/biz/ - Business & Finance

If the new increased pace of production is
maintained, the stockpiles grow faster, making new increases less significant. It
remains practically impossible for goldminers to mine quantities of gold large
enough to depress the price significantly.
Only silver comes close to gold in this regard, with an annual supply growth rate
historically around 5–10%, rising to around 20% in the modern day. This is
higher than that of gold for two reasons: First, silver does corrode and can be
consumed in industrial processes, which means the existing stockpiles are not as
large relative to annual production as gold's stockpiles are relative to its annual
production. Second, silver is less rare than gold in the crust of the earth and
easier to refine. Because of having the second highest stock-to‐flow ratio, and its
lower value per unit of weight than gold, silver served for millennia as the main
money used for smaller transactions, complementing gold, whose high value

meant dividing it into smaller units, which was not very practical. The adoption
of the international gold standard allowed for payments in paper backed by gold
at any scale, as will be discussed in more detail later in this chapter, which
obviated silver's monetary role. With silver no longer required for smaller
transactions, it soon lost its monetary role and became an industrial metal, losing
value compared to gold. Silver may maintain its sporting connotation for second
place, but as nineteenth-century technology made payments possible without
having to move the monetary unit itself, second place in monetary competition
was equivalent to losing out.

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