What countries still use gold coins.

Gold coins have been minted by countries all over the world for many years. However, most countries stopped making gold coins as currency by 1933, as they switched from the gold standard due to hoarding during the worldwide economic crisis of the Great Depression. 

As of 2023, none of the world’s countries use the gold standard.

Internationally, gold coins are used in countries such as China, South Africa, and Australia to hedge against inflation and as an investment opportunity. Zimbabwe recently joined the ranks of countries that have issued gold bullion coins. Malaysia also issued its gold bullion coins in 2023. However, gold coins are not as widely used as currency as envisaged by Zimbabwe’s central bank.

Mexico still use silver for coinage.

As of 2015, it remains the sole nation embracing silver coins as its official legal tender. However, it’s essential to note that the silver content in Mexican currency is of minuscule proportions, reflecting a symbolic gesture more than substantial economic backing.

The Mexican peso features a silver composition of 0.925%, indicating that 92.5% of the coin’s content is pure silver, while the remaining fraction comprises of other metallic elements. The division of the Mexican peso is in terms of 100 centavos, and the smallest unit containing silver is the 10-peso coin. This particular coin boasts a diameter of 28 mm and a weight of 14 grams.

In a similar vein, Tuvalu, a diminutive island nation nestled in the expanse of the Pacific Ocean, employs silver coins as a representation of its currency. Tuvalu introduces a series of silver coins, each possessing a nominal value of $1 and adorned with depictions reflecting its cultural heritage and historical narratives. Although granted legal tender status within Tuvalu’s borders, these coins aren’t primarily intended for commonplace transactions; rather, they are predominantly marketed to enthusiasts and investors. The silver coins from Tuvalu exemplify an exceptional purity level of 99.9% and are characterized by a weight of 31.1 grams.

Across the United States, a fascinating trend has emerged – the revival of gold and silver as legal tender. Several states, including Utah, Arizona, Texas, Oklahoma, and Louisiana, have already enacted laws recognizing these precious metals as viable means of exchange. Impressively, this movement has gained momentum, with eleven U.S. states either formally adopting gold and silver U.S. bullion coins as legitimate currency or actively progressing towards this status.

Regrettably, the era of commonplace gold and silver circulation in the world’s economies is a thing of the past. Scenarios of stumbling upon an old silver dime in one’s change still arise, albeit increasingly rarely. Remarkably, bullion coins like the $1 American Silver Eagle, $5 Canadian Silver Maple Leaf, and £2 British Silver Britannia possess legal tender status, though their actual value far surpasses the nominal face value.

Venturing into the realms of U.S. currency, stories of encountering a silver dime, nickel, half dollar, or even a dollar bill in everyday transactions do persist, yet their prevalence dwindles over time. A personal anecdote comes to mind – not long ago, I found myself in possession of a lady liberty 50 cent piece as part of my change from a local store. A bit of research unveiled its silver content to be worth around $6.00, a glimpse into the value hidden in everyday transactions. Interestingly, the United States retains a unique distinction – the uninterrupted continuity of its currency. U.S. minted silver, exemplified by iconic pieces like Morgan silver dollars and so-called ‘junk silver,’ remains legally accepted tender. Although spending such coins at face value remains an option, the pragmatic choice often leans towards selling or preserving them for their underlying silver value. The narrative takes a historical twist when revisiting the year 1964. Faced with escalating inflation, the U.S. halted the production of coins containing 90% silver, a pivotal decision that rested on the economic equilibrium between the coin’s intrinsic metal value and its nominal denomination.

Zooming back to a bygone era, the echoes of April 5, 1933 resonate with President Franklin Delano Roosevelt’s executive order. This decree mandated the return of gold coinage, bullion, and certificates to Federal Reserve Banks, effectively criminalizing private gold ownership within the United States. In a parallel move, the minting of gold coins also ceased that same year, marking a historical turning point in the nation’s monetary landscape.

In 2014, Isis made his own gold comeback.

In 2014, ISIS announced that it would mint its own currency in gold, silver, and copper denominations of the Islamic dinar. The currency was intended to free Muslims from a financial order that had “enslaved and impoverished” them. The coins were designed by the ISIS leader, Abu Bakr al-Baghdadi, and were to be used in the self-declared caliphate. The currency was made up of seven coins: two gold, three silver, and two copper.

 The gold coins had two denominations, the silver coins had three, and the copper coins had two. The move was “purely dedicated to God” and was intended to remove Muslims from the “global economic system that is based on satanic usury”. The currency was not recognized anywhere in the world, and its value was limited to the areas under ISIS control. The coins were meant to replace U.S., Iraqi, and Syrian banknotes. The ISIS policy-making Shura Council tasked its treasury, Beit al Mal, with minting the coins. The coins bore an inscription that read, “The Islamic State, a caliphate based on the doctrine of prophecy”.

Why don’t we use gold coins anymore?

the shift away from using gold coins as currency is due to a combination of economic factors, practicality concerns, and changes in monetary systems. Modern economies rely on fiat currencies that are backed by the trust and confidence of the government issuing them.

1. Abandonment of the Gold Standard: Many countries, including the United States, abandoned the gold standard in the 20th century. The gold standard was a monetary system where the value of a country’s currency was directly linked to a fixed amount of gold. However, this system was abandoned to curb inflation and provide more flexibility in monetary policy.
2. Monetary circulation: For gold coins to function as money, they must circulate—exchanged for goods and services. However, if productivity grows faster than the gold supply, hoarding increases, reducing the available gold further. This scarcity encourages the search for alternative currencies. People realize the gold’s inherent value exceeds its denomination. Melting coins becomes tempting; selling the gold content often earns more than the coin’s purchasing power. Gold and silver endure, allowing long-term storage without deterioration. Interestingly, modern gold production includes recycled gold, possibly from ancient times. Governments would struggle to sustain this. Gold/silver coins couldn’t circulate without being melted for greater value. Eventually, fiat money emerged. It adjusts supply to productivity, surpassing gold as functional currency.
3. Economic growth: The gold standard proved detrimental, evident in its 150-year history of 30 severe recessions (up to 10%) and 30 instances of high inflation (over 12%). This system needlessly constrained growth, causing economic pain and underutilization 75% of the time. Like other countries, leaving the gold standard was inevitable to enable expansive economic growth. The gold standard limits an economy’s size—$100 in gold yields a $100 economy. Comparing the post-gold standard growth, the appeal of a larger economy is evident.
4. Expense and Practicality: Minting gold coins is expensive, and they are easily lost or stolen. Gold coins also tend to be stockpiled rather than circulated, which limits their usefulness as a medium of exchange.
5. Clipping and Counterfeiting: In the past, gold coins were susceptible to clipping, where people would shave off small amounts of gold from the edges of the coins. This practice allowed individuals to accumulate enough gold to be melted down into bullion. Additionally, gold coins were easily counterfeited in the pre-industrial era.
6. Capital Gains Tax: There are tax implications associated with using gold and silver coins as currency. Capital gains tax may apply when using gold and silver coins due to their potential increase in value over time.