There was a time, long before the introduction of the gold standard, when currencies across the globe came in the form of coinage minted in precious metals. In Medieval Britain, a silver hammered penny would be accepted for trade and exchange in any country purely on the weight of the coin.
The gold standard is a monetary system where a country’s currency has a value directly linked to gold. For example, if the U.S. sets the price of gold at $500 an ounce, the value of the dollar would be 1/500th of an ounce of gold.
However, the gold standard is not currently used by any government. Britain stopped using it in 1931. Citizens were urged to trade in their gold sovereign coins to the Post Office, exchanging them for notes instead – signalling the end of gold coinage circulation in Britain. President Herbert Hoover famously said in 1933 “We have gold because we cannot trust governments.” This statement foresaw one of the most draconian events in U.S. financial history: the Emergency Banking Act, which forced all Americans to convert their gold coins, bullion and certificates into U.S. dollars.3 While the legislation successfully stopped the outflow of gold during the Great Depression, it did not change the conviction of those who remain confident in gold's stability as a source of wealth.
So from precious metals to paper promissory notes, we have now progressed to plastic notes, which to all intents and purposes should survive much longer before having to be replaced. All well and good but as we are all aware, there is now a massive push towards a ‘Cashless Society’ mainly instigated by banks and governments who seem hell bent on everyone banking online — and to my mind the Coronavirus is shamefully being exploited to this end. So what does the future hold? If we allow it to happen, virtual electronic figures on a computer will be stating our wealth, wealth unattainable in hard currency. Consider this, if in the future we head into an economic meltdown and fall into negative interest rates — resulting in a run on the banks — there will be no cash to stash for the stormy times ahead.