A Treatise on the Case for SilverSubmitted by Rogersan on Fri, 01/10/2014 - 20:51
A Treatise on the Case for Silver
Rarely has a subject so intrigued me, so piqued my interest as has the subject of precious metals and more specifically that of silver bullion.
Silver is such a magical metal. It has long been associated with the occult, with the moon and with the Gypsy. The idea of getting your fortune read once silver has crossed the palm of the fortune teller is not lost on me or the various references to silver in dealing with the elusive werewolf.
Silver as an industrial metal
As it turns out silver is more than a mythical metal. It is equally useful in the treatment of disease. Initially when I heard the statement that biological and viral agents can be destroyed via contact with colloidal silver I was very intrigued. Evidence of this is available in burn wards throughout the country via application of silver nitrate and silver related compounds to wounds.
I have studied herbal medicine and have held a deep interest in folk remedies and healing. It is well established that improper applications of antibiotics has led to super bugs capable of withstanding everything that can be thrown against them. Yet here standing in defiance to them is silver. It is much harder or impossible to obtain immunity to the effects of silver since it is a metal and not an antibiotic.
There are a myriad of uses in industry too. Solar panels, solder, photography etc. It seems like new discoveries are found all the time to better utilize silver or to expand uses into previously unknown applications. The most recent that I read about was using nano-particles of silver to build new nano batteries capable of more recharges than previously found possible.
The fact is that our current industrial usage is destroying the available quantities of silver in the world. This is not apparent to everyone when they first look into investing in silver. The reason for the destruction is that very small quantities are used over vast industries.
For instance a very small amount of silver is used as the coating on mirrored surfaces. From a recycling standpoint it would not make sense to burn the mirror to obtain such a small amount of the metal in a recycling effort. It would cost more than mining new quantities of the metal therefore that inconsequential amount is essentially gone forever. Now multiply that by billions and you will start to see the scope and quantity of destruction. One statistic I have seen is that of all of the silver ever mined in the entire history of the world 90% of it is gone as in used up, lost at sea, buried in the ground and forgotten etc. Better keep looking for that treasure map.
That is a staggering statistic. On the same note all of the gold ever mined is essentially still around as it is not used in our industry on this world. There is some debate about alien usages for gold but I will not go there today.
When it is considered that silver to available gold in the earth crust is estimated at about 16:1 you should expect to see a straight ratio. 90% off of the 16 would yield 14.4 so with a little math the available to available ratio of gold to silver should be closer to 1.6:1 ounces already above ground.
If I am off on that data please correct me. I have also seen a lot of data regarding ore values and ore mined v.s. silver recovered. That number keeps getting worse as less and less silver is available to pull from the ground and as peak oil takes hold the cost to mine will continually increase. These are commodity factors in my mind as that is a cost factor increase based solely on supply and demand v.s. cost to mine etc.
Lastly comes silver as a monetary metal. Here is where the history runs the deepest and yet the trail seems to oddly run cold.
My generation has never known silver as a monetary metal. I fondly recall my grandfather showing me his coin collection with mercury dimes, silver quarters and pennies made from steel. His generation knew what real wealth was, silver, gold, food etc. The steel pennies were the relic of a war where copper was needed more for bullets than for pennies.
So who bamboozled us out of our wealth?
Why did silver get pulled as a monetary metal?
Is this a vast conspiracy to deprive us of our true essence?
Our birthright as Americans, born out of blood, forged in revolution and solidified with gunpowder and lead?
Is it just a coincidence that the Constitution stated only real money was to be made from silver and gold? Again, why?
Did our founding fathers not understand monetary debasement? That the destruction of this great country would one day come from shadowy banking cartels and not by foreign invaders?
You will ultimately have to decide what you believe on that for yourself. It is not without great thought that I have come to agree that buying silver is a revolutionary act. You are literally challenging the matrix through your actions and deeds.
I can say that when silver first fills your palm I think something magical happens. It changes you on some fundamental level. You start to understand what wealth feels like. The metal has a subtle shine to it. It has a ring unlike anything else. The action is sublime.
I can recall tales from my childhood gleaned from the dusty volumes of Treasure Island, King Arthur and Ali Babba and the 40 Thieves. Tales of silver and gold gleaming in hidden tunnels and secret chests. Stories filled with dragons and knights; glory, fame and riches.
Am I truly alone in daydreaming of being a swashbuckling pirate? Sailing the Spanish Main plundering treasure, pieces of eight, burying silver and gold deep in the ground with a weather worn treasure map with X marks the spot for only privileged eyes to see?
