as caught between supportive and negative forces. A weaker dollar could help lift gold toward $4,200, but persistently https://www.moneymetals.com/news/2026/11/02/what-sparked-golds-off-selloff-005336";>high real bond yields could weigh on the metal. “If we’re looking at persistently high real bond yields,” she said, “that works against gold.”

At the start of the year, when gold was above $5,000, O’Connell warned that the market looked crowded and forecast $3,800 by year-end. During the interview, she characterized her outlook as neutral within a broad 3,800-to-4,500 range, reflecting the competing tailwinds and headwinds.

Maharrey raised the possibility of gold falling as low as $3,500 before recovering. O’Connell said a major economic shock could initially prompt distress selling, followed by renewed demand for gold: “You’d get distress selling first, and then it would pick up again.”

She cited an OECD warning at the September IMF and World Bank meetings that limited fiscal room had eroded governments’ ability to respond to future shocks.

Debt and Private Credit Add to Financial Strains

O’Connell put U.S. government debt at about 123% of GDP, while Maharrey cited a national debt of roughly $40 trillion. She said the Fed’s room to maneuver is constrained by high debt levels across governments, corporations, and households.

She is also watching the growth of private credit. Investors may expect to withdraw money over a three- or six-month period, while private credit funds hold longer-term assets. O’Connell said some investors seeking withdrawals are being limited to about 5% of their holdings.

She compared the structure to risks that were overlooked before the 2007 subprime crisis, while stressing that she was not predicting another global financial crisis. Banks’ movement of credit into less-regulated areas, combined with maturity mismatches, concerns her. “I’m not comfortable with that at all,” she said.

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Singapore and Hong Kong Vie for Asia’s Bullion Trade

O’Connell highlighted competition between Singapore and https://www.moneymetals.com/news/2026/08/24/hong-kong-gold-futures-contract-reports-physical-delivery-record-as-the-citys-role-as-a-gold-hub-grows-005156";>Hong Kong to become Asia’s leading precious metals hub. At the Asia Pacific Precious Metals Conference in Singapore in June, she heard concerns about fragmentation in the market and questions about China’s influence in Hong Kong.

She said the two hubs could bring complementary expertise and resources to the market if they cooperate. Asia has long been central to physical gold demand, making the efficient movement of metal important to the market’s liquidity and development. “It’s a question of expediting flows and not going for supremacy, but trying to make it holistic,” O’Connell said.

O’Connell also noted that the issue was appearing in specialist industry discussions, including at the London Bullion Market Association’s annual conference. She said it remains uncertain whether Singapore and Hong Kong will work together or compete for supremacy.

Finding StoneX Research

O’Connell directed listeners to StoneX.com, where the company publishes market intelligence and analysis across its business lines. She said StoneX has analysts on the ground in regions including Latin America and North America, covering markets from agriculture and dairy to precious metals.

Blue Wave, Red Ink, and Gold

Fri, 06 Nov 2026 00:00:00 EST

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Coming up don’t miss a wonderfully informative interview with Rhona O’Connell, Head of Market Analysis with StoneX Financial – a global leader when it comes to financial services, commercial hedging, foreign exchange and physical commodities. Rhona has over 40 years of experience as a commodities analyst and is a recognized authority in the precious metals sector.

Mike Maharrey and his guest this week dive into the post-U.S. election landscape and its implications on the precious metals markets and the dollar. Rhona shares some interesting comments on how a change in Congress and the pending turnover among Senate Banking Committee leadership could provide some new pressure on the Federal Reserve as they face monetary policy decisions in the months ahead, and what that may mean for Fed decisions, since, sadly, it’s always all about the Fed.

So, be sure to stick around for our exclusive interview with StoneX’s Rhona O’Connell about those topics and much more, coming up after this week’s market update. And if you enjoy this material, we would like to remind you once again to please do us a favor and like and subscribe to this podcast wherever you consume this content. We would be greatly appreciative if you would do that, thank you.

Gold and silver are attempting to regain their footing this week after a brutal October. And now, investors have something else to consider: a dramatic shift in the political landscape following Tuesday's midterm elections.

A Democratic blue wave has swept through Washington, giving the party control of both chambers of Congress and setting the stage for two years of political gridlock with President Donald Trump.

The election results initially gave precious metals a lift, with gold climbing back above $4,000 an ounce and silver recovering above $52. But whether that modest enthusiasm can translate into a sustained rally remains to be seen.

So, what does a divided Washington mean for gold and silver? And could the political shakeup actually help relieve some of the pressures weighing on precious metals? We'll get into that in a moment.

First, let's look at the markets.

Gold is trading at $4,073 an ounce, having recovered from last week's plunge below $4,000. The yellow metal is up nearly $200 since last Friday’s low close and is up 4.8% now on the week.

Silver checks in at $52.41, also bouncing off its recent lows. Poor man’s gold is up more than $2.50 this week or 5.3% with a few trading hours left in the day.

