…except people don't keep fiat currency underneath mattresses. They invest it, and better their economy for doing so.

So your old coin isn't competing against some ratty old dollar bill, it's competing against the real value of my index fund shares.

Which, by the way, are winning: http://ritholtz.com/wp-content/uploads/2013/04/fda.jpg

"It's just like bitcoin in practice, except you have to use fire and steel to break it into smaller increments!"

A Morgan dollar is worth $15 for its material and possibly more for its collectible value, what is the problem here? Every dollar invested in 1900 would still have yielded a better return than $15, i.e. burying silver in the ground.

The real issue with a currency based on precious metal is that the reverse grows at such a rate much slower (<1% annually for gold IIRC) than economic growth. In a deflationary market, rational actors would simply remove money from circulation because it will just increase in value on its own, whilst the economy collapses.

People don't understand the risk of commodity investments until I show them a coin collectors red book from 1986, when that same Morgan dollar was worth $3-4.

Gold and silver is high because asians with money in places like China and India don't trust their governments. Period.

Reliance on gold and the resulting starvation of capital caused a lot of economic and social devastation 100-130 years ago.