What is money?
This seemingly simple question is a necessary starting-point in understanding precious metals, precisely because very few people have ever been given a precise and comprehensive definition of "money". Real "money" must possess the following four, central properties:
- It must be a "store of value"
- It must be "precious" or scarce
- It must be "uniform"
- It must be evenly divisible
Clearly, it is the first two properties which are of paramount importance, and which exclude most of the "candidates" as possible forms of "money". The criterion of money as a "store of value" is self-explanatory: real "money" must be able to retain its value over the long term. This is precisely why no paper currency currently in existence qualifies as "money".
Where do you keep your savings (if you have any)? In stocks? Cash? If you're considering gold, silver or other precious metals, this article may help. See also here.
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