Both metals remain well below their earlier highs, and neither has convincingly broken out of its recent trading range. But after weeks of relentless selling, there are at least some signs the market may be stabilizing.

Gold's technical picture has improved somewhat. The recent decline increasingly looks like a correction rather than a complete breakdown of the longer-term trend. Gold has encountered selling pressure around $4,150, but buyers have been showing renewed interest at lower prices.

Silver's outlook is a little more complicated. The white metal continues to underperform gold, and its longer-term technical indicators remain weak. But after falling below $50, silver has shown signs of recovering some momentum here in recent days.

For now, the question is whether this is the beginning of a meaningful rebound or simply a temporary bounce in a market that remains under pressure.

And that brings us to the biggest story of the week: the midterm elections.

Democrats scored sweeping victories Tuesday, taking control of both the House and Senate. That means President Trump will face a much more hostile Congress during the final two years of his term.

We can expect plenty of investigations, political battles, and fights over spending and the debt ceiling.

But here's the interesting part for precious metals investors: Political gridlock could actually be somewhat favorable for gold and silver.

As our own Mike Maharrey explained in https://www.moneymetals.com/news/2026/11/05/what-does-the-blue-wave-mean-for-gold-and-silver-005347";>an article published this week, the new balance of power could make it much harder for Washington to enact additional tax cuts or major new spending initiatives.

And while that might sound like a recipe for economic restraint, nobody should expect Congress to suddenly discover fiscal responsibility.

Democrats and Republicans have both demonstrated a remarkable willingness to spend money the government doesn't have. They just disagree about where to spend it.

The national debt is already approaching $40 trillion, and annual interest expenses are consuming an increasingly large share of federal revenues.

Those obligations aren't going away because one party or the other won an election.

In fact, the next two years could bring even more uncertainty surrounding government funding and the federal debt ceiling.

And historically, uncertainty about Washington's ability to manage its finances has often encouraged investors to seek the relative safety of gold.

Analysts at Metals Focus believe the election results could be modestly bullish for precious metals. Their reasoning is that political gridlock may limit additional fiscal stimulus, potentially slowing economic growth and reducing the pressure on the Federal Reserve to keep raising interest rates.

That could eventually mean lower bond yields and a weaker dollar, both of which would generally be supportive of gold and silver.

But there's a catch.

The Fed is still dealing with stubborn inflation, and policymakers remain concerned that rising energy costs could keep pushing consumer prices higher. Traders are still expecting another interest-rate hike in December, and possibly another early next year.

So even with the election behind us, monetary policy remains a major obstacle for precious metals in the near term. And much of that inflation problem is tied to developments overseas.

Oil prices have retreated recently, falling about 1% Tuesday to their lowest level in nearly four weeks as investors weighed the possibility of diplomatic progress in both Ukraine and Iran.

Any meaningful progress toward ending these conflicts could help ease pressure on energy prices. And that would be welcome news for the Federal Reserve.

The war involving Iran has contributed to a major energy shock this year, driving up oil prices and making the inflation problem much harder to contain.

Ironically, geopolitical instability that might ordinarily boost demand for gold has instead been contributing to selling pressure.

That's because higher energy prices raise inflation expectations, which in turn encourage the Fed to keep interest rates elevated. And higher interest rates tend to weigh on precious metals, at least in the short run.

A lasting settlement with Iran could change that equation by reducing energy costs, easing inflation concerns, and giving the Fed more room to lower rates.

Silver could benefit especially from such a development, since lower energy costs and improved economic conditions would also support industrial demand.

Of course, there's no guarantee these diplomatic efforts will succeed. And even if the fighting ends, damaged infrastructure and disrupted supply chains won't be repaired overnight.

But the possibility of easing geopolitical tensions is one more factor investors are beginning to consider.

Meanwhile, the European Central Bank is facing its own inflation dilemma. The ECB left interest rates unchanged Thursday but signaled that another hike could be coming in December as elevated energy costs continue threatening price stability.

So, this isn't just an American problem. Central banks around the world are struggling to balance inflation risks against the economic damage caused by higher borrowing costs.

And that brings us back to the bigger picture for gold and silver.

The markets have spent the past several weeks reacting to every inflation report, every change in interest-rate expectations, and every new geopolitical headline. But the fundamental problems underlying the global monetary system haven't gone away.

Governments are deeply indebted. Deficits remain enormous. And central banks face growing pressure to keep the financial system functioning without allowing inflation to get completely out of hand.

That's an extraordinarily difficult balancing act.

The Fed may be talking about additional rate hikes today. But how long can it maintain that position if economic growth slows, financial markets stumble, or Washington's borrowing costs become even more burdensome?

That's the dilemma facing policymakers.

And it's one reason the longer-term case for owning physical gold and silver remains compelling, regardless of which political party controls Congress.

There's also an important distinction between the two metals right now.

Gold continues to benefit from central bank demand and its established role as a monetary safe haven. Silver, meanwhile, is more sensitive to industrial demand and has suffered considerably more during the recent correction.

