Hardness does not mean something that is necessarily tangible or physically hard, like metal. Instead, it means "hard to produce."

By contrast, "easy money" is easy to produce.

The best way to think of hardness is "resistance to inflation," which helps make it a good store of value—an essential function of money.

Would you want to put your savings into something that somebody else can create with no effort or cost?

Of course, you wouldn't.

It would be like storing your life savings in Chuck E. Cheese arcade tokens or airline frequent flyer miles.

Unfortunately, putting your savings into government currencies isn't that much different.

What is desirable in a good money is something that someone else cannot make easily.

The stock-to-flow (S2F) ratio measures an asset's hardness.

S2F Ratio = Stock / Flow

The "stock" part refers to the amount of something available, like current stockpiles. It's the supply already mined. It's available right away.

The "flow" part refers to the new supply added from production and other sources each year.

A high S2F ratio means that annual supply growth is small relative to the existing supply, which indicates a hard asset resistant to inflation.