I think that is probably a childhood fancy of a fair number of children. I myself was always more than a little intrigued by the mystery that silver and gold held.
How did they command vast armies of men to go to their deaths? Traveling the back country of California reveals more than a few holes in hillsides. Long abandoned mines, the only hint is the occasional opening partially hidden in the scrub brush.
On the bigger mines some of the original equipment is still there rusting in the desert heat. The occasional cactus or jackrabbit the only visitor. I often would wonder traveling the southwest what that must have been like during the great gold rush. Imagine miners elbow to elbow for miles. Digging feverishly at their individual claims. Leaving their life blood on the ground in the blast of dynamite or flash of gunpowder.
The real winners of that gold rush were certainly the general goods store and the brothels. Fascinating to ponder. The idea that a mineral so precious men would squander their lives, fortunes and futures on finding pay dirt.
We are no longer in that world. It has been replaced by modern gleaming buildings, high rise apartments, shiny cars. Gone are the wagon trains, the mules and the blood sweat and tears. It has been replaced by crisp fiat paper. That is “money” to my generation. King dollar rules over all.
I had a friend who first introduced me to silver and precious metal buying. I still recall him telling me of the fiat dollar in the fading afternoon sun. I was looking at him, mostly ignoring what he was ranting about, thinking of the next project, the next job.
I truly did not understand or care about fiat money at that point or what he was trying to impress upon me. It was only years later when I started following Ron Paul that the Federal Reserve Banking System began to creep into my consciousness.
I have since achieved a financial zeitgeist for myself. I have found the almost arcane sway that silver holds. I am not knocking it but Gold does not have the same luster to me.
So again, why silver? I have voraciously read every article I can find on the subject. I have endeavored to absorb every last ounce of information available and I have found that my understanding of that one metal has been continually shifting and changing.
It is not simple enough to say it is a mere monetary metal that holds value. Silver is so much more than that. It is honest money but what does that mean?
In the world where paper silver is traded in the hundreds of thousands how is it really honest?
At the end of the day silver is solid. If heated and melted in will return back to itself. The same cannot be said for paper. If you were plopped down in the middle of ancient Rome you would definitely want to have silver on you v.s. paper fiat.
That is #1. Store of value or as I like to think…cold, hard cash. It is cold, hard and can be easily used as cash. So how does it work?
How does silver protect your wealth
This is where I have struggled to fully understand silver. I have looked at various countries that have defaulted and my analogy will be based on one country defaulting v.s. other countries being ok. In our current world with a race to the fiat bottom it is likely a large majority of countries will collapse. In that type of a scenario it is possible you would not exchange silver initially for a different fiat currency especially if all are essentially without value. You would instead trade for other commodities like food, water, shelter, guns etc. So on to my example of a country in collapse.
Venezuela and the Bolivar
I will use Venezuela as a convenient example as their crisis is ongoing and easy to see.
Venezuela is utilizing the Bolivar as their national currency. I am not 100% on the exact cause/causes of their hyper-inflationary cycle so for simplicity sake let’s assume out of control money printing as the only culprit and leave out other reasons.
In this environment their national currency has experienced a series of revaluations. Since I am not an economist or economic expert I will express that in layman’s terms.
Let’s say you start out with 100 dollars buying a nice pair of shoes and the currency is devalued by 50%. You wake up the next day and your 100 dollars is deemed to only be worth 50 dollars from the day before.
You now would need 200 dollars in the revalued money to buy the same pair of shoes. Your income may or may not have increased so this is a “tax” on you based on devaluation of your money. For examples sake let us say that one ounce of silver would also have cost you 100 dollars the first day and now it costs you 200 dollars in Bolivars the next day.
Your silver has maintained its value in relationship to the goods you can buy with it however you would have to fork over 200 dollars in the “new/revalued” money to buy one ounce of silver. I am taking artistic license with the numbers but essentially it is simple to understand. Before your currency is devalued you can buy silver and thus protect yourself from the hidden “tax” of currency devaluation, inflation and central banking shenanigans.
Now this is where it gets more interesting.
Your government decides to keep “stimulating” the economy by further expanding the monetary supply and creating more monopoly money for use in the economy.
The currency is further devalued in relationship to real goods i.e. silver, gold, oil, shoes, food etc. In the case of Venezuela merchants started to raise the price of goods in relationship to the devaluation of the currency. This is a logical progression since other nations have now refused to take your currency in payment for goods or they are requesting much larger sums in the native currency.