But silver also has the potential to outperform dramatically when investment demand returns.

The gold-to-silver ratio remains elevated after silver's recent collapse, suggesting the white metal is relatively inexpensive compared with gold. That doesn't guarantee an immediate rebound. Silver's short-term technical picture remains uncertain, and additional volatility is entirely possible.

But for investors with a longer time horizon, the combination of silver's monetary appeal, industrial applications, and historically volatile price behavior remains worth watching.

The bottom line is that this week's election results may have changed the political balance of power in Washington, but they haven't fundamentally changed the country's financial predicament.

The government is still spending far more than it collects. The national debt continues growing. And the Federal Reserve remains caught between fighting inflation and supporting an increasingly debt-dependent economy.

Political gridlock may slow the pace of new legislation, but it won't make those problems disappear.

And while gold and silver investors have endured a rough stretch, the underlying reasons for owning sound money remain very much intact.

In the end, elections come and go. Political majorities rise and fall. But Washington's appetite for borrowing and spending seems to be one of the few things that never changes. And that is something precious metals investors would do well to remember.

Well now, without further delay, let’s get right to this week’s exclusive interview.

Mike Maharrey: Greetings. I'm Mike Maharrey, and I'm joined today by Rhona O'Connell. She is head of market analysis covering Europe, the Middle East, Africa, and Asia at StoneX. Excited to have you on the show today, Rona. How you doing?

Rhona O’ Connell: Excited to be here, Michael. Thank you for inviting me.

Mike Maharrey: Well, it's great to talk to you and plenty to talk about. We just had this crazy election here in the US. I'm sure that's going to have some impact on the markets. But before we dig into those things, I would like you to take an opportunity to give folks a quick idea of what StoneX does. I don't want to assume people are familiar with the company. And so if you can just describe your work, that would be great.

Rhona O’Connell: Sure. Yeah. So one of our senior economists was asked that question a couple of years ago, and he said it's probably the largest company you've never heard of, which is quite a nice way of putting it. Essentially, we have just celebrated our centenary. We started off in 1923, so actually it's more than our centenary now. And there was a gentleman by the name of Stone, Mr. F.C. Stone, and he was a door-to-door egg salesman in Chicago.

Mike Maharrey: Oh, wow.

Rhona O’Connell: Yeah. So, through over a hundred years of organic growth and acquisitions, we are now, I think we're about 5,000 strong now. The head office is New York. The largest office is London. We are number 31 in the NASDAQ 50 and 64 in the NASDAQ 500. I think that's right. I think that's right. Certain 31 in the NASDAQ 50s is correct. Our turnover revenues are in the billions, but return on investment on the fiscal year this year was, it was something like 26%. It's the best company I've ever worked for. Probably not necessarily the most important one because I think that was the first one way back in the early 1980s when I was very much a baby analyst working at Consolidated Gold Fields, which at that point was the world's second largest gold producer behind Anglo. And I was in the corporate development team in London, basically looking at the gold market the whole time.

But also my boss and I spent a year putting together a 10-year outlook for the evolution of the, or likely evolution of the silver market. And then three of us did the same thing the following year for the evolution of the Platinum Group Metals. And they were both parts of feasibility studies for advanced exploration deposits. The silver deposit, which was payable at $20 cash, and we're talking about 1982, that did not come on stream, whereas the PGM was Northern Platinum, which is still up and strong running. So my personal background comes from within the mining sector to kick off with, but I was so very, very lucky to have been at Goldfields with one of the world's greatest gold analysts ever by the name of Tim Green. And so it went on. So I've moved through the financial sector and I came to StoneX, which at that point was still called INTL FC Stone.

In 2019, the head of precious metals at that point, well the head of metals to be fair, wanted to put together a team of analysts to be based in London. I'd just been made redundant from running the GFMS team at Thomson Reuters, so the timing was perfect. So I came on board to build a team that's just the two of us. And I actually stole an analyst that I had previously hired into GFMS and trained her and she's very, very, very good. So I brought her with me six months later. Metals is one of the liquid areas of the company. There's base metals, there's precious metals. We cover practically everything in the natural resources. There's ags, there's softs, then there's energy of the exchange traded commodities, if you like. We have a global payments system, which is essentially central bank to central bank. We've got institutional prime and people who run funds or people whose clients run funds, I should say.

I've probably missed something there, but we pretty much cover everything in, and Forex of course, we pretty much cover everything in the financial sphere.

Mike Maharrey: Yeah. And you guys put out fantastic analysis. And before the election, you guys put out a report looking at various scenarios depending on the outcome of the elections. And I don't know that we know completely, but we have a pretty good idea and I think that it would qualify as a wave based on the scenarios that you put out. Yes, absolutely. It looks like the Democrats will have at least a four seat advantage in the Senate, probably a couple more than that, and then very close to 100 in the House. So, not veto-proof, but a very significant majority to say the least. So, from your perspective, looking at it big picture, what do you expect that this might do in terms of impacting the gold market as we move forward with this shift in power?

