I’m trying to setup a local currency tied to individual stores of gold or silver and I have a few questions about how this would work. Here are my questions so far:
- How can the dollar have a set value when the spot price of precious
metal changes daily? - Does the amount of dollars in circulation increase when the spot
value increases or is the dollar a direct representation of the amount
of a commodity ($1.00=1 ounce of silver) - If the amount of dollars in circulation increases when the spot
value increases how do fractional increases in the value of silver add
to the circulation? (how can you add 1/2 dollars or 0.66666 dollars to
the system?) - If the dollar is a representative of a commodity how do merchants
price goods if the price changes? Would all merchants require a
commodities merchant even if there was a paper dollar backed by
commodities? - If the dollar was tied to commodities how would anyone know what
value the commodity was worth? - If the prices of commodities are still artificially manipulated by
COMEX and paper markets how can the value of the dollar reflect the
true value of the commodity it represents?