Silver is not money!

[wulfgar60]

One thing I'm sick of hearing, is silver placed beside gold in the monetary argument. This happens with investment pundits who might have a great deal of knowledge otherwise. But succumb to this classic mistake!
Silver ceased to be a monetary metal back in the 1870's. Money is an abstract concept of credit. Gold is an extremely good mimic however.
The key feature that causes precious metal to mimic money is the luxury usage. Because money to be a useful measure needs to be non-volatile. A ruler that becomes mishapen is no longer a ruler. There are number of characteristics of money. Gold mimics all of them. Silver did this until the 1870's. Why, because until around then silver was in heavy demand for the table and other household ware of the middle class. This changed with the advent of porcelain, stainless steel and so on. Gold has never lost its traditional market.
Why is the luxury useage so important to the monetary concept. Because luxury's are price driven, that is they reflect the amount of capital around. But unlike the luxury's like a neat TV screens that wind up trashed in so many years. Things like gold are almost infinitely recycled.
Not that I disagree that silver is valueable. It could be even more valueable than gold. The problem is without the huge luxury usage repository, silver will be volatile. Industrial useage is volatile, precisely because it can be indifferent to price. There are industrial users that will pay any price for silver, yet at the same time once demand is satisfied . They don't exactly want anymore.
A luxury market is price driven. If gold jewelry becomes cheap, then people will buy more. If the price gets too high, then jewelry holders will dishoard to buy other things.
The seeming volatility in gold over the years. Has been purely the product of CB mechanations. Creating artificial demand and then dishoarding it. The CB's don't want gold sitting around doing a screamer on what the actual state of money liquidity is. They want the market to be fooled, so that the continuely inflated fiat is the bench mark. One thing they cannot hide is the amount of the world money supply spent on gold, is very consistant. But they can influence the quantity of gold coming on the market. With a series of shorts and longs. In the long term this all evens out.
Will silver ever become a monetary mimic again? Who knows, but it needs to find a new criteria to do that.http://www.goldismoney.info/forums/images/smilies/cool2.gif

[Lakewood]

Silver is money. It is money because thousands of years of human history says so. There is nothing new under the sun, except for maybe us.

[wulfgar60]

I agree, silver had been money for thousands of years until the 1870's. But around then the luxury usage in middle class holdings of plate, cuttlery and candle sticks. Was drying up.
So when is an oversupply, who buys the excess? And when the market is short, who dishoards? This leads to voatility in the silver price. The key feature of money is non-volitility.
With gold the industrial usage is 500 tons per annum. With as much as 150,000 tons lying around the world. There is enough above ground gold to supply industry for hundreds of years. At the same time what industry doesn't need will be happily retained as luxury jewelry. It's the luxury useage that is price driven and maintains price stability.
Does the above apply that well to silver?
Could you price monetary contracts in silver. When in a few years it could spike to 500 euro's. That is what I mean, silver is an unrealiable monetary measure. Surely you would wish you payment, to be as non-volatile as possible?:character
I'm not saying silver isn't a good speculative metal. Quite the opporsite.
But if you fixed a contract to pay somebody 5 or 10 years from now. What would you feel safer to pay in, silver or gold?

[Palatine Creator]

But if you fixed a contract to pay somebody 5 or 10 years from now. What would you feel safer to pay in, silver or gold?
This is a choice that should be made by those making the deal. Today things are set up so that nothing other than paper dollars can be used in most situations. Even when the US did use a gold and silver money standard, they fixed the ratio to 12 to 1, which prevented the market itself from deciding which is more valuable.
That is what I mean, silver is an unrealiable monetary measure. Surely you would wish you payment, to be as non-volatile as possible?
The reason precious metals were what civilization settled on using as money was the lack of volatility and small spread between bid and ask. I think it would be best to have a system in which gold, silver, platinum, and palladium were used as currency, with the market deciding the value of the ratio to one another and to other commodities. It would be a lot less volatile than the current paper currency system.

Here's a good article about the future of precious metals as money:

http://www.kitco.com/ind/Hultberg/jan312005.html

BTW I dig your screen name Wulfgar. Are you a fan of R.A. Salvatore's novels by any chance? I'm in the middle of reading "The Spine of the World" in the "Paths of Darkness" collector's volume.