Rhona O’Connell: Right. Well, obviously it's very early days and it's going to be a movable feast. And I take your point entirely about it's not veto proof, although there'll be more checks and balances that the Democrats can employ. Provided, this is something I picked up from an observation in the Financial Times this morning, it's not an original though of my own, that they actually do take the cat by the scruff of the neck and get stuck in and have good, solid, viable policies which they implement as opposed to, as the generalist referred to it as enjoying an empty victory.

So bottom line, with the big change in the balance of power, we've already seen an immediate short-term reaction with the dollar coming off, yields coming down a little bit because fiscal stimulus is likely to be constrained and brinkmanship may start because we're already in the presidential race, aren't we basically? So we would look for rates and the dollar to come off in the medium term. We've had the knee-jerk reaction. We're probably going to get some stabilization now and then maybe some further erosion. But then what happens in, let's say the first quarter of next year to rates and the dollar and so forth will be a function of what we've just been talking about in terms of how authoritative will the Democrats be in Congress? Put vetoes to one side for a moment because they will be able to constrain a certain amount of White House policy.

So, if they don't hit the ground running, then you'll probably find that uncertainty will come back into the markets and the dollar would weaken even further. Whereas if they get the job done properly and efficiently and from the get-go, then that weakening of the dollar is very unlikely to be catastrophic or even dramatic. It's probably going to be a force of interest rate differentials and so on and so forth.

A second order effect of this, I think is probably a fair way to describe it, would be the impact on the Fed because we've got a hawkish Fed, which is currently comfortable with the labor market and they're happy with unemployment sitting about 4.2, which seems to be more or less like full employment anyway. So, they're training all their gunfire on fighting inflation. So, with the Democrats in power in both chambers of Congress, that takes some of the political heat off the Fed in the first place when we're thinking about the makeup of the FOMC. But it also means that we're likely to have Elizabeth Warren as the chairman of the Senate Banking Committee, and she is a Fed protector in my view. So if they need to raise to... Where are we now? We're three and three quarters at four, aren't we? I think our strategy team in StoneX is looking for one hike in December.

Well, isn't everybody? And then probably another one in Q1, something like that. It may be that they need to go a little bit further or they will feel the need to go a little bit further. So at that point, I know all the arguments about forward guidance and not forward guidance, not I know, I'm aware of. I actually had the impression at the October presser, sorry, the November... Where are we? October.

Mike Maharrey: October meeting.

Rhona O’Connell: Yeah, thank you. Although Kevin Warsh did swerve forward guidance per se, there was a slightly more hawkish tone in what he said I thought than in the previous two. He was also quite forthcoming at the IMF World Bank meetings in September. So, I think we can expect at least two more rate hikes regardless. The mitigating, not the mitigating factor, the rate determining step, shall we say, is going to be what happens in the Gulf because we've got a Democrat party that will hopefully be able to, if indeed things aren't sorted out by January, the impression that I have is that they will want to get it sorted out. They're not necessarily going to give away a lot of ground, but it could be a more amicable set of meetings. So at some point, let's hope for everybody's sake that the Gulf problems get sorted out.

That does not mean if we had a ceasefire or what I'm looking for, settlement on day one, that does not mean that on day two we're going to start seeing oil prices come down and inflation weakening and so on and so forth because we've got supply chain disruption which will take time to unravel. So obviously we've got the Gulf, we've got supply chain, we've got problems not necessarily just with crudes, but with the distillates and jet fuel is a very good case in point, all of which are feeding through to the bottom line in the PPI. The question that I've been mulling over for quite some time now is that when you compare the CPI and the core CPI and the PPI, there is something like a two and a half percentage point difference between CPI and PPI. So at some stage, either the people in the middle of supply chain or the manufacturers and the semi-manufacturers are going to have to endure even more compressed margins, which some of them may not be able to do, and if they can't or won't, then that's going to come to the consumer.

So, that means that the lead time for inflation to be brought under control in the states is probably a good six months longer than some people think it is, which means that, and I'm getting there as far as gold is concerned, which means that we're probably going to have a combative Fed and we could easily see two or three hikes on that basis. But then of course the fiscal headroom problem is such that they don't want to be too restrictive. So, I wouldn't be in Kim and Walter's shoes for all the tea in China, frankly. Horrible job. But all of those uncertainties could well mean that while a weakening dollar is giving gold a bit of a boost up towards 4.2, if we end up having a semi-restrictive, let's say, Fed policy and real yields, and of course it's the bond market which counts if the Fed can call the shots, but the bond market actually fires them.

If we're looking at persistently high real bond yields, quite apart from what that's going to do to mortgages and so on and so forth and consumer spending, that works against gold.

