Is Silver Bullion “Real” Money?

In order to determine if an item is actually money, one must first define what constitutes real money. What are the characteristics that make money what it is?

To be defined as real money, being merely accepted as a method of payment is not sufficient. To truly be considered money, an item must be mutually and generally accepted as payment. No legal contract that creates obligation between two parties is required to uphold its exchange. Checking accounts, stocks, bonds and credit cards are all examples of contracts that are expressed in monetary terms.

Real money is a commodity with stable financial value, such as silver bullion coins or rounds. Many would consider notes issued by central banking systems to be real money, but this is not always the case. A centrally-issued banknote is not real money, until it is redeemed for the amount of precious metals by which it is backed. Most of today’s fiat currencies cannot be converted into an equal value in precious metal. Real money must also be durable, compact, divisible and highly valued.