Oct. 18, 2004
“A day's wage used to be a silver dime, a silver quarter, or maybe a silver dollar. A silver dime today costs about 45 cents, at $6.20/oz. for silver. About 900 million oz. of silver are consumed annually, and just under 600 million ounces mined annually. Oddly, there is seven times as much refined gold as silver... Buy real silver, it is scarce, real wealth, and cannot go to zero value. By the time paper money fails mankind once again, as it always does, any silver dime you can lay your hands on will probably be worth more than what $100 to $200 will buy you today.” — Jason Hommel
The mind boggles here, huh ? The above statement implies that a silver dime’s future purchasing power will probably increase from $0.45 to between $100 to $200, a 222 to 444 TIMES increase !
How can this be possible, even in our wildest dreams?
One way to look at it is from a static point, right now, not considering the flow from mining and usage but from the fact that at the present time, there is reputedly 7 times the number of gold ounces in existence as the number of silver ounces in existence. And with gold currently at $418.40 per ounce and silver at $7.08 per ounce we have a ratio of 59.1 to one. So stay with me here as we enter the Twilight Zone. To put it mathematically blunt, 59.1 times 7 equals 413.7. And that 413.7 is the number of times silver would be revalued when assuming that we are looking at the relative above ground rarity of silver to physical gold (7X), and the out of whack ratio of silver spot price to gold spot price (59.1 to 1). And if we multiply 413.7 times the current silver spot price of $7.08, we get a revalued silver price of $2,920 per ounce ! See, I warned you that we were entering the Twilight Zone.
So the 413.7 times revaluation of silver falls within the 222 to 444 times as calculated in my first paragraph.
Now can you see what I mean by static ? This is assuming that we all came to the realization that this is where we stand at THIS moment in time. A sort of financial snapshot.
But we live in a dynamic, ever changing world. A world where so many things compete for our attention all of our waking hours (and many of our dreams). It has been said that the study of money is the most important thing a person should do. After all, we need money to provide for our lifestyles, whether a billionaire or a pauper. It is this crucial understanding that money is really ONLY gold and silver and most of the public doesn’t have a clue.
It might be revealing to consider how much silver the average American has in his possession. Look through his home and you will find only a minute quantity in the light switches and appliances. No sense looking there as we are only talking in grams at most and to “harvest” this would leave them in the dark (ages).
Next, a small percentage may have some sterling silverware, which he will not turn in until the silver price goes wild as in 1980. And much of the silverware was already turned in in 1980, so what is left ? Most likely, silverware that holds sentimental value passed down from previous generations and would be difficult to pry it away from them, even with high prices.
Next, we have the coin collectors. There are at least a couple of types I am aware of; the ones who have the cardboard holders and found coins from circulation. Well, this pastime of finding silver coins in circulation died many years ago not long after 1964 when the silver content was removed. Additionally, many of these collectors have penny and nickel holders; no silver there. They are probably somewhat sentimental as the silverware folks mentioned above.
The second type of coin collector is into the high state coins; many of which are in PCGS or NGC plastic holders. There are also raw rare coin collectors but they are of the same attitude in that their coins have a value many, many times their melt value.
And lastly, we get to the silver investors. Hey, that’s us ! I see three types. The first, type A, is entirely investing in silver stocks and futures. I wish you the best of luck. I just wouldn’t want to be in any paper promises if fiat paper crashes suddenly.
The second, type B, silver investor is in silver stocks and futures but also holds a considerable portion in physical silver. He is taking his profits and adding to his physical silver. I wish you the best of luck also; if fiat suddenly crashes you will at least have your physical to depend upon. To be honest, I do not feel confident (competent, really) enough to be in this category but wish that I were able as I could enjoy a little excitement and bragging rights.
The third, type C, silver investor is the physical only of which I am a charter member. Sure, I look at the posts where a silver stock or future investor made a killing. I also think of when I have gone to Lost Wages and watched gamblers win and lose fortunes. I, on the other hand, take a few rolls of nickels and expect to eventually lose them on the slots. Conservative in my way of thinking but probably a cheap bastard in the eyes of the house. That is why they never comp me a room; they hope I never come back ! I probably cost them in electricity, beat up machines and upholstery. Could I do this in the stock market ? Homey don’t think so.
