The Silver Underground, which is the blog of the upcoming Silver Circle Movie, just wrapped their week long focus on precious metals and I had the privilege of submitting an article on what I've learned as a collector of ancient Islamic Coins. Here's what I submitted.
I thought I’d share some things I’ve learned, about history, currency and precious metal from my coin collecting.
It’s important to point out that there are a lot of scams in numismatic coin collecting realm. Often disreputable dealers up sell collectors on “rare” coins that turn out to be common bullion coins. Sometime this week we’ll devote a whole post to exposing these scams, but when it comes to collecting Arab and Persian coins the reverse is often true. I’ve been able to buy numismatics at spot price or less from people who simply didn’t know what they had. For example, in my experience the purveyors of rare US coins look upon me with suspicion when I ask if they carry Arab or Persian coins. Often they sneer with disdain and pointed me toward a tray of miscellaneous “foreign” coins. Don’t disparage these miscellaneous coin trays. I bought a matching set of 14th century Indian coins, pictured above, one silver and one copper, for a dollar because the guy had no idea what they were. Also, since I did most of my purchasing from eBay, often I found numismatic coins listed in the bullion section, or bullion coins listed in the numismatic section. I once bought a collection of gold dinars that the seller brought home from a business trip in Dubai and mistakenly listed them as ancient coins. I placed a bid for the full spot value, but I was the only bidder, so I actually bought them for half. That’s just how eBay works sometimes.
There’s actually quite a bit to learn from the history of Islamic coinage that could benefit the alternative currency movement today. In the 7th century the Arabian Peninsula was inhabited almost entirely by nomadic tribes of Bedouins. Mecca was at the intersection of trade routes between the Byzantine Empire, the Persian Empire and Abbassynia to the South. It was a place for merchants to rest their caravan, water their camels and soak in some of the local flavor before heading off someplace else. But even after Muhammad unified the tribes of Arabia, and being a merchant himself taught quite a lot about honest money, Muslims didn’t coin their own money until the 8th century. Arabian markets were flush with Roman and Persian coins, but once those Empires began debasing their currencies with copper and brass it was time for Muslims to mint their own. So, from the outset the industry of Islamic coins was a movement to provide an honest alternative to fraudulent currency.
The first thing they did was countermark existing coins they’d identified as silver. Drachms that came into Arab markets from Persia all looked the same to the naked eye, but the older coins were pure silver while the newer ones were debased. So, the Muslims would pound a countermark into the older silver coins, usually a tiny “Allah” to certify them as honest money. I view this as the same work that Don’t Tread On Meme does today, selecting out the old US coins from a bygone era of honest money and marking them, in this case with a QR code, to distinguish them from the debased coins.
Eventually it became clear that they would have to begin minting their own coins, and just like today the production method played a pivotal role in their success. Minting is not free, but keeping the premium down is the key to a viable alternative currency. For the first gold dinars and silver dirhams the prohibition of graven images presented some unexpected monetary advantages. Byzantine and Persian rulers put their own faces on their coins, but Islamic coins were inscribed only with text identifying the mint, the weight of the coin, and perhaps the year. Quranic verses on the opposite side admonished dishonest business practices. The result was a far less expensive manufacturing process and a wildly successful monetary epoch. Caravans brought wealth and prosperity back to the Arabian Peninsula, while the currency reached deep into foreign lands and developed a reputation for the most rigid standards of purity in the market.
I see these qualities in two modern alternative currencies. First, the Silver Circle Rebel Round. Although not religiously motivated, by sticking to a 2D design, and not the fully sculpted faces you see on the Liberty Dollar and various commemorative coins, we can keep the price under most other rounds, and more easily manufacture the smaller tenth ounce round. Also, instead of the round promoting a person, the Rebel emblem has developed a reputation which speaks to the purity of the coin. Second, I see these qualities in Shire Silver, but in a more modern sense. By abandoning the die process altogether, and packaging specific weights of silver in laminated cards, Shire Silver has lowered the production cost as low as current technology allows. If you really think about it, the silver is the currency, and the coin is just the most cost effective package technology allowed at the time.
Then, as always occurs, corruption ensued. The fall from this period of market integrity is disheartening, but none the less interesting. A profound cautionary tale to modern economists. As greedy local governors abandoned standards of purity and debased their own currencies market pressures came down on them hard. And for a time the markets were split between competing currencies from different mints.
Many Muslim countries continued circulating gold and silver coins long after the US stopped, and you can still find the Turkish Kurush, the Saudi Guinea and the Iranian Azadi at bullion prices. In fact, for gold bullion I still buy these because numismatic coins and bullion coins fall in different legal categories, and when the Federal Government gets around to confiscating gold again their agents likely won’t know the difference.
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