What is a Dollar?

What is a Dollar?

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The United States Dollar (USD) is the official currency of the United States and is one of the most widely used currencies in the world. Recognized by the symbol “$,” the dollar has a rich history and has played a crucial role in shaping the global financial landscape. In this article, we will delve into the origins and evolution of the USD, exploring its link to gold and the historical context that led to the establishment of the gold standard.

The Birth of the United States Dollar

The dollar concept in the United States dates back to the American Revolution. As the country fought for independence from British rule, individual states and local banks issued various forms of currency. This decentralization of currency posed challenges, leading to the need for a unified national currency.


In 1792, the U.S. Congress passed the Coinage Act, establishing the dollar as the official currency of the newly formed nation. The act standardized the dollar’s value based on a bimetallic system, where gold and silver were used as the basis for minting coins.

The Gold Standard

The early 19th century saw the United States adopt the gold standard, linking the dollar’s value to a specific amount of gold. Under the gold standard, the U.S. government committed to redeeming paper currency for a fixed quantity of gold, providing stability and confidence in the dollar’s value.


The Gold Standard Act of 1900 solidified this link, setting the dollar’s value at $20.67 per ounce of gold. This fixed exchange rate remained until the early 1930s.

The Great Depression and the End of the Gold Standard

The worldwide economic turmoil of the Great Depression in the 1930s led to significant strains on the gold standard. To address the mounting financial crisis, President Franklin D. Roosevelt took measures to stabilize the economy. In 1933, he issued an executive order prohibiting private ownership of gold and required citizens to exchange their gold coins, bullion, and certificates for dollars at the prevailing fixed rate.


1934 the Gold Reserve Act was passed, effectively devaluing the dollar to $35 per ounce of gold. This devaluation allowed the U.S. government to accumulate gold reserves and promote exports, eventually leading to the dollar’s prominence as a global reserve currency.

Bretton Woods Agreement and USD Dominance

In 1944, representatives from 44 allied nations convened in Bretton Woods, New Hampshire, to establish a new international monetary system. The resulting agreement pegged their currencies to the USD, which, in turn, was linked to gold at a fixed rate of $35 per ounce.


Under the Bretton Woods system, the USD became the primary reserve currency, providing stability and facilitating international trade. However, the system faced challenges in the 1960s due to mounting U.S. trade deficits and the increasing amount of money held by foreign governments.

The Collapse of the Gold Standard

By the early 1970s, the pressure on the U.S. gold reserves had become unsustainable. In 1971, then-President Richard Nixon made the historic decision to suspend the dollar’s convertibility into gold. This effectively ended the gold standard and severed the direct link between the dollar’s value and gold.

The Fiat Currency Era

Since abandoning the gold standard, the USD has been classified as a fiat currency, meaning its value is derived from government decree rather than any physical commodity. The Federal Reserve, the central banking system of the United States, manages the supply of money and regulates interest rates to control inflation and maintain economic stability.


Now, defining a dollar requires some form of circular logic. $1 is 100 cents; now, what is a cent? A cent is one-hundredth of a dollar. So the dollar lacks any definition, meaning its value is dynamic and changes based on external factors set by the government.  

Dollar vs. Gold and Silver

The lack of stable value in the dollar contrasts significantly with that of precious metals, such as gold and silver. Here are the key differences:

Intrinsic Value

Precious metals, like gold and silver, have intrinsic value because of their rarity, durability, and demand for use in various industries and as jewelry. They have been valued throughout history for their scarcity and physical properties, making them a tangible store of wealth.


On the other hand, the dollar’s value is purely based on trust and confidence in the issuing government and its economy. The dollar itself has no intrinsic value; it is a fiat currency, meaning it has value only because the government declares it legal tender and people accept it for transactions.

Stability of Value

Precious metals have historically been more stable in value over the long term than fiat currencies like the dollar. Gold, for example, has retained its purchasing power for centuries. While the price of gold may fluctuate in the short term due to various economic factors, its long-term stability is attributed to its limited supply and universal desirability.


On the other hand, fiat currencies, including the dollar, are subject to fluctuations in value due to changes in economic conditions, government policies, and global market forces. Inflation, which erodes the purchasing power of a currency over time, can erode the dollar’s value. Central banks can also influence the value of fiat currencies through monetary policy, such as interest rate adjustments and quantitative easing.

Hedge against Economic Uncertainty

Precious metals are often considered safe-haven assets during economic uncertainty or geopolitical turmoil. Investors and governments have historically turned to gold and other precious metals to hedge against currency devaluation and inflation. The stability and scarcity of precious metals make them a reliable store of value in times of financial crisis.


While the dollar is still considered a reserve currency and remains widely accepted for international trade, its value can be impacted by economic and political developments. As a result, during periods of economic instability or inflationary pressures, investors may seek alternatives to the dollar to preserve their wealth.

Diversification and Portfolio Protection

Many investors diversify their portfolios by including precious metals to mitigate risk and protect against currency devaluation. Gold, in particular, is often seen as a “haven” asset, meaning its value tends to rise during economic uncertainty and market volatility.


In contrast, holding a significant portion of wealth solely in dollars exposes the holder to currency risk. If the dollar value declines significantly, the purchasing power of assets denominated in dollars diminishes, leading to potential losses in real terms.


The United States Dollar (USD) has a storied history, evolving from decentralized currencies during the American Revolution to becoming the world’s primary reserve currency. Tied to gold under the gold standard for much of its early existence, the dollar’s link to gold ended during the economic turbulence of the 20th century. Today, as a fiat currency, the USD plays a pivotal role in global trade, investment, and financial stability, reflecting the economic power and influence of the United States on the world stage.


