Silver as a precious metal: A brief history

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Silver tends to sit in the shadow of its more lustrous cousin, gold, when people consider precious metals as an investment.But silver has also been as highly prized as gold for many centuries and among many cultures around the world.

Silver is greater in abundance than gold, and therefore commands a lower price per ounce. Because of this, silver has tended to have more practical uses, not only in manufacturing, household items and ornamental jewelry, but also as currency in commerce and trading.

Silver has been used as a base metal for coins in civilizations from the Far East to the Americas. The ancient Greeks are believed to be the first to mint coins from silver, starting in the Greek city state of Aegina around 700 B.C.

As trade developed among other colonies of ancient Greece, silver coins achieved greater acceptance. Eventually, other ancient Greece city states would mint their own silver coins with unique identifiers to represent their place of origin.

The Roman Empire developed its own silver-based currency, the denarius, based on the silver coins used in ancient Greece. Soon, the denarius, with silver content of around 4.5 grams, became widely used in circulation throughout the Roman Empire.

The modern day British pound sterling can trace its history to the silver Roman denarius, starting with the introduction of the silver penny in Anglo-Saxon Britain during the 8th Century. These pennies were originally produced from the finest silver available, but eventually were replaced and debased to a lower silver content of 92.5%. This became the standard for sterling silver.

Silver also became important in colonial America in the years before the Revolutionary War. British merchants sought to trade for American goods using silver coins, which at the time were scarce and thus highly valued. Spanish dollars, which had a slightly higher silver content than the pound sterling, were used for commerce. Silver coins were also minted in Massachusetts in 1652, but with a much lower silver content.

The importance of silver in trade for American colonists can be found in the U.S. Constitution. Article 1, Section 10 reads, No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts. When the Coinage Act of 1792 was passed establishing the U.S. Mint, under the guidance of Alexander Hamilton (before he became a Broadway sensation), the silver dollar became legal tender in the United States with silver content of around 24 grams.

Silver would remain part of the U.S. currency system until the latter half of the 19th Century. At that time, debates about monetary standardspitting supporters of a single-metal gold standard against those who favored a bi-metallist policy of gold and silvershaped American politics and presidential elections.

The Coinage Act of 1873 eliminated the silver dollar as legal tender and put the U.S. on track to establishing gold as its monetary standard. Supporters of bi-metallism, however, rallied around the free silver movement to keep silver dollars in circulation.

The silver movement was central to William Jennings Bryans presidential campaign of 1896 and the focus of his famous Cross of Gold speech. But Bryans loss to William McKinley effectively ended the free silver movement and put the U.S. squarely on the gold standard in 1900.

As silver fell from favor as a basis for currency, silver bullion gained greater acceptance as an investment and store of value during times of economic stress. Silver coins produced throughout history have reached collectible status today, and now can be used as part of an effective wealth preservation strategy for U.S. investors.