Let’s look at History of Gold and Silver as Currency and Asset in China, India, and the Arab World, long before the invention of modern commodity market and the world could know the symbol XAU/USD and XAG/USD. This article is not financial advice or any prediction of asset prices.
Introduction: The Triad of Ancient Metallism
For millennia, across three distinct but interconnected civilizations, gold and silver were not merely decorative metals but the very sinews of power, faith, and commerce. In China, India, and the Arab world, these precious metals evolved from ritual objects to coinage to stores of sovereign and private wealth, embedding themselves deeply in cultural consciousness. Their histories reveal not a uniform monetary evolution but a fascinating divergence in how societies conceptualized value, trust, and permanence.
Part I: China — The Silver Heart of an Empire
Ancient Beginnings: The Age of Bronze and Cowries
Long before coinage, Shang Dynasty (c. 1600–1046 BCE) elites used bronze in ritual vessels and cowrie shells as a medium of exchange. Gold was rare, viewed more as a precious material for ornamentation in royal and religious contexts than as a monetary base.
The First Coins: Spades, Knives, and the Unification
By the Spring and Autumn period (770–476 BCE), China developed some of the world’s earliest cast bronze currencies in shapes like spades (bu) and knives (dao). Silver began to appear in bullion form, particularly in the southern Chu state, which issued yuan jin (ant-nose money)—small, stamped silver pieces. Gold was used sporadically in plaques and as gifts among nobility but never became a widespread circulating currency.
The Qin and Han Standardization: The Rise of the Liang
The Qin Dynasty’s unification (221 BCE) standardized weights and measures, but it was the Han Dynasty (206 BCE–220 CE) that solidified silver as a high-value unit of account. The liang (tael), a unit of weight (approx. 37.5g), became synonymous with silver. Han emperors amassed vast gold reserves—often in the form of gold ingots (jin ding)—for imperial treasuries, rewarding generals and funding major projects. The famous Silk Road trade with Central Asia and Rome flowed with silk westward and Roman gold and silver eastward, integrating China into Eurasian bullion flows.
The Tang to Ming: Paper Promises and Silver’s Sovereignty
The Tang Dynasty (618–907 CE) saw a monetary paradox: the world’s first widespread paper money (jiaozi) emerged in Sichuan, yet silver remained the ultimate store of value. By the Song Dynasty (960–1279 CE), paper notes circulated extensively, but their value was often linked to silver reserves. The Mongol Yuan Dynasty (1271–1368 CE) attempted a fiat system, but its collapse led to a profound retreat to metallic trust.
The Ming Dynasty (1368–1644 CE) marked a monumental shift. In the Single-Whip Tax Reform of the 16th century, most taxes and state finances were consolidated and required to be paid in silver. This effectively monetized the entire Chinese economy on a silver standard, creating insatiable demand. This demand was met by Spanish silver from the Americas, flowing through Manila Galleons via the Philippines, making China the terminal sink for perhaps half the world’s silver output. Gold receded further as a monetary metal, becoming chiefly an asset for saving, jewelry, and imperial artifacts.
Cultural Significance: More Than Money
In Chinese culture, gold symbolized yang energy, immortality, and imperial authority. Silver represented purity, stability, and wealth. Holding both, often in the form of ingots, shoe-shaped sycee, or jewelry, was a primary means of intergenerational wealth preservation for both the state and families, a practice that endured through the Qing Dynasty and into the modern era.
Part II: India — The Land of Golden Accumulation
The Vedic and Ancient Era: Gold in Ritual and Republics
References in the Rigveda (c. 1500–1000 BCE) mention hiranya (gold) as a symbol of sun, immortality, and kingship. Early use was ritualistic and ornamental. By the 6th century BCE, the Mahajanapadas (great republics and kingdoms) issued some of the world’s first punch-marked coins, primarily in silver and copper. The Karshapana, a standard silver coin, became widespread. Gold coins were rarer, issued by more powerful states like Kushana.
The Classical Golden Age: Dynasties of Gold
The Gupta Empire (c. 320–550 CE) inaugurated India’s “Golden Age” in both art and coinage. The Gupta Dinara—a superb, high-purity gold coin depicting rulers and Hindu deities—became a symbol of imperial prestige and economic might. It set a standard for centuries. Silver and copper served lower-denomination needs. India itself possessed limited gold mines; its vast stocks were accumulated through trade surplus—exporting spices, textiles, and gems to the Roman Empire, Southeast Asia, and later the Arab world, in return for gold and silver.