[wulfgar60]

Palatine, the risk you refer to in the spread. Is what metals are good at. But all this means is one of the key features of money is satisfied. That of liquidity! Me, being the humble small time physical investor. Faces a spread of around 7% for gold. Competing metals like silver and platinum, have spreads of up to 33%. Gold, has superior liquidity. Why is it so! Because of gold imense popularity in the luxury market. At the end of the day, somebody is always willing to take it off your hands. And that with not so much price differential Gold, do not lieth around the docks with no buyers. This doesn't work to the same degree for other PM's. Young chic's are always the buyer of last resort!
It is this price driven, luxury market that ensures stability. Too cheap and the young chic's buy. Too expensive and the young chic's dishoard. Silver and Platinum don't have the same percentage in this luxury price stabilzing repository.
Industrial demand is not so price driven. If industry needs more silver, then they will pay through the nose. If they got enough, then they don't buy. The secret is that people will buy more luxury, if the price is good.
I keep bars of silver, for grand day when it trades 15 to 1 against gold. But it will not last. I keep gold, because I'm more ensured of a smaller profit, but at all times I retain my liquidity.
I don't think Hultberg, comprehends Fekete. Because money is an abstract system of credit. Gold is not money. Gold mimics money, very well. However it is not as liquid as notes of credit. Paper money is superior, just as long as the market is honest. PM does have a certain guarantee against dishonesty. It is more reliable than paper.
Even in the gold standard era, the major monetary trades were in paper. Because you can't eat gold. But what gold does do in the luxury commodity market is trade consistently as a portion of world liquidity. This the guarantee with gold. It is a steady monetary measure. The trick is to price the monetary contract against gold! I will have sardines to such and such value in gold, and so on. In fact it serves little purpose to hold an excess of monetary or investment gold. However the natural commodity market can support coinage safely. What gold does do is keep the market honest.
Unless silver regains the luxury market it used have, in the days of silver table ware. It does not have the same guarentee.
However the CB's alternately hoard and dishoard gold to create volatility in something that in its commodity usage has little volatility. They don't want a competator for their lousy inflation game.
In the very long term however, gold reveals its true nature. No returns on low risk bonds will equal gold as a store of value. Because the CB's siphon off the value of money.
Who would need the million's of monetary accountants, trying to figure the value of money? When gold just does that naturaly any way!
At the moment gold is being sold at half its true commodity value. When the NY Fed runs out of gold to dump. Then gold automatically will double in price, and nothing can take it down. The only thing the CB's can do, when empty. Is to restock. This is the magic that will send the POG to $14,000. And when gold is scarce on the maket, then silver will temporily act like money to fill gold's shoes in the jewelry market. And silver will hit $1,000. But it will not last!
Something worth checking is the amount of money spent on gold as portian of world GDP. Most of the time it is consistent around 1/800. It can vary depending on the state of world liquidity.
Some would say I'm crazy with predictions like this. To which the CB's can reply, "Hey dude, can I print, or what?"
I must read the novels. The Wulfgar I refer to is the Norse hero that held Attila the Hun at bay for 3 years. In the late 430's AD.

[Palatine Creator]

There is really no way to say what the future price of silver will be. It has not been traded in a free market for a long time.
This is the magic that will send the POG to $14,000. And when gold is scarce on the maket, then silver will temporily act like money to fill gold's shoes in the jewelry market. And silver will hit $1,000. But it will not last!
What won't last is using dollars as a price measurement. We may return to an honest money system, or the old fraud will be replaced with a new fraud. Either way the dollar can't last.

Using a monometalism currency isn't as good as bimetalism or multimetalism. Nobody can tell for sure how much market conditions will change in precious metals when people begin losing in faith in paper currency.

Don't make the mistake that most silver investors make. Lots of people make mistake #3 on this list.

