Comments on: The Case for Buying Silver: A History of Paper Money

By: ARode

ARode — Wed, 15 Aug 2007 00:55:20 +0000

In 1853, Spanish dollars were overvalued, they were no longer legal tender in the US. Britain adopted the Mexican Eagle (1858)to replace the Spanish dollar as the official trade dollar with China. Since China was open, their economy was expanding, and they needed currency.

At that time, Chinese currency was measured silver by weight and purity. Merchants preferred Mexican eagles because of their purity.

Germany dumped silver in 1871 further depressing silver prices. New silver deposits were discovered. American mints still coined silver but this had to be stopped in 1873.

In 1795, Jefferson and Hamilton had a similiar problem - shiny US light silver dollars were being traded for heavier Spanish dollars that were then imported and sold back to the US mint. By 1803, silver minting had to stop, since the US was losing money.

My main point is that most of the silver coined in the US during this time, stayed in the US and by 1880, you could buy silver dollars for 80-85 cents.

Some employers used silver as wages which couldn't be deposited in banks or the silver would be discounted again resulting in a 35%-40% loss. A $10 wage became $6.50.

I think this is why silver is called poor man's gold. Silver made you poorer, not wealthier. Only a fool would trade their gold for silver.

In one sense, I can see that mercantilism and private speculation were good reasons for going off the gold standard. But also I see how governments misuse fiat currencies, by continually injecting money whenever its politically expedient to do so.

By: ARode

ARode — Tue, 14 Aug 2007 17:42:02 +0000

London abandoned their gold standard in 1931 transferring deflationary pressure to the US and Germany. Roosevelt abandoned the US gold standard 1933 when it was learned that gold was being shipped to Amsterdam and London by Hitler conspirators to create another US bond crash. There was also rumor that the Fed would be converted into a national bank. The "sound-money" lobby was Pro-Morgan and they were exposed later by Pecora (e.g. Citibank dumping worthless Peruvian bonds on its customers) and Gen. Butler who uncovered a plot to seize control of the white house by Fascists. Resulted in laws to curb excessive speculation and the SEC. Roosevelt favored returning to a silver standard. Those were different times.

By: eddysharpe

eddysharpe — Tue, 24 Jul 2007 21:27:26 +0000

Silver has been in bear market for close to 500 years. It reached its peak purchasing power prior to Columbus.

Is now the time for a resurrection? Who knows? My guess is yes, but when. It may come after I'm gone (hopefully not for at least 40 years!).

We probably have consumed about half of the Earth's silver that is minable and left with about 20 billion ozs. This is a lot, but represents about 4 ozs per person on the Earth ($5 - $10 US dollars in 1965 coins). Not much really.

By: Malcolm Winter

Malcolm Winter — Fri, 20 Jul 2007 11:37:50 +0000

I have run a one man business in the UK recovering silver from waste photographic processing chemistry since 1978. I am now virtually retired although I still maintain an investment interest in silver bullion. I can remember that in the late 70's I was getting around £3.00 per ounce for my silver. Apart from the Bunker Hunt peak in late 79, early 1980 it remained at this level for most of the period to date with a low of £1.60 per ounce in the early 1990's. It's now at a little over £6 per ounce so from an investment point of view it has been a pretty poor performer when compared to equities or especially residential property. For example, how many times it's 1979 price would your house be worth today. Even compared to the yellow metal it has lost value with a price ratio of 51:1 today compared to under 38:1 average in 1984. Even now the price is not very exciting when one considers that silver averaged $11.43 per ounce in 1983 which is only marginally below the 2006 average of $11.62 per ounce. However, consider the purchasing power of a 1983 dollar compared to what a dollar would buy in 2006. It's true that if silver were purchased on the lowest dips and sold on the highest peaks there have been great potential profit making opportunities over the years but how many investors have been successful at reading the market this well? Although I have been pretty negative about silver's past performance, conditions are certainly looking much more posative for the white metal now and I live in hope that silver will soon find its true value, which by my reckoning should be about $23 per ounce, whilst I am still young enough to enjoy spending the proceeds.

By: Bart Hall (Kansas, USA)

Bart Hall (Kansas, USA) — Thu, 19 Jul 2007 13:31:47 +0000

Silver is hardly a better answer than paper. In the past 130 years or so (since just before the US silver legislation of 1878) silver has lost between 70 and 75% of its value, priced in gold.

US paper currency in the same period has lost between 90 and 95 percent of its value, so silver is a little "less bad" but certainly no place to attempt a long-term storage of real value.