The Medieval Synthesis: Islamic and Hindu Traditions
The Delhi Sultanate (1206–1526 CE) introduced standardized Islamic coinage. The Tanka (silver) and Mohur (gold) became established units. The system reached its zenith under the Mughal Empire (1526–1857 CE). Emperor Sher Shah Suri introduced the Rupiya (silver coin) in the 1540s, a precursor to the modern rupee. The Mughals minted magnificent gold Mohurs, but silver was the primary circulating currency for the empire’s vast economy. The Gold Mohur was a high-value unit for transactions and treasuries.
The Culture of Hoarding: Sona and Chandi as Social Security
The Indian relationship with gold and silver transcends economics. It is deeply embedded in social and religious practice:
- Gold (Sona) is central to dowry, weddings (as stridhan), religious offerings, and temple treasures (like the famed vaults of Tirupati or Padmanabhaswamy).
- Silver (Chandi) is used in utensils, jewelry, and ritual objects.
Accumulation was not for investment in a modern sense but for security, social status, and spiritual merit. This cultural imperative turned India into a “sink” for precious metals, absorbing vast quantities through trade, with bullion often melted and transformed into cultural artifacts rather than recoined.
Part III: The Arab World — The Bridge of Bullion and Coin
Pre-Islamic Arabia: The Age of Tribalism and Byzantine/Ghassanid Influence
In the Jahiliyyah (pre-Islamic period), the Arabian Peninsula used a mixture of Byzantine gold solidi and Sasanian Persian silver drachms for long-distance trade, alongside barter. The Meccan Quraysh tribe’s wealth was built on caravan trade, where gold and silver served as both capital and means of settlement.
The Islamic Revolution: The Dinar and Dirham Standard
The birth of Islam created a transformative monetary system. Caliph Abd al-Malik ibn Marwan (r. 685–705 CE) of the Umayyad Caliphate instituted a profound reform, issuing the first standardized Islamic gold dinar (4.25g of pure gold) and silver dirham (2.97g of silver). These coins were devoid of human imagery, instead inscribed with Quranic verses—marrying divine authority with economic function. This bimetallic standard powered the vast, unified economic zone (Dar al-Islam) from Spain to Central Asia.
The Golden Age of Trade: Pillars of a World Economy
The Abbasid Caliphate (750–1258 CE), centered in Baghdad, made this system the backbone of medieval globalization. The dinar and dirham were trusted from the Volga to the Zanj, facilitating an unprecedented exchange of goods, ideas, and gold. Arab merchants acted as the crucial intermediaries, channeling West African gold (from Ghana and Mali) and Central Asian silver into the broader Eurasian system, while also connecting to the Indian Ocean trade for Indian and Chinese goods.
Legal and Philosophical Foundations: Riba and Wealth
Islamic law (Sharia) shaped the metals’ role. The prohibition of riba (usury) encouraged asset-backed trading and partnership finance. Gold and silver were considered thaman (natural money), whose exchange was governed by strict rules to ensure fairness. Hoarding (kanz) was discouraged from a religious perspective, but possession as a means of preserving wealth and fulfilling zakat (the alms tax, which must be paid on savings of gold and silver above a threshold) was institutionalized.
Later Empires and Legacy
The system persisted through successive empires: the Fatimids, Ayyubids, Mamluks, and most notably the Ottomans, whose gold Sultani and silver Akçe continued the tradition. The Arab world’s historic role was less that of a final stocking (like India) or a monetizer (like China), but rather the essential conduit and stabilizer of the precious metal flows that linked continents.
Conclusion: The Enduring Metallic Legacy
The histories of China, India, and the Arab world demonstrate that gold and silver were never “just money.” In China, silver became an instrument of state fiscal control and macroeconomic stability. In India, gold became deeply woven into the social and sacred fabric, a form of cultural capital. In the Arab world, these metals became vectors of faith and globalization, uniting a civilization through divinely inscribed coinage.
These ancient pathways of bullion—the Silk Road, the Indian Ocean monsoon network, the Trans-Saharan caravan routes—created the first global economy. The movement of gold and silver was the movement of power, trust, and civilization itself. While modern financial systems have moved far from metallic standards, the deep-seated cultural affinity for gold and silver as embodiments of purity, permanence, and prosperity in these regions remains a direct legacy of this millennia-old history. Their story is a testament to humanity’s enduring search for tangible value in an impermanent world.