http://www.financialsense.com/fsu/editorials/2005/0106.html

3. SILVER INVESTORS THINK THEY KNOW HOW HIGH THE PRICE OF SILVER WILL GO.

Ask almost any silver investor how high silver is going to go …. and they will give you an answer!! $10, $20, $100, $500. There isn’t an answer my friend! We have not seen a free-market price of silver for so, so long that any number than you or anyone else can dream up is an exercise in foolishness. There are five, large “contributors” that have negated (trumped) the free market and therefore make price estimating impossible. One, Doug Casey has said that 80% of the silver produced is by-product of gold, copper, lead and zinc mining. Since the advent of modern mining techniques in the early 1900s, literally, multi-billions of ounces of by-product silver have flowed into the market irrespective of price and profit. Two, starting around 1945, the United States government began selling-off the world's largest-ever silver stockpile. The selling went on for nearly 60 years until “the well finally went dry.” Three, during the 20-plus-year bear market in silver, overly-discouraged silver investors and other governments of the world dumped large amounts of the “white shiny” into the market. Four, during the last 15 years, millions of ounces of leased-hedged silver has pounded the market ever-lower. And five, massive paper short positions on the COMEX are presently having a profound, negative effect on price. The powers that be in New York have repeatedly demonstrated that they can “drive” the price of silver in any direction that they darn well please…. for the time being. For example on 12-7-2004, Pearl Harbor Day, the price of silver was smacked for 70 cents or nearly 10% in a single day! Just as an aside, it should be noted that there was no meaningful silver mining news announced on or near that day. So, you still think you know what silver is worth? O.K. If the above isn’t enough, any price prediction must also account for the number of “future” dollars the governments of the world will “print-up” (inflate) over the next few years …. and the governments themselves don’t even know the answer to that one yet!

[lhslancers]

All things being equal which they probably won't be I have a number in mind at which I will sell and never look back. If a piece of property I am looking at today goes for say 200K goes up to 300K and my Silver goes to 75 bucks then I'll sell what I need to buy it. Silver isn't going to the moon and staying there. Be realistic go back and read about bubbles. You won't get the top. Don't be a pig.

[Halophyte]

One thing I'm sick of hearing, is silver placed beside gold in the monetary argument. This happens with investment pundits who might have a great deal of knowledge otherwise. But succumb to this classic mistake!

Silver ceased to be a monetary metal back in the 1870's.


1870's eh ?

[Palatine Creator]

All things being equal which they probably won't be I have a number in mind at which I will sell and never look back. If a piece of property I am looking at today goes for say 200K goes up to 300K and my Silver goes to 75 bucks then I'll sell what I need to buy it. Silver isn't going to the moon and staying there. Be realistic go back and read about bubbles. You won't get the top. Don't be a pig.
I plan on holding my silver for a minimum of 3-5 years regardless of price. It's a strategy that David Morgan recommends, it's not piggishness. Indeed it could be argued that your desire to own the land you live on is based on piggishness (some one telling me about bubbles wants to buy real estate) :banghead: . I don't even own anywhere near enough silver to buy property without a loan with the profits until after silver is well into three digits. Some fish are bigger than others in the pond, and since you can actually afford to buy real estate when silver hits $75, you are already a much bigger fish than I (or a bigger pig, depending on which analogy you prefer.)

I'll also make sure to consult this list of approaching forces for higher silver prices before I decide to dump my wealth into something else, be it real estate, beanie babies, politics, stocks, gold, or realdolls.

http://www.financialsense.com/fsu/editorials/2003/0718.htm

[wulfgar60]

I'm inclined to think silver will make it into 3 digits myself. I'm only presenting the price in dollars, since that's what most people think in. One thing that would send silver there, is as a replacement for gold. That is if gold became too expensive. This happened for a short while when gold peaked around 1980. I think blaming it all on the Hunt brothers is market deception.
Only 500 tons of gold was avalible for jewelry in 1980. Silver normally is used in twice the quantity of gold for jewelry. Currently 3,000 tons of gold is used each year. If the CB's bought up big again, then silver is the best alternative to fill the jewelry void left by gold. In this situation, silver is likely to go back to 15 to 1.
But my essential argument is silver is too volatile to fill gold's shoes as a monetary indicater. CB's hold gold, I don't think they retain silver. Even though that gold is leased out, it's still on the the CB books. Prior to WW1, the basic wage in Australia was equal to 1/2 ounce of gold. Currently the basic wage nets 3/4's an ounce of gold. And this is when gold is being shorted. I'd say the price of platinum indicates to the true POG.
When gold became legal in Australia in 1976. Gold was $75au. To get today's price is equal to about 7.5% return every year. And effectively in Australia you can trade in gold under $10,000 for a cash cheque! Yet, we are told gold doesn't work! Something is not right, because the long term facts tell a different story. If we take the 1970 price of $26au, the return is stronger. Gold is a rock solid investment like gilt edged bonds. The market would have more of it, if it could get it. Demand outweighs supply.
No matter what people say, the correction in PM will come. It's only a question of when, not "if"!

