Gold and silver are the most stable currency the world has ever seen. The value of the bimetallic currency has remained surprisingly stable in relation to basic consumable goods:
A horse at the time of our Beloved Nabi Mohammad Salla'llahu Alaihi Wa sallam, cost about 1000 dirhams* today, 1,400 years later, a horse costs approximately 1000 dirhams (ZAR8,700 or about $1200 ).
Assuming $12.5/oz Silver, ZAR7.2/$ (September 2007)
3g/31.1035gx12.5x7.2x1000~=ZAR8,700 or $1200 for a horse
In 1,400 years inflation is zero. [www.e-dinar.com]
In pre BC an ounce of gold could buy a man a good set of clothes. Today, an ounce of gold can do the same. A dollar in 1920 can not buy you the same things in 2006 it could buy you then. In fact, it can buy you less than 3% of what it could in 1920. And in real terms gold should be priced at over $2000 an ounce to keep up with it's true intrinsic value. [http://www.learning-how-to-make-money.com/invest_in_gold_why.htm]
... and in todays terms (all figures quoted in South African Rands)
| Model | 2001 | # 1 oz KR Coins @R2500/Coin | Model | Aug 2007 | # 1 oz KR Coins @R4800/Coin |
| Price | Price | ||||
| BMW 318i | 165,000 | 66 coins | BMW 320i | 251,500 | 53 coins |
| Merc C180 | 174,500 | 70 coins | Merc C200K | 292,000 | 61 coins |
| Toyota Tazz 1.3 | 58,230 | 24 coins | Toyota Yaris T3 | 111,700 | 24 coins |
In the long term the bimetallic currency has proved to be the most stable currency. It has survived, despite all the attempts by governments to transform it into a symbolic currency by imposing a nominal value different from its weight.
Reliability
Gold cannot be inflated by printing more of it; it cannot be devalued by government decree, and unlike national currencies it is an asset which does not depend upon anybody's promise to pay.
Portability and anonymity of gold are both important, but the most significant fact is that gold is an asset that is no-one else's liability.
All forms of paper assets: bonds, shares, and even bank deposits, are promises to repay money borrowed. Their value is dependent upon the investor's belief that the promise will be fulfilled. As junk bonds and the Mexican peso have illustrated, a questionable promise soon loses value.
Gold is not like this. A piece of gold is independent of the financial system, and its worth is underwritten by 5,000 years of human experience.
[www.e-dinar.com]
* Imam Nawwawi (RA) through Tabarani quotes an incident of Jareer bin Abdullah. The essence of the incident is that he asked his assistant to purchase a horse for him. The assistant bought the horse for 300 in the then prevalent currency, which was dirham. The seller accompanied the horse too. Seeing the horse, Jareer asked the seller: “The price is not appropriate for this horse, would you accept 400? The seller said: “As you please.” Jareer happily added: “Would you like to take 500?” The seller said: “Sure, if it pleases you.” Jareer kept adding till it reached 800 dirhams, which were paid to the seller. People questioned Jareer for his strange conduct. They said that people bargain and pay less while buying something whereas you kept increasing the price. Jareer replied that he had taken oath of allegiance on the hand of Prophet (SAW) to wish well and to do good to fellow Muslims.
Remember that the horse in this example was an old, below average horse that the seller wanted to get rid of and therefore the low price. A average healthy horse would cost between 1000 - 1500 dirhams.