So the refrigerator that would have cost 500 bolivars on the international market is now 800. In order to make a fair profit the merchant sets the market rate at $1000.00 bolivars. Currency deflates and suddenly the foreign entity now wants 4000 Bolivar for the same item.
The merchant now has to buy that same good for the 4000 Bolivars. They expand their credit to be able to afford the goods and then bring them to market at $4,500.00 or $5000.00 Bolivars. Credit keep in mind would also become more expensive as the credit rating gets degraded by your own government. Folks making loans to you to give you extra fiat money to purchase are going to want more interest for the risk.
Eventually the government is overrun with the people crying foul. How can the greedy merchant justify “gouging” the people for the goods. In response, the government in Venezuela instituted price controls and also complete theft from the owners of the store or merchant with the goods.
The people were happy by this populist policy but the not so evident destruction is just below the surface. What incentive is there to keep running a store either at a loss due to price controls or to outright government theft or redistribution of wealth?
The government by decree have forced merchants to give away their goods for free or to accept payment for goods at a loss. In a free market capitalist society this is obviously not a great way to wealth and success. Merchants will ultimately close their doors and massive shortages in goods, food etc will result. The irony is that the people who were getting the “free” goods will ultimately be rewarded with shortages and starvation.
The interruption of the supply and demand cycle is the overall culprit. In Venezuela they decided to peg the price of the Bolivar at 6.5 Bolivars to the Dollar. The dollar is external to the Venezuela economy and therefore is traded on the black market since it has a store of value v.s. the Bolivar. I believe at last count it was approximately 60-80 Bolivars to one U.S.dollar. Significantly more valuable v.s. the local currency mainly due to less devaluation v.s. the Bolivar.
The result of ongoing currency destruction is that other nations will decide at some point to stop trading with you for your monopoly money. They will demand commodities in exchange or fiat dollars that are currently perceived as being valuable.
Since you can currently buy silver in U.S. dollars at approximately $20.00 per ounce you could essentially trade those 20 dollars if sold in U.S. dollars for approximately 1200 to 1600 Bolivars. If the U.S. currency were to be devalued and suddenly that same silver was $40.00 per ounce the ratios currency wide would remain equal and that is the ultimate value of silver or another commodity.
Being able to trade in a currency external to the one in crisis is the key. Gold and silver are the ultimate for that end since they not only are used in exchange for currencies but they have intrinsic worth and value. They store and represent a large amount of physical labor which is also a commodity. Imagine how much work or labor you could get done in Venezuela right now in exchange for $20.00 dollars U.S. This is the same equivalent to silver based on current pricing.
The fact that silver and gold are a universal medium of exchange is one of the primary monetary secrets.
The fact that they cannot be created or printed out of thin air is what makes them so dangerous to the central bankers.
Sound money is truthful money. It does not have to bullshit you about its true worth. That lawnmower you bought would be devalued were you to try and sell it later.
Silver and gold trade easily for cash. This makes it very easy to use and to trade as it is highly valued. If you doubt that statement look at Craigslist or your nearest Pawn Shop and see if they are buying silver and gold. I have never seen them not doing that.
It should not matter to you where you live as long as the markets are open and honest. Right now we are experiencing an extended period of dishonest money. Money that is based only on fiat dollars. Where equities are backed by nothing and yet continue to skyrocket only based on rapid monetary expansion.
If you own precious metals you really cannot go wrong. It should not matter what happens to anything else since ultimately it will balance out against all currencies and come to a store of value.
What does that ultimately mean v.s. the dollar? If you have something like a fiat paper currency with no intrinsic value a real commodity such as silver or gold will continue to grow in relationship to that fiat. If the value of a fiat reaches zero the ultimate value of a non-fiat v.s. fiat is infinity.
I am greatly intrigued by discussions of when to sell silver. When to trade in your non-fiat for a fiat.
When is the right time? What point before the non-fiat store of value collapses v.s. the fiat.
The answer is quite simply that on a long enough time line the value of all fiat dollars goes to zero.
Silver, Silver everywhere and not a drop that stinks…
Do you want something with intrinsic value?
Something that has been around for thousands of years and has never been worthless?
Something that is becoming increasingly rare on planet Earth?
Something that is being permanently used up by industry never to return.
The wealth transfer if you are before the other zombies in the coming “zombie apocalypse” is huge.
Imagine how much labor will be exchanged later for that same low priced silver today. Ultimately the Federal Reserve should be thanked for devaluing the dollar and also crashing the price of silver.
If you have the ability to use your newly devalued dollars to beat the coming silver and gold rush you will certainly be well ahead of the game.