In my essay “The Quality of Money”, I argued that the purchasing power of money cannot be explained solely by its quantity. What truly matters is its quality – its ability to reliably function as a medium of exchange, a store of value, and a unit of account.
In times of rising government debt, massive monetary expansion, and increasing uncertainty within the financial system, it becomes especially evident why precious metals such as gold and silver fulfil these requirements far better than government-issued paper currency.
1. Quality Matters More Than Quantity
Traditional macroeconomic approaches focus almost exclusively on the money supply. I emphasize, however, that purchasing power can decline even without an increase in the money supply – simply because the quality of money deteriorates. Quality, as I define it, means: How well does a monetary good fulfil its monetary functions in the eyes of market participants?
2. Why Precious Metals Make Good Money
- Non-monetary demand: Gold and silver possess an inherent, non-monetary value. Jewelry, industrial uses, and cultural significance ensure a permanent baseline value – even if their monetary role is temporarily suppressed. This reduces the risk of a total loss.
- Scarcity and production costs: Precious metals are the result of a costly extraction process and cannot be created at will. This natural scarcity protects against the political temptation to expand the money supply – something that is structurally embedded in fiat currencies and has repeatedly been abused.
- Durability and stability: Gold does not corrode, and silver only minimally. Both metals endure for generations. Good money must be durable – something paper currencies fail to guarantee, especially when their value can be altered or annulled by political decree.
- Divisibility and homogeneity: Precious metals can be divided precisely without disproportionately losing value. At the same time, they are homogeneous: One ounce of gold is identical wherever you go.
- Portability and high value density: Gold and silver have a high value per unit of weight and can be stored and transported efficiently – an indispensable characteristic for any medium of exchange.
- Recognizability and resistance to counterfeiting: Metals have unique physical properties that make counterfeiting difficult. Fiat currencies, by contrast, require constant updates to printing techniques and security features – a symptom of their inherent weakness.
- Market origin instead of government design: Money must emerge from the market process. Gold and silver became money not through government decree but through spontaneous, evolutionary selection by individuals. Fiat money, however, depends on legal-tender laws and coercion.
3. Behavioral and Market Implications
As debt levels rise, central banks expand their balance sheets, and political interventions reshape people’s expectations, the quality of paper money declines. In response, demand increases for assets whose quality is preserved by market processes rather than political control. Gold and silver serve exactly this function: They are credible stores of value precisely because they are independent of political institutions.
4. A Critical Note
It is true that gold and silver are no longer everyday media of exchange. Yet this is due less to their inherent qualities – which in fact make them excellent forms of money – and more to state monopolies, legal-tender laws, and tax barriers. In a genuinely free competition among different forms of money, precious metals would have strong prospects and would experience a significant increase in purchasing power if they were once again demanded as a medium of exchange.
5. Conclusion
The quality of money determines its long-term viability. Precious metals such as gold and silver combine scarcity, durability, divisibility, recognizability, non-monetary value, and market-based origins – characteristics that fiat currencies often lack by design.
For this reason, more and more people are turning to precious metals as protection against inflationary policies, unstable financial systems, and the erosion of government-issued currencies. Not out of nostalgia – but from rational economic judgment.
How can you buy precious metals cheaply and store them safely?
Elementum Deutschland GmbH, based in Sindelfingen (Germany), specializes in trading physical precious metals. Customers who purchase precious metals from Elementum Deutschland (or one of the other national Elementum companies in five European countries) can store them in the renowned high-security vaulting facilities in the St. Gotthard Massif in Switzerland at Elementum International AG.
Of course, you also have the option of purchasing gold and silver directly and having it delivered to your desired address. However, storing silver in the so-called open duty-free warehouse (“offenes Zollfreilager”) at St. Gotthard offers decisive tax advantages:
- The 19% value added tax customary in Germany is completely waived on purchases and sales – a considerable price advantage that effectively secures you 19% more silver for your money.