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So you have decided to buy silver online.

Great choice. Let’s talk about silver.

Silver is exceptionally popular today. Part of the reason for this is the belief that it’s potential for upside value increase is even greater than the same belief in gold. In fact, there is a very good book on this subject entitled: “ Why Silver Will Outperform Gold by 400% in the coming years”. It’s a very scholarly book and quite convincing. Give it a read if you have the time.

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Mind you, one need not look as far as that book to find evidence of the common belief that silver has great potential for growth in the near future. All one has to do is go to the web or even Youtube and there are advocates of this thought at every turn.

At Durham Precious Metals we believe that silver is an easy choice because it gives a sense of substance due to its lower cost per ounce than gold.

Silver Bullion

Probably 90% of our business is silver sales so this sentiment is fairly unanimous throughout the public. 10oz bars seem to be the most popular. Generic rounds and Silver Maples seem to be the next most popular and 1oz bars a close 4th place. It is our opinion that 10 oz bars and 1oz rounds are your best value as their premium over spot is very reasonable. However, there is no wrong choice when it comes to our silver product line because we try to concentrate on product lines with low premiums anyway.

Silver has always been a form of money. There are those that will argue that silver has been demonetized but we beg to differ. All one has to do is refer to the (CCRA) definition for 999 bullion. It is deemed by Rev Can to be a “ financial instrument”. Enough said on that subject!

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From a utility standpoint, silver has somewhere in the neighbourhood of 60,000 industrial uses including painting the backs of mirrors to create the reflective surface to collecting radiation in solar panels. If nothing else, the lack of an above ground supply of silver ( which is relatively new historically) will keep the demand for this metal strong since for most applications there is no viable substitute.

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Can you imagine the mayhem that would ensue if all the major electronic manufacturers came grinding to a halt due to a silver shortage? It would be catastrophic to the economy. We believe that this fact alone will be a major driver of support for the silver price when the powers that be run out of tricks in their attempt to suppress the price of silver. And yes, we agree that this practice goes on in plain sight and that the regulators turn a blind eye. Let’s hope justice prevails and that the historic silver/gold ratio returns to its traditional level.

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In the meantime…keep stacking!

So you have decided to buy gold online.

Great choice! Let’s talk about gold then, shall we?

Gold is, and always has been, a favorite of collectors of precious metals. Its 6000-year history of sustaining wealth is unprecedented. The yellow metal has launched wars, bought fortunes and has been a form of money throughout that history. It is one of the densest metals and also one of the densest elements on the periodic table. It weighs in at a density of 19.32 grams per cubic centimeter. Water, by contrast, has a density of 1 gram per cubic centimeter.

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Platinum is the densest of the common 4 precious metals at 21.45 grams per cubic centimeter.

People will often ask when gold is the right choice to buy as opposed to other metals such as silver. This is a very common question. There is no easy answer that anyone can give to someone so we always boil it down to practical applications.

Gold Bullion

Consider how much of an investment you are planning to make over-all throughout the course of your precious metals buying.  If you are planning on purchasing, for example, $10,000 worth of metals and then cap your spending then it really doesn’t matter which metals you buy. The volume of the purchase will be relatively small in terms of weight and size. Our main concern and Durham Precious Metals comes down to simple things like , cost of storage, cost of shipping and bulk. We are always trying to help our customers have the best experience as metals collectors.

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For example, if you were to tell us that you are considering selling a piece of real estate and use the proceeds to buy metals then gold would be our suggestion. The reason comes down to volume and weight at this point. Several hundred thousand dollars of silver would be an incredible amount of bulk at this spend level. Hundreds of pounds of silver would be hard to store practically and would be more expensive to store as well. If you are the DIY type it would also be harder to hide than a comparable dollar amount of gold.

Keep in mind that at the time of this writing gold is about 75 times more expensive in dollar terms as the same weight of silver. That equates to 75 times less bulk per dollar spend. This will make it much easier to hide or store if you are looking at large purchase amounts.

Price of Gold?

If you are only considering a small total purchase amount either of the metals is perfectly fine. The one consideration we always emphasize for small purchase amounts really comes down to personal perception. Here is what we mean. Silver is 75 times more bulky per dollar spend. Obviously, it is going to feel a lot more substantial if you buy $5000 worth of silver and have several hundred ounces to admire than only about 3 ounces. It’s a perception thing at this point but perception matters to people since perception can make us feel a particular way about what we spend our money on.

In closing, gold and silver are both great choices and neither is wrong in terms of their value of utility. They have both had a long history as a store of wealth and that isn’t likely to change any time soon.

Buy both with confidence. Buy Gold Online

We often carry pieces that we don’t list on site so feel free to call us for an up-to-date list.

About DPM

When you consider silver value and gold value, the wise choice is to stock up today. At Durham Precious Metals we make it easy and convenient to buy silver and buy gold online.

For those who are serious about investing in gold and silver bullion, DPM is your one-stop store to buy gold and buy silver, whether it be through our website or our retail store.

Many people want to know where to buy gold and do not realize they can avoid the traffic hassle of driving into the city and visit us at DPM located in Oshawa, Ontario. See our Retail Store page for directions. Our customers are delighted with our competitive silver price. We carry mint direct silver bars, silver coins, gold bars and gold coins.

Make Durham Precious Metals your choice for gold and silver bullion.

Consider a Gold IRA as well