“Central banks buy gold” is routinely presented as a reason we should buy it. But why should their priorities automatically become ours?
Gold has legitimate industrial uses, including electronics and aerospace. Its historical monetary status, however, developed long before those applications. Its value cannot be explained by industrial necessity alone.
Its geological rarity is real, but underground rarity is only part of the supply picture. The World Gold Council estimates that almost all the gold ever mined still exists in some form. Any scarcity argument should account for that accumulated stock and the conditions under which its owners would sell.
Gold’s physical properties also allow industry to use extremely thin wires and coatings. That helps manufacturers economize on an expensive material. Recycling exists, and gold's high price incentivizes its recovery.
Silver raises a different question: what happens when monetary ownership competes with industrial demand for the same material?
In 1965, President Johnson publicly acknowledged that silver demand was outrunning new production and that continued silver coinage would exhaust Treasury stocks. He also explained that Treasury sales at $1.29 an ounce were intended to prevent the metal’s price from making existing coins profitable to hoard or melt.
Treasury’s own subsequent account says that, in May 1967, it restricted silver sales to domestic industrial users, requiring purchasers to certify manufacturing use. Government policy was explicitly deciding who could access public silver stocks at the controlled price.
Then, in 2002, Congress acknowledged depletion of the defense stockpile’s silver reserves and authorized purchases from other sources to continue the American Eagle silver bullion program. That deserves scrutiny as a decision about public resources and strategic priorities.
This history is why I question treating gold and silver as interchangeable expressions of financial independence.
I understand the argument that privately held gold can protect someone’s savings. But personal protection and changing the distribution of economic power are different goals. Buying gold does not automatically accomplish both.
So here is the discussion:
What makes gold the better use of an ordinary person’s limited resources?