And here is a little digression (no apologies this time) to rest your gray cells. Speaking if beating up the machine reminds me of a time about 10 years ago. An old friend (who I can only liken to a cross between W.C.Fields and Jack Nicholson) and I were going to take my refurbished Greyhound on a three thousand mile shakedown cruise, a sort of Moronic Misery Tour. Just before we left, he took a small sledge hammer and was going all around, lightly tapping the sides and bumpers while mumbling softly. I caught the last time he spoke to the bus and he was saying with his bald head tilted and his eyebrows raised in query (kinda looked like the RCA dog at the phonograph), “We are going to be good to each other, aren’t we ?”. Quite surprised, I asked him, “What the Hell are you doing ?”. He said that was to make sure the bus knew there were consequences. Perhaps his way of checking to see if I knew the difference between an animate object and an inanimate object. Or maybe he was just voodoo nuts and in the 21 years of our friendship, I never picked up on that. I‘ll give him the benefit of the doubt and favor the former. Makes me look better too.
(digression off)
So, the first type A silver investor stands to gain or lose the most. The second type B stands to gain less but not lose all. The third type C stands to hold what he has, believing upon what Another said about realizing that what physical precious metals you now have is all that you may ever have. A good way to remember the types is to remember that the type A is a type A personality, an Alpha male. The type B wants to Be on both sides of the fence. The C type wants to See nothing between himself and his silver. Caught that last misapplication, didn’t ya ? Well, the C could stand for Conservative or Cautious. I like Chicken for myself as I don’t want to play chicken with my future.
The principal risk to the physical silver investor is theft. I’m thinking mainly of our illustrious government. That would be tantamount to the Lost Wages dealers coming to your home to shake down all your money because you were too wise to take it to their casino. And I think how stupid and pathetic the government people would look in doing this so unconstitutional act after having squandered the multibillion ounce silver reserve which we citizens paid for in the first place and entrusted to them.
And if the government came a’knockin for my silver, I might ask for the dollar price per ounce against all those trillions floating out there. In other words, the price were silver monetized to cover all the fiat they have pumped out. Should be in the thousands per ounce. Well, other than lying to government agents (heaven forbid !), that is the best answer I could give while staring down the wrong end of the barrel of a gun. After all, they can print as much fiat money as they need to pay for my silver. So why be stingy ? How about two thousand per ounce; how about twenty thousand ? Just another zero. Just add it to the deficit; nobody will notice or even care. But don’t cheat me as my motto is, “Be nice to me; you wouldn’t want to become my hobby”.
This rant is beginning to sound too parallel to the government’s recent confiscation of the Social Security fund and leaving a non-negotiable note as payment. Has anyone thought as to who is to pay off this note ? A mirror should suffice. Makes me wonder if this is part of the plan when fiat becomes worthless and the note obligation also becomes worthless. Just like our foreign trade defeces or our domestic defeces (deficit sounds too kind and innocuous). If the dollar collapses, there will be a lot of pissed off (to put it mildly) people, most of them foreigners. And in the aftermath of such an event, do you think any of them would shed a tear if we were obliterated ? Remember the Mel Brooks movie satire “Men In Tights; They Had It Coming” ? Well, we have been prancing around like a bunch of fruity prima donnas at the expense of the world’s investments. A famous author wrote that America was the only nation that went from barbarism to decadence without civilization in between. Maybe I am just getting older and crustier but I understand that quote better now than 5 years ago. When do we have it coming ? Soon, very soon, very, very soon, uncomfortably soon, excruciatingly soon….. Have to quit; I’m scaring myself !
Whenever I ask someone what happens to anything in demand when there is limited supply I always get a look from them like a deer frozen in the headlights. The next action is like they are desperately trying to shift into some gear without using the clutch. It would be funny if it weren’t so sad. That is how dumbed down the general public is in regard to economics.
And in a financial fire sale when stock and bond investors run for the exits, where will they run to with depreciating fiat paper in their hot little hands ? Well, they need to get rid of the fiat paper because they are carrying some of the fire with them.
