Fluctuation in the Value of Money
Metals are valued for their rarity: if they were as easy to get as water, they would have hardly any value. That is not to say that metal has no practical use, merely that practical use is less influential to their value than their rarity: a nail of copper and a nail of iron will both serve the same purpose, but iron being more common in Europe, it is valued less.
Copper, silver, and gold are the rarest of metals and have such a high value that a small weight can be traded for a greater amount of any other good. As such, their use as a commodity of exchange is valued more greatly than a material of use.
Of the three, copper is of the greatest abundance, but less uniform in its quality: the copper of Sweden and Japan is "more perfect and lustrous" than that of England or Spain, but gold and silver of whatever mine can be refined to the same level of perfection.
The value of copper is according to its rarity and the costs of production, but copper being fairly common it is frequently used in common objects such as kitchen utensils, locks, and such. While it is used as money in nearly all states, it is generally for very small purchases.
Historical records reflect the use of silver beginning in the year 484 BC, and its value has fluctuated much over time: In the author's time, 80 ounces of good Swedish copper would fetch a single ounce of copper, but this has varied by place and time. The author presents the rates at a number of periods in roman history, in which if fluctuated much over time between 54 and 125, reflecting the relative rarity of each metal.
It's also noted that coins are valued more than raw metal, as coins are standardized in weight and alloy in a way that makes them fit for use in exchange. Copper may be rated 80 to 100 to one ounce of silver as metal, but generally about 40 to 1 in coin. Domestic coinage is generally accepted at face value, but is assayed and weighed when traded abroad.
For small purchase, copper will suffice - but when the amount is significant, merchants prefer to deal in silver coin as the weight of much copper becomes unwieldy. Silver having greater value, far more attention is paid to the purity of the alloy and the weight of the metal in coinage.
While silver is more rare than copper, it is more common than gold. As with copper and silver, the rate has historically fluctuated according to the rarity of both metals, though the amount of silver required to purchase an ounce of gold has been in a narrower range, between 10 and 18 ounces in various places and times. In the author's time, the ratio has been generally fixed at 16.
Outside of Europe, the rations are quite different: gold is cheap in India, and very cheap in Brazil, whereas silver is very cheap in Japan. It is also known to be very cheap in Africa, but this is likely due to the poverty of the continent, where people have little use for money. However, the distance is too great to make the exchange of metals advantageous. It should be possible to profit by 87% in bringing silver from Europe to exchange for gold in Japan, but even that margin does not cover the cost of a sea-voyage.
Because gold and silver are in demand in international trade, their exchange value has less to do with their quantity in a given state than the demand for them in aggregate. Particularly in Europe, the ratio of silver to gold in England, France, Holland, Italy, Spain, and neighboring states has little to do with each nation's supply.
In aggregate, the exchange rates of metal fluctuate according to demand for them, such that the rations between copper, silver, and gold are not permanently fixed but fluctuate a little. Given that gold fluctuates between 15 and 16 times its weight in silver, a mere 6.25% can be made by the speculator buying low at one time and selling high in another - the amount of time he must wait remaining unknown, there are better ways to profit by investing money in production.
This does, however, pose a difficulty for states that use more than one metal as their currency: setting an arbitrary rate for how many silver coins are to be exchanged for a gold coin has given some profit to those who would purchase coin cheap and melt it to sell the metal at its market value.
One proposal is for a state to fix its primary currency to one metal (specifically silver) and allow the market to determine the price of the others in order to have a monetary standard that can be preserved.
It is also of importance that coins remain of a fixed alloy. Rulers have attempted to defraud their subjects by debasing the coin of the realm., but in each case it has been quickly discovered. The prices increased in nominal coin to reflect the diminished amount of precious metal, and coins of purer alloy disappeared from circulation, to be melted for their metal value.
These are still more examples of instances in which the common sense of the market has nullified the arbitrary edicts of princes.