WHY GOLD THOUGH?

A gold reserve is a reserve maintained by a national central bank as a guarantee to honor obligations to pay depositors, note holders (e.g., paper money), or trading peers, as well as a store of value or to sustain the value of the national currency during the gold standard eras.

 

Gold carries no credit or counterparty risks; it serves as a source of trust in a country and in all economic environments, making it one of the most crucial reserve assets worldwide, alongside government bonds.

 

But why gold?

 

Because it is

divisible – GOLD can be divided into smaller components

portable - it is capable of being carried around as a result of its high value should be able to be contained in a small space and weight 

homogenous - one unit is the same as any other unit 

durable -  it can not be easily destroyed or eroded 

valuable -it has intrinsic value, normally because it is desirable Should not be made or found without fair effort (usually a commodity in and of itself).

BUT SILVER ALSO HAS THESE PROPERTIES THEN WHY THERE IS NO SILVER RESERVE?

Central banks used to keep silver in their reserves and issue it in the form of coins.

BUT,

silver has been effectively demonetized, with hardly any central banks retaining silver as part of their reserves. This demonetization occurred beginning in the 1870s and lasted until the late 1960s. The fact that silver was totally demonetized but central banks kept gold as part of their reserves is a key reason why some people see gold as money but silver as a commodity.