- If you store your silver in this high-security vault, you can sell it back to Elementum Deutschland GmbH at any time – without any bureaucratic hassle and also without VAT, as the trade takes place within the duty-free warehouse. You will receive the funds via bank wire.
- VAT is only payable when you physically remove the stored silver – either by picking it up in person (after prior notification) or by having it shipped to your address.
More silver, more return
Thanks to duty-free storage, you receive 19% more physical silver when you buy. This additional amount also participates in the performance of the silver price if it rises – a leverage effect that significantly improves your return opportunities.
Secure your storage space now – free of charge and without obligation
Register now for a storage space in the St. Gotthard high-security vaulting facility and receive free access to:
- our General Terms and Conditions (GTC)
- current fee tables
- annual audit reports from the auditing company BDO AG
- transparent proof of use of funds
- family discount information
- the popular children’s program “Schatz4Kids” (“Treasure4Kids”)
- as well as numerous other documents and information on storage, purchase, and resale, as well as the ratio “switching” strategy.
Register now: https://silberbar.elementum.de/
Tip for discounted entry: Enter the promotional code “50” (“Aktionscode“) and the “Vermittler” number 1000166 when registering to receive a 50% discount on the storage space setup fee.
Important: Registration is non-binding and does not commit you to anything – but it is your first step towards an independent and crisis-proof precious metal investment.
Elementum is a second-generation, owner-managed family business. Trust, consistency, and long-term thinking are at the heart of our philosophy. The Board of Directors of Elementum International AG is composed of internationally renowned experts in the money and precious metals markets, including economists, analysts, university professors, and precious metals specialists. This in-depth expertise forms the backbone of our actions—for your security, your assets, and your future.
About the Author
Prof. Dr. Philipp Bagus
President of Elementum International AG
Philipp Bagus is Professor of Economics at Universidad Rey Juan Carlos in Madrid, Spain. His research focuses on monetary and business cycle theory, and he has published in international journals such as the Journal of Business Ethics, Independent Review, and the American Journal of Economics and Sociology. He has received numerous awards for his work, including the O.P. Alford III Prize in Libertarian Scholarship, the Sir John M. Templeton Fellowship, the IREF Essay Prize, and the Ludwig Erhard Prize. Bagus is a member of the Academic Advisory Board of the Ludwig von Mises Institute Germany and the author of several books. His best-known works include “The Milei Era: Argentina’s New Path” (2024), “Full Reserve Banking versus the Real Bills Doctrine” (2024), “In Defense of Deflation” (2015), and “The Tragedy of the Euro” (2011).
Contact
Rockstone News & Research
Stephan Bogner (Dipl. Kfm., FH)
Müligässli 1, 8598 Bottighofen
Switzerland
Phone: +41-71-5896911
Email: info@rockstone-news.com
Disclaimer: This article reflects the personal opinion of the author. Elementum assumes no responsibility for the accuracy of the content and accepts no liability for its use. This article may contain links to external third-party websites. Elementum is not responsible for the content of these external sites and expressly distances itself from all information provided there. At the time the links were created, no unlawful content was identifiable. This article does not constitute a recommendation to buy or sell. Elementum International AG is a Swiss company that specializes exclusively in the storage of physical precious metals in a high-security vault facility located in the St. Gotthard mountain massif in Central Switzerland. The Board of Directors and Executive Management of Elementum International AG have been selected solely based on their professional expertise and long-standing experience in precious metals markets. As these individuals may also be professionally active outside their roles at Elementum International AG, the company has no influence over their external activities and respects their right to freedom of expression. Therefore, the views expressed by persons working with or for Elementum do not necessarily reflect the opinion of Elementum International AG. Investments in precious metals are subject to risks, including those specific to the structure of this market. Please read our full risk disclosures and consult a licensed financial advisor before making any investment decisions. Neither the author, Elementum International AG, nor Elementum Deutschland GmbH assume any liability for actions taken based on the information provided. Past performance is not indicative of future results. The cover picture has been obtained and licenced from Shutterstock.com.