[Palatine Creator]

No matter what people say, the correction in PM will come. It's only a question of when, not "if"!
There could be many corrections on the way up, as there were in the stock market in the 1980s and 1990s. If you were to actually accumulate more stocks during the corrections, you could have done really well overall. Of course you can't predict an exact top, but as you check off those 78 forces for rising silver prices, you can see how far we are from the beginning of a new bear market in metals.

I'm really not too worried about corrections. Corrections are how markets move. It takes a while to confirm that a new long-term bear market is really in place, and we can now confirm that were have been in a long-term bear market in stocks since 2000 and long-term bull market in metals. Even if you waited until now to bail out of stocks, you still would have done very well if you started buying in the 1980s and accumulated more on the corrections throughout the bull market. Just like you would have still done well if you bought silver and gold during the 1960s and 1970's and didn't sell until after the top was confirmed in 1980. When you don't have to worry about leverage, you can invest long term based on Kondratieff Wave cycles.
I'm only presenting the price in dollars, since that's what most people think in.
That trend is starting to reverse itself worldwide, and for good reasons. The dollar hasn't been doing it's job in retaining value. I find myself thinking more in ounces of silver all the time. Why don't I think in ounces of gold? Because silver is the poor man's gold. While I'm certainly against class warfare, I'm aware that most fish in the pond are bigger than me, at least in America and among the posters on this board. If I move to some ultra poor third world country, I would be considered one of the big fish.

[wulfgar60]

Okay, thinking in terms of silver units. May be cool, but what I'm claiming is it doesn't work anyway. What I'm arguing about is something represent monetary value. An Inherent price stability is required. A good currency is something non-volatile. PM's all have good characteristic's that make them useful as currency. But only gold has the stabitility.
My point is only gold has the majority tonnage going to a purely luxury market. And it is luxury usage that is stable in relation to the money supply, because and please understand this point. It is price driven, it reflects price perception.
With silver it used to work, when silver still had the extensive luxury market of tableware. Silver lost this traditional market, but gold never lost its luxury market.
Gold has varied historicaly, from an ounce being equal to a laboring wage. To a height of 4 weeks of a laboring wage. 8x, and this only because the CB's have busted their balls malnipulating it. Where as silver has moved from 3 ounces for a weeks basic wage to over 60 ounces. This is 20x and undoubtabley malnipulation has played a big part in this.
Currently only a 1/3 of silver on the market is used for the luxury of jewelry. And it is only the luxury use that ensures price stability.
However I still say that there is not much point in using the metals beyond a token amount as money. Where gold in particular works, is when its commodity price is used as a derivative for monetary value.
With out CB malnipulation, there would almost no variance in the real POG. In greatgrandfathers day, a good tradesman earned an ounce per week. With the CB's tactics, this would be much the same situation today.
A tradesman could take an ounce of gold per week and find it always buys the bacon. It would put an end to much unnecessary speculation on monetary value. It would induce a great deal of market stability. But alas, this is what the money powers wish to destroy. Because it is easier to cheat the blinded.

[samwheat]

Wulfie,

You are scorning silver like it is as evil as fiat.

You do that for a reason: So you can get people to sell it to you.

Gold's downside is that you can't use it to buy everyday needs in the event of a currency collapse. It's monetary value is too much.

[Silverity]

Silver eagles are legal tender.

All pre-1970 40% coins and pre-1965 90% coins are legal tender.

Therefore, silver is money.

[WillTheSHTF?]

Silver is a precious metal and will always have value. Therefore it will always be money...:aetsch:

[Sparky]

Silver eagles are legal tender.


Here's a thought exercise...

Let's say someone spent a silver eagle as a dollar, say at the doughnut shop. The clerk puts it in the same cash register slot as the Sacagewa's, which are also dollars. At the end of the day, the manager balances his register, counting the Eagle as a dollar. The next morning, he takes his bankroll (including the Eagle) and deposits it in the bank.

So the bank teller gets the Eagle, and counts it as a dollar toward deposit. It is now property of the bank, like all the rest of the paper cash and cupro-nickel coins.

So what happens next to the Eagle? Does it re-circulate? Does it go to the nearest Fed bank? What would they do with it, or "count it as"? A dollar, right?

I'm assuming that in reality, someone along the chain (probably the doughnut shop owner or the bank manager) swaps it for a paper dollar and pockets it. But if not, how is this silver dollar "supposed" to be treated within the banking system? Is there any chance of it getting re-circulated as money?