I'm sort of neutral about gold at this level. At the start of this year, she says, showing off, when we were above 5,000, and I wasn't alone by any stretch of the imagination with saying, "This market is too crowded, it's too busy. We've had algos and CTAs and this, that, and the other. There is trouble ahead. This will end in tears." And I called 3,800 for year end and quite a few people told me I was an idiot. And I have to say for that of January, I felt like one. We might not see 3.8, but at the moment, and I know this is going to sound like a wide range and as if I'm ducking my responsibilities, but I'm sort of neutral between 3.8 and 4.5, something like that, because I can see that it's got tailwinds and it's got headwinds and it's not all going to be done to Congress, of course it isn't, but Congress is going to be a key driver as to how things develop over the next five, six months or so.

Mike Maharrey: Yeah, I think that's a really good range, and that kind of dovetails with a lot of folks that I've talked to. I've heard folks say even 3.5 is kind of a possible bottom and then that 4.5, that kind of range over the next months. And as you say, there's so much uncertainty, right? We don't know. And I guess the wild card is we still have a few months before the new Congress is seated, what happens in the interim? Does Trump do something extremely aggressive in Iran? We just don't know the answers to those questions.

Rhona O’Connell: I saw another the other day, I can't remember who... I really can't remember who it was. I think again, it might've been the Financial Times, but it did make me giggle because she said, "Will the president now be a lame duck or an angry duck?" It was just such a lovely little image because he could throw his toys out of his prime. He's done it before. But then by the same token, I thought the speed with which J.D. Vance said what he said yesterday was quite telling.

Mike Maharrey: Yeah. Oh yeah. Vice President Vance is definitely positioning himself and trying to position himself not quite so close to the president. And I guess the other thing that we could see just from a political standpoint, I don't want to get too deep into politics, but I would not be at all surprised if we didn't see some pretty aggressive efforts to investigate the president and even possible impeachment proceedings before the next couple of years is up. So there's going to be a lot of political turmoil. I'm curious, you mentioned the Fed and that you wouldn't want that job, and I completely agree. I wonder how much you feel like the Fed is constrained by the massive levels of debt, not only talking about the government debt that we have all across the globe, and of course 40 trillion here in the United States, but then also we have a lot of corporate debt.

Mike Maharrey: We have a lot of consumer debt, you mentioned mortgages, and it's easy to say we're going to fight inflation, but on the other hand, sometimes it can get dicey when you have an economy that is so dependent on easy money. So, how constrained do you think the Fed is?

Rhona O’Connell: I think that they're going to have problems, to be quite honest. It's 123% of GDP at the moment, I think, isn't it? And that's not a lot of headroom. We've got a similar problem in the UK, so I can empathize with this, and some of the European economies as well. The OECD submitted a written statement to the IMF World Bank meetings in September, and one of the points that they made really quite forcefully was that because of the restrictive wriggle room with respect to fiscal deficits, the potential resilience against any further exogenous shock is being and has been eroded. That would be good for gold, frankly. You'd get distressed selling first and then it would pick up again. But yeah, I think you're right. I think they do have constraints upon them because there's not a huge amount that they can do if they're going to stay within their fiscal rules.

Mike Maharrey: Yeah. You look at the amount of time that the CPI here in the US has been above that mythical 2% target. It's 67 straight months, I think.

Rhona O’Connell: Yes, and he's counting.

Mike Maharrey: Yeah. So, that's definitely a lot of pressure. But then on the other hand, you kind of have to think, why didn't you just hike in October? It's interesting because you can tell that they're kind of trying to walk this tight rope, aren't they?

Rhona O’Connell: He was asked that question in the press conference, and I'm plagiarizing what he said, but effectively he said something similar to what Jay Powell would say about data dependence and one swallow doesn't make a summer. And of course, September to October is one month, October to December is two, so they'll have a lot more material to work with in December, and he wants to be cautious. He doesn't want to throw things off balance, but you're talking about debt. Something which has been nagging at me for a couple of years now, and it's getting worse, is the proliferation of private credit because there is a mismatch in terms of maturity with respect to what the investors into private credit want. They might work on a three, six month time horizon, whereas the people who are actually running the private credit funds are invested for the long term.

So we're already starting to see stresses whereby, generally speaking, when people come up to their three-month limit and they want to take monies out, they're being restricted to 5%, generally speaking, of what they've got, not necessarily what they want, but what they've got. And this puts me in mind of subprime in 2007. One of the reasons why it stays with me is because I, and again, I wasn't alone, I did not see the significance of the subprime problems in 2007, and it still hurts.

But with the banks rolling out, it's like a quasi-securitization in some sorts of ways, banks taking that credit off their own balance sheets and parking it with somebody else so that they can then recapitalize and go out and make hay second time around into a non-regulated system where you've got these maturity mismatches. I'm not comfortable with that at all. I'm not, by any shift of the imagination, saying that we're going to see GFC 2.0 because the authorities are with it and we've had Dodd-Frank and all the other odds and ends. But the fact that it's not regulated, I know it's in the feds cross hairs and the European central bank's got their eyes on it too. So hopefully, all will be well, but it's just rumbling underneath the surface and I don't like it very much. And again, that's the tailwind to gold.

