Why the price of silver could skyrocket
By the mid-6th century BC, Darius the Great was ‘King of Kings’, ruling over the vast Achaemenid Empire.
By that time, gold and silver had already been in use by earlier civilizations for thousands of years.
There are cuneiform tablets that are nearly 4,000 years old from ancient Sumeria which record commercial transactions made in gold and silver.
And subsequent civilizations– the Babylonians, Egyptians, Lydians, etc. all used gold or silver in commerce.
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But Darius had a unique idea.
He borrowed the idea of minting gold and silver coins from the Lydians… but then established a fixed exchange rate between the two metals.
Darius decreed that one gold “daric” was worth 13.5 silver coins– one of the first examples in history of a fixed, bimetallic standard.
His idea caught on. And for thousands of years afterward, later civilizations established a fixed gold/silver ratio.
In ancient Greece during the age of Pericles, gold was valued at 14x silver. In ancient Rome, Julius Caesar valued gold at 12x silver.
It remained this way for centuries.
Even in the earliest days of the United States, eighteen centuries after Caesar, The Coinage Act of 1792 established a ratio of 15:1.
(According to the law, one US dollar is supposed to be 24.1 grams of silver, or 1.6 grams of gold. So those pieces of paper in your wallet are not dollars– they are technically “Federal Reserve Notes”.)
In modern times there is no longer a fixed ratio between gold and silver, though its long-term average over the last several decades has been between 50:1 and 80:1.
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