[Big_Rob]

As long as things have to be soldered with lead free solder there will be an industrial use for silver, plus I cannot forsee photography going all digital in the near future and silver is used heavily in that as well.

Also there is a huge Ornimental/Jewelry market for it as well.

So yeah, The price of silver might be volitile but, In time of an emergency where I might need some cash, I can sell my silver bullion and silver jewelry at any pawn shop (Last Option) across these fruited plains. I am also willing to bet I can find more than a few people to trade/barter products or services for enough of my silver bullion. Hell I would even do some side work on someones computer for enough .999 proof silver bullion

So yes it does have value both as a money and long term industrial useage.

[Argentsum]

Weww if youw advocating the concept that money is cwedit then I'ww be the fiwst to agwee wif you that siwvew ain't money. Siwvew is a stowe of weawth. Not a vewy good stowe, mind ya. Gowd does a bettew job no doubt about it. But siwvew wiww do in a pinch. Bettew then money anyways. Oh, dat scwewy wabbit!

:withstupi

[Silverity]

It will eventually end up in someone's hoard.

Bad money still drives out good money.

[Ponce Cuba]

Sparkly? back in 1982 I went to the bank to take out some money and I saw a really old man infront of me reach into his pocket and take out a whole stack of silver dollars, the clerk wrote his deposit in his check book and gave him a deposit slip and after he left and right infront of me she took out her purse and took out some fiat which she exchanged for the silver dollars in a one to one ratio.

I asked her if that happened very often and she told me that yes, at the time I believe that a silver dollar was worth about nine fiat dollars.

[Big_Rob]

Sparkly? back in 1982 I went to the bank to take out some money and I saw a really old man infront of me reach into his pocket and take out a whole stack of silver dollars, the clerk wrote his deposit in his check book and gave him a deposit slip and after he left and right infront of me she took out her purse and took out some fiat which she exchanged for the silver dollars in a one to one ratio.

I asked her if that happened very often and she told me that yes, at the time I believe that a silver dollar was worth about nine fiat dollars.


:eek: I wish that would happen to me!!!!

[Ragnarok]

According to the IMF, silver is not a monetary asset, nor are platinum, palladium, or gemstones. These are considered goods, not monetary assets, and are reported as such.

Gold however, IS a monetary asset, according to them.

Not that I particularly care what they think. Money is what each person sees it to be, whether others will or won't.

R.

[Silverity]

Government and its lackeys say silver is not money and we should believe them!!???

As the gold to silver ratio approaches 15 again, silver will approach de facto money status.

[honu5050]

hollywood the silver screen :hmmmm: now why did that come up?:rock:

[TheKingsSon]

I contend that Silver IS money, because God has ordained silver AND gold as money. Although there is no one verse in the Bible that says this specifically, every time money is referenced... it references silver and gold.

When God wanted the tabernacle build he mentioned Gold and silver promently.

[RichG]

:hahaha:One thing I'm sick of hearing, is silver placed beside gold in the monetary argument.

wulfgar60 with all due respect.... :coolbeer:

[Keef]

Gold is a monetary metal and SO IS SILVER. I don't care what the lying thieves in power say, it's the truth. People in power HATE real money, it's hard to scam an honest man with honest money. end of discussion.

I imagine if TPTB said toilet paper was money and silver was toilet paper you would believe that too? Well, that's just about what they are sayin today. so, when u go to wipe, i hope u don't believe the hype.

And when fiat fails, we will see what silver is.

[wulfgar60]

Face facts you losers. The displacement of silver by stainless steel was the last kick in the teeth for silver. The simple problem is it hasn't got the demand of gold and longer.
I'm not saying, don't silver as an investment. At 60 to 1, who knows? I got 15 times the weight of silver to gold myself.
But the demand on gold, is many times the quantity of gold available. Prices alone checks the purchase. Gold is more liquid than silver for this reason. Gold away's has a buyer if the price is right.
Explain this? Why does gold have a spread similar to currency exchanges, while silver's spread is that of a commodity?
The market has spoken. Gold is money, but silver isn't.
Any Central banks hoarding silver?

[GoldenSheikUrBootie]

I have 10-1 value ratio gold/silver. The POS (price of silver) is a POS (piece of shit).
No help from COB's in keeping the POS up. Gold is manipulated more and should someday become unmanipulated in the squeeze of all squeezes.

[GoldenSheikUrBootie]

I'm not buying anymore silver until it crawls past $10.