Mike Maharrey: There's a lot of things that are kind of rumbling like that. I did an article last week or the week before about the subprime automobile market. They've done the same thing with auto loans that they've done with or that they did with housing back in the early 2000s. Obviously, the auto market's not nearly as big and doesn't have the same potential to pull down the entire financial system, but it's just kind of those things that are percolating under the surface that you have to keep your eyes on. I'm curious as somebody who lives overseas, you're in England, and I'm curious your perception as not an American, how badly has America's reputation and trust factor been damaged over the last couple of years in your view? And do you think that Congress could maybe restore some of that trust and maybe roll back the debasement trade a bit?

Or has America kind of, I don't know, put itself in a position where maybe it's going to be hard to get that trust back?

Rhona O’Connell: Right. Great question. Glad you asked it. Over the past couple of years, quite a few of us, certainly in the financial sector, because we're exposed to it, not financially, I don't mean necessarily, but just in terms of what we watch and what we have to analyze and what we need to respond to. A lot of us have had our heads in our hands thinking this is sleepwalking, taking a long walk off a short plank. But it's not the American people here, it's just a few bad actors. And the reaction in the British press, when I turned on my radio at six o'clock yesterday morning, I though the BBC man was going to explode. He just said, "We've had a blowout in the States." And I thought, "Oh, here we go." And I got into the office and it was big smiles all around. And I said to someone, and again, I wasn't the only one, the best thing that's come out of this is the reaction of the American people.

And they had spoken, and I know I was talking to a skeptic who actually lives in South Africa, so he is entitled to be skeptical, I suppose, but he was concerned last week about whether the American people would actually go for it the way they have. So the reputation for integrity of the man in the street in the States at the moment has taken a huge jump, huge.

Mike Maharrey: That's interesting. Yeah, I never really thought about it from that perspective, but I guess that is kind of heartening to see that kind of response. It's not surprising to me at all here in the United States knowing American politics. We're used to these big swings, and of course there's downsides for both parties in my opinion, but it is interesting. I feel like from my perspective, I'm a political conservative in the United States. I guess that's what I would be considered. I'm very much a constitutionalist. I'm very much believe in division of powers. I think the biggest problem that we've seen in the Trump era is the fact that we've had this executive overreach and executive -

Rhona O’Connell: Sorry, I can't tell you how many times I've written about Lisa Cook.

Mike Maharrey: Yeah. So this kind of overreach, it happens in every administration, but it's just been magnified over the last couple of years. And so my hope is that maybe Congress will reassert itself as that check and balance because we've had no checks and balance for a number of years.

Rhona O’Connell: Exactly. Which goes back to what the journalist that I referred to earlier about basically they've been handed the baton, now they've got to run with it.

Mike Maharrey: Yeah, exactly. So before we go, is there anything that you're kind of watching and that has your attention that maybe is not related to the war and the Fed? What is something maybe that could impact the gold and silver market that is getting buried in the headline noise?

Rhona O’Connell: Well, there's lots of things going on in the background. One element which is intriguing me at the moment, I couldn't go to the London Bullion Market Association annual conference this year because I'd had an accident and couldn't get out of the house, let alone out the country, which is a shame. But the reason I mentioned that is that I was at the Asia Pacific Precious Metal Conference, which is Singapore in June. And at the moment we've got Singapore and Hong Kong both vying for poll position as the Asian hub for the precious metals markets. Now, the interesting thing about that and why I mentioned the APPMC conference is that one of the recurring themes at APPMC was a bemoaning of the fragmentation of the market. I was thinking to myself, "Well, hang on a minute, this isn't making any sense because you've got Hong Kong on one hand and Singapore on the other." I'm told that at the LBMA conference, they were all lovey-dovey in saying it can all work together, blah, blah, blah.

So, I'm not necessarily espousing this particular view, I'm quoting somebody else in Singapore who referred to the unseen hand behind Hong Kong. So there's obviously concerns about whether China is exerting too much influence. Singapore is obviously much more of a free trade position or free trade post and so on and so forth. If it's handled properly, they can probably bring complimentary expertise and resources to the table and work hand in hand. Whether that will actually happen, I'm a bit of a skeptic about human nature. One or other is going to want supremacy, I suspect. Asia obviously is very important for the physical gold market, has been for years. So it's a question of expediting flows and not going for supremacy, but trying to make it holistic. It's been on the horizon for quite some time, but it's now starting to make the specialist headlines at any rate.

So that, I think, is probably one of the most important things about how the markets evolve and maintain their fluidity.

Mike Maharrey: Yeah, it'll be very interesting. I've been writing quite a bit about just the nuts and bolts of what's going on, a lot of additional vaulting space, new products. So it is interesting and it'll be interesting to see how it plays out and integrates. So let folks know where they can find StoneX and what they might find over there.

