In previous articles on fantasy role-playing games I’ve argued for a silver economy in which gold is worth 100 silvers. I’ve also revised the weight of coins to a more reasonable 200 per kilogram, or 100 per metric pound. Finally I’ve introduce the concept of banks in fantasy role-playing games, which may also serve as temples, to mitigate the effect of players suddenly carrying ten time the coins.
The Role of Gold
What I haven’t addressed is the role of gold in such an economy.
Gold serves primarily to store value more compactly. Especially if Dwarfs artificially hold the price of their high-quality gold at 100 times its weight in pure silver, a noble or a kingdom might convert their tax revenue in silver and other goods to gold. High-quality, hard to counterfeit Dwarf gold is ideal. The value of this investment will never rise, but it will never fall, either. It’s the ultimate secure investment. (This presumes little or no inflation, a common assumption in fantasy.)
Prior kingdoms and civilizations presumably also believed in the enduring value of gold, so most hoards adventurers may discover will be primarily gold, whether coins or jewelry. Thus adventurers toting home theil loot have a hundred times less weight to carry, assuming the gold is pure. (It may not be.)
Converting Gold To Silver
Previously I’ve stated that “gold crowns”, gold minted by states other than the Dwarf kingdoms, are not necessarily worth 100 times in silver. To clarify, this volatility only applies to gold of a foreign nation or of uncertain provenance, e.g. gold “liberated” from a crypt.
When a kingdom – let’s call it Mythendria – mints both gold and silver, it sets a fixed ratio whereby each Mythendrian gold is worth a hundred times its weight in Mythendrian silver. (Whether that gold is pure gold and silver is pure silver is another matter.) Within the kingdom itself, merchants will trade 100 silvers for a Mythendrian gold coin of the same weight, or vice versa. They may look at gold from other kingdoms, on the other hand, with more suspicion depending on Mythendria’s relationship with that kingdom. A handful of gold from an unknown or extinct kingdom will warrant an immediate gold assay, and maybe hard questions from agents of the Mythendrian crown.
Silver, on the other hand, is always accepted as silver as long as it looks and smells somewhat like silver. In part this is a matter of hos common transactions in silver are, and partly the inconvenience of testing silver, typically using solvents. Merchants always accept silver coins of the customary size, no matter which city, kingdom, or empire minted them.
What About Other Metals?
Copper, bronze, and other metals are not afforded the same courtesy, because of how little intrinsic value they have. Towns and cities only mint copper to pay low-wage workers for whom keeping a ledger would be inconvenient. (In rural areas, the local lord or his staff know all the residents, so any debits and credits remain in a single ledger.) Rural districts seldom use coins at all; residents that do insist on silver.
(Technically, silver and gold have little intrinsic value, either. Iron can make weapons, and copper can make cheap utensils. Still, gold and silver are shiny and hard to obtain, and silver reacts to some poisons, so tradition dictates they’re valuable.)
The Lifecycle of Gold and Silver
Where does gold and silver come from? In my fantasy worlds, substantial amounts come from the Dwarfs, either from the powerhouse of Myrkheim or from Dwarf mining settlements scattered throughout the Known World.
Humans mine a significant amount of silver, but Dwarfs long ago cornered the market for gold. (Some whisper Myrkheim actually buys its gold from outlying mining colonies or ruin delvers, then purifies it and mints it into its famous guilders.) A new source for gold might break the Dwarfs’ near-monopoly on gold … or it might not.
Generally people use silver for everyday commerce, at least until the silver coin becomes so worn that one can’t tell who minted it. Jewelers may melt down silver coins for jewelry or silver tableware; armorers may use it to silver weapons against lycanthropes. Periodically worn silver coins may be taken out of circulation, melted down, and minted again as new coins. (Sometimes the coin contains less silver.)
Gold, because of its value, warrants more care. Sometimes it becomes jewelry or other items of ostentatious wealth, but gold coins and gold ingots usually sit in a noble’s vault until the noble house needs an infusion of silver to meet their daily needs. Then another noble house buys the gold and keeps it in their vaults. Dwarf gold is preferred, but nobles will also invest in their kingdom’s gold, other kingdoms’ gold, or gold disinterred by adventurers. Here the volatility of gold applies.
Merchants normally do not accept gold uless it’s a big purchase, like a sword, a horse, or property. Even then, such things commonly come from the local lord as gifts to build loyalty rather than as strictly commercial transactions. A merchant with gold will usually sell it for silver, either to a money-changer or to a noble looking to build their stockpile of gold.
Other Economies
The coin-based economy of adventurers and city-dwellers hardly exists in rural areas. There the local lord accepts grain or other raw materials as taxes, and peasants trade their remaining raw or finished products for other products of equivalent value. Very rarely do coins chainge hands, and then always silver.
Barbarians may covet gold and silver coins, but they too engage mostly in barter or gifts between lord and subject. The gold and silver raiders plunder sooner or later makes it back into the economies of civilized lands.
Dwarfs famously trade with outsiders only in silver and gold, but among themselves the Dwarfs exchange nickel-copper coins representing quantities of gold and silver. Sometimes they even use clay or paper “checques” to pay each other. The Bank of Myrkheim ultimately settles all such debts.
Elves and other primarily hunter-gather societies typically engage in barter. The ancient Elvish Empire, curiously, has two economies: a gold-based one between nobles and a bronze-based economy for commoners and local clan leaders. Some sort of barter or gift economy connects the two. The bronze tokens exchanged in outlying regions of the Elvish Empire have no intrinsic value; they merely serve to tally debts between Elves. Theoretically one can redeem the bronze with gold, but it would take a lot of bronze tokens to equal one gold coin.