A bumper sticker I have yet to make up :
IF YOU THINK MARRIAGES WERE MADE IN HEAVEN,
Where do you think divorces come from ?
I only bring this up because we have been divorced from real money but are still living together in a hostile fiat world. Remember the movie “The War Of The Roses” with Kathleen Turner and Michael Douglas ? They were living together while going through a divorce and doing whatever rotten tricks they could conjure up to hurt each other. A good dark comedy, but only if you are watching it and not living it. Anyway, a little junk food for thought.
Maybe more appropriate to this site would be :
IF GOLD AND SILVER ARE GOD’S MONEY,
WHERE DOES PAPER MONEY COME FROM ?
Yeah, like I am going to paste that on my bumper ! I might be crazy but I’m not stupid.
Too often I hear the misquote, “money is the root of all evil”. Really, the correct quote is from 1 Timothy 6:10, “For the love of money is the root of all evil”. And continues with, “which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows”.
And what does covet mean ? Well, Webster says, “to desire for; especially something belonging to another person”. Think about it, who wants what you have ? And I mean without really paying for it. I have met people who covet and it is not a pretty sight. On a large scale, I mean worldwide, who loves money to the extent that they covet ? And “Thou shalt not covet” is one of the ten commandments. Maybe Balzac’s quote, “behind every great fortune there is a crime”, holds more truth than we care to recognize. Really, look around and see the very rich. Our admiration or revulsion should depend upon how they came by that fortune.
And in Matthew 21:12, Jesus “overthrew the tables of the moneychangers” in the temple. These weren’t guys making change like “Here‘s 60 widow‘s mites for your shekel, Amos and have a nice day“; sounds more like crass profiteering was going on. Could these guys be early bankers ? What else could they be ? In the next verse he called them a den of thieves. That seems to clear it up some. Interesting to note that this is the only time I have found in the Bible where Jesus even approached what some might call violence.
And while I am snortin’ and pawing the ground, what about all the retirees who are not getting their fair cost of living raises ? Isn’t this a sort of actuarial murder ? Let me try to explain. Say there are a million retirees and they are not being given enough to eat or house or live properly. First, their quality of life diminishes. And second, their length of life diminishes. If we only took one year from each of their potential lifespans, we would have a million years. And to my thinking, with as an example of 80 years average lifespan divided into a million souls, we get 12,500 lifespans lost. And we have many millions of retirees here in the U.S alone.
Ya can’t fill yer tummy with one of them thar heeedonic indicators, can ya ? Cousin Thurlow says howdy.
I won’t cover which retirees were entitled and which were not but promises were made and broken with all the sincerity accorded the Indian tribes. What is next, handing out free smallpox laden blankets to the elderly ? Soylent Green ?
Respect for the citizens rights seems to be directly proportional to the value of fiat money. What happens when we extrapolate toward zero ? A corrupted money begets widespread moral corruption. We can see this happening on a daily basis in the financial world. And Martha Stewart is doing jail time while the big boys are slapped with a fine (which is probably tax deductible, just part of the cost of doing business) and told to be more careful in the future ?
Have we been turned into a country of Rodney Dangerfields ? Can’t get no respect. Well, we’ll see when the time to vote comes, right ? Wrongo moose breath ! Let’s see, should I vote for skull and crossbones candidate A or skull and crossbones candidate B ? Tough choice. Maybe I should write in my vote for Homer Simpson; at least when he screws up he cringes and says, “D,oh !“
Would love to write more but since I have probably lost 90% of readers by now even I can see the futility of further punishing you all.
You might want to note next time when you see a Silver Musing article posted along with all the urbane, insightful, informative, intelligent, organized and profitable other posts on the GIM site, you will be forewarned. Like one who flew over the cuckoo’s nest. But drop in if you have a mind to (or one you want to lose).
JMHO and
Best wishes
Agnut, lightly tapping around the sides of the computer with a hatchet while softly saying, “We are going to be good to each other, aren’t we ?”.
http://www.goldismoney.info/forums/showthread.php?t=14171