Rhona O’Connell: Well, the website is easy enough. It's stonex.com, S-T-O-N-E-X. There's masses of stuff inside the website. You can be guided into any of the different sectors that we work in. There's the market intelligence, which is my forte. We've got loads of analysts, but we've got stacks of analysts on the ground for eggs and softs, particularly in Latin America and in North America. Over dairy, I forgot to mention that one. Yeah, there's just masses to see. We've got something like 50,000 corporate clients and over a quarter of a million retail, so we've got quite a reach.

Mike Maharrey: Yep. I see your guys' stuff pop up all the time out there in the mainstream. You do fantastic work. Helps me do my job, and I very much appreciate all of the great analysis, and I appreciate you taking time out of your day. You're already getting ready to wrap up your workday, and I'm just getting started. That's the -

Rhona O’Connell: I've got another three hours to go yet, but I'm closer to a cocktail than you are.

Mike Maharrey: I feel like I just woke up, but it's been enjoyable. It's worth getting up to talk to you, so I really appreciate your insights.

Rhona O’Connell: Very gracious of you. Thank you. It's a great pleasure. I always enjoy it.

Mike Maharrey: Absolutely. Well, we'll have you back again as we move forward. It'll be interesting to talk again in a few months and see how things are unfolding, because right now it's a lot of uncertainty, so we'll just roll with it, right?

Rhona O’Connell: Okay. Well, thanks very much, Michael. Lovely to talk to you.

Mike Maharrey: Thank you. Bye-bye.

Rhona O’Connell: Bye-bye.

Wonderful to have Rhona back on the podcast and to get her thoughts. Having met her personally at several conferences and rubbing shoulders with people she’s known in the metals industry, some of them for decades now, I can tell you she is incredibly well-respected amongst her peers and in this space. So again, it was great to have her join us for a second time now during this highly tumultuous year in the metals markets.

Well, that will do it for this week. Be sure to check back next Friday for our next Weekly Market Wrap Podcast. And to check out any of our audio programs, including our second podcast, the Money Metals Midweek Memo, just visit https://www.moneymetals.com/podcasts";>MoneyMetals.com/podcasts or find them wherever you listen to your favorite podcasts. And as a big help to us we would ask you to please like, subscribe, download and rate our podcasts. Doing so helps us extend the reach of this material.

Until next time, this has been Mike Gleason with https://www.moneymetals.com/";>Money Metals Exchange, thanks for listening and have a wonderful weekend everybody.

Why Is Gold Valuable - Scarcity, Durability, No Counterparty, and Central Bank Demand - Why Gold Held Its Worth After 1971 and What It Means for Your Savings - Money Metals

Fri, 06 Nov 2026 00:00:00 EST

Picture a grandfather who keeps a single gold coin in a small envelope in his desk drawer. He never spends it, never sells it, and rarely talks about it. Ask him why he holds on to it and the answer is short: “Because paper changes and this doesn’t.”

He is not an economist. He has simply watched the https://www.moneymetals.com/gold-price";>gold price and the dollar move through enough cycles to notice which kind of money holds up. Plenty of American families have a story like that one.

So why is gold valuable? Gold is valuable because it combines a rare set of physical traits (scarcity, durability, divisibility, and difficulty to counterfeit) with something no government can print: a track record of holding purchasing power across centuries.

It does not need a central bank, a balance sheet or a promise to be worth something. Even after the gold standard ended and gold stopped backing the dollar, it kept its role as the asset people turn to when confidence in paper money fades.

Scarcity, Durability and the Monetary History Behind Gold’s Value

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The first thing influencing gold’s value is its scarcity. All the gold ever mined would fit into a cube roughly 22 meters on a side. Annual mine production adds only about 1.5 to 2 percent to the above-ground stock each year, which means no discovery or policy decision can suddenly flood the market.

Gold does not rust, tarnish or decay. A coin struck two thousand years ago is still recognizable gold today. It can be divided into small units without losing value and it can be tested for purity.

Those traits are why gold served as money in nearly every major civilization. For much of American history, the dollar itself was defined as a fixed weight of gold.

That changed in two steps. The first in 1933 under President Roosevelt. The second came in 1971 under President Nixon. https://www.moneymetals.com/history/when-did-the-gold-standard-end";>Money Metals' history of how the gold standard ended lays out those events in more detail. However, the really striking part came after these events.

If gold’s value came only from government backing, it should have collapsed once the backing was removed. Instead, the opposite happened. At the time Nixon closed the gold window in 1971, the official price was $35 an ounce.

Today gold trades at more than a hundred times that level. The dollar, meanwhile, has lost more than 85 percent of its purchasing power over the same stretch. Gold did not need the government. The government’s money, it turns out, needed gold.

Key Factors That Give Gold Its Value

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When a careful saver asks why gold is valuable, these are the factors that matter most.

