1) It makes for an ideal currency - This arises from the inherent scarcity of both gold and silver, thus unlike the U.S.D, which i will soon be using a currency, can't be created at push of a button (printing press) . It is durable and easily denominated according to small (silver) or large (gold) purchases. The historic background does not explain why societies throughout history, (going back over 5,000 years) commodity as the best medium of exchange. my guess would be the other metals are either to scarce (platinum) or to plentiful (copper).
2) The sheer fact that it can't be replicated ensures there will very little to no inflation when referring to a gold standard (I'm Talking hundredths of % ) because gold produced via mining has declined for a decade now, the largest mine deposits have been discovered and the very commercial use in jewelry. Silver on the other-hand is mined is significantly larger quantities but after the industrial use is subtracted by the total supply mined, the net addition to world holdings is declining as well. Silver will likely have this problem become worse as more countries entering their own industrial revolutions i.e Russian, Brazil, China, Indian will demand larger quantities of this universal resource. Oh I forgot to mention another fact just as important, Silver is increasingly being used in the technology arena in more and more ways. The future of batteries (universally speaking) will require silver as a key component.
3) It has been used in world trade -despite the fact it isn't officially recognized as legal tender, and even that is starting to change. China has been stockpiling gold since 2003 , increasing the magnitude of their purchases each year. Additionally, they have announced their desire to achieve 10% of their total reserves in the form of gold. Even the Russians have expressed their desire to increase gold holdings. As clueless as government officials are to begin with, these actions signal a worldwide recognition of gold as a necessary asset.
4) Gold and Silver retain their store of value/purchasing power while a fiat money system (which we use, is essentially just pieces of paper due to the fact they are not backed by real assets). This is of particular importance in present day America and other inflationary countries i.e Zimbabwe, South Africa(THIS GOES OUT TO SANDRA), etc. A great example would be to think of a price of bread in 1990 selling for $3.10 a loaf (would cost about 1oz of silver OR 1/66 of an oz of gold). Fast forwarding 20 years, this loaf would likely be $6.20( these aren't actual prices or changes in the price level), you have lost half your purchasing power. But bread priced in gold would equate to about 1/50 of an oz OR 1/2 an ounce of silver, thus demonstrating an increase in the purchasing power. In short, the message I'm attempting to convey is that even when paper money is earning a few percent interest at the bank, basic consumer goods have seen their prices constantly increase. Therefore keeping some gold and silver, would protect you from inflation thus making this investment in order to ensure capital preservation.
5) These metals not only protect one's wealth, but like art, many coins become worth 5x,10x,20x more than the underlying asset. Therefore it is a great thing to give to your kids or leave as inheritance. Although I'm not certain on the taxation of such as assets, but a very good accounting argument could be made that only the face value (with is minimal) is fair game. If, on the other hand, it is treated as a gift, therefore the original cost basis subtracted from the future selling price woud then be taxable. But the solution is one word : BLACK-MARKET
Bottom Line: Having at least 10% of your wealth in these precious metals should be commonplace especially when living in a fiat money world that will inevitably collapse.
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