It cannot be printed. Federal Reserve notes can be created with a keystroke. Gold has to be found, mined, refined and minted, at great cost. That cost of production puts a natural brake on supply that no central bank faces.
It has no counterparty. A bond depends on the borrower paying. A stock depends on a company surviving. A bank deposit depends on the bank. A gold coin in your hand depends on nothing but itself. That is a major part of the case for owning physical gold rather than gold stocks, where your outcome is tied to management decisions and market sentiment rather than to the metal.
Central banks still want it. Here is the irony “modern” monetary thinkers would rather skip: the same central banks that issue fiat currency keep gold in their reserves. According to the World Gold Council, https://www.moneymetals.com/investment/central-banks-buying-gold";>central banks bought more than 1,000 tonnes of gold in each of 2022, 2023 and 2024. If gold were just a “barbarous relic,” why would the institutions running the paper system keep buying it?
It has real-world uses. Jewelry demand is enormous, and gold’s conductivity and resistance to corrosion make it valuable in electronics, dentistry and aerospace. These uses add demand but are not the main reason gold holds value. The main reason is monetary.
It has a long memory. Gold has outlasted every paper currency that tried to replace it. That history is why people reach for it in moments of stress.

A Simple Framework for Deciding What Gold’s Value Means for You

Understanding why gold is valuable is useful only if it helps you decide what to do. Consider this checklist.

If your main goal is preserving purchasing power over ten or twenty years, gold’s long record matters more than its month-to-month swings.
If you are worried about inflation, gold has historically been one of the assets people move toward when the dollar weakens. That pattern explains why investors turn to gold when inflation starts rising, and it is a reason to own some before inflation is in the headlines.
If you want liquidity, stick to widely recognized products: https://www.moneymetals.com/1-oz-american-gold-eagle-coin/7";>American Gold Eagles, Canadian Gold Maple Leafs, South African Krugerrands and https://www.moneymetals.com/guides/what-is-bullion-gold-silver";>one-ounce bars from known refiners.
If premiums worry you, https://www.moneymetals.com/price/gold-premium";>compare the cost over spot price across products. Bars usually carry lower premiums than coins; coins are easier to sell in small amounts.
If you want https://www.moneymetals.com/buy/gold";>gold as insurance, size the position so a price drop would not keep you up at night. Many careful savers hold somewhere between 5 and 20 percent of their savings in precious metals.

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Common Concerns and Misconceptions About Gold’s Value

“Gold doesn’t pay interest, so how can it be valuable?”

True, gold produces no yield. But that is the point. A yield is payment for taking someone else’s risk. Gold’s job is to hold value without that risk. You do not expect your homeowner’s insurance to pay you dividends, either.

“Isn’t gold’s value just a shared belief?”

Every form of money rests on trust. The difference is what that trust is placed in. Fiat money asks you to trust politicians and central bankers. Gold asks you to trust physics, chemistry and five thousand years of human experience. Which seems sturdier?

“What if the price drops right after I buy?”

It might. Gold can fall sharply in the short run, and it has gone through long flat stretches. Long-term holders treat those periods as part of owning insurance rather than as a sign the insurance failed.

Scarcity and Independence Keep Gold Valuable Without a Gold Standard

Gold is valuable because it is scarce, durable and independent of any institution’s promise, and because centuries of experience have taught people to trust it when paper money falters. Removing gold from the dollar in 1933 and 1971 did not drain gold of its worth.

It simply revealed which of the two had been carrying the other all along, which is exactly what that grandfather understood about the coin in his desk.

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Sources

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Gold Repatriation and the Growing Importance of Physical Ownership

State Sound Money Victories Continue

Fort Knox, Gold Revaluation, and the Outlook for 2027

Gold and Silver Bounce Back as Tech Stocks Stumble

The Precious Metals Sector’s Impressive Relative Breakout—and What It Portends

Bank of Poland Hits Gold Reserve Goal, Hints at Plans to Buy More

Paraguay Banking Crisis: A Lesson in Counterparty Risk

Counterparty Risk Rears Its Ugly Head

Rhona O’Connell Examines Gold’s Crosscurrents

O’Connell’s Career Began in Mining

Election Uncertainty Could Weigh on the Dollar

Inflation and the Fed Remain Key Risks

High Yields Could Limit Gold’s Gains

Debt and Private Credit Add to Financial Strains

Singapore and Hong Kong Vie for Asia’s Bullion Trade

Finding StoneX Research

Blue Wave, Red Ink, and Gold

Why Is Gold Valuable - Scarcity, Durability, No Counterparty, and Central Bank Demand - Why Gold Held Its Worth After 1971 and What It Means for Your Savings - Money Metals

Scarcity, Durability and the Monetary History Behind Gold’s Value

Key Factors That Give Gold Its Value

A Simple Framework for Deciding What Gold’s Value Means for You

Common Concerns and Misconceptions About Gold’s Value

“Gold doesn’t pay interest, so how can it be valuable?”

“Isn’t gold’s value just a shared belief?”

“What if the price drops right after I buy?”

Scarcity and Independence Keep Gold Valuable Without a Gold Standard