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Thread: What is wrong with silver?

  1. #31

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    Quote Originally Posted by NoOneButPaul View Post
    Of course I could argue that the fact the Central Banks hold NO Silver actually makes it a better buy because it's much more difficult for them to manipulate it. They have to go through banks like JP Morgan to do so and even JPM can only manipulate it with their paper and not their actual silver reserves because they don't have as much as they claim. It's much harder for the central banks to manipulate silver than it is gold because they can just dump their own gold reserves on the market.

    Furthermore... as people start to try to protect themselves against inflation the first thing they'll run to is gold... and immediately they'll make the realization that Gold is too expensive for them (it's already much to expensive for the common man) and they will naturally run to the poor man's gold... Silver.

    And... if Gold does become money again then it's price will skyrocket and Silver's price will eventually go right along with it. At the historic 16-1 ratio Silver should be about 107$ today... if Gold goes up to say 4000$ then Silver should hit 250$

    What i'm getting at is the gains on Silver will end up being much greater because the flocking to gold has already begun with the Billionaires... the people have yet to flock to silver to protect themselves.
    The central banks and the "giants" as FOFOA calls them, which is the generationally super wealthy or the "super producers", are who establish what money is. It has always been gold. The fact they do not hold silver is not a plus, but a minus.

    There is no manipulation on the physical silver market. Just like we are seeing gas shortages because of price controls, we would be seeing physical silver shortages if in fact there was physical silver manipulation. There isn't and to keep saying there is makes the hard-money movement looks tin foil hatish.

    To say an item that is infinitely divisible is to expensive to buy in any quantity is just wrong. You can buy gold in grams or if need in 1/10ths of grams.

    On what time frame are you using to get your 16-1 ratio and why must it hold true today?

    Relatively to gold, silver's price largely set by industrial demand. Gold's price is arbitrary. It is arbitrary because it is real money. Also, it is not practical to have money based in a metal that will be consumed.

    So as a commodity silver may go higher(because of demand and/or inflation), but I do not believe it will go higher because it will turn into money again. If/when gold retains its status as the only real money, means its price must rise to replace the purchasing power of all currency today. FOFOA estimates 1oz will be worth about $55k in purchasing power of today's dollars. I do not see a similar move in silver.
    Last edited by cubical; 11-03-2012 at 03:15 PM.



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  3. #32
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    I am a coin collector , I also collect other things, I will just keep collecting and see what happens

  4. #33

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    Quote Originally Posted by oyarde View Post
    I am a coin collector , I also collect other things, I will just keep collecting and see what happens
    That's cool. What's your most prized silver piece?

  5. #34

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    Quote Originally Posted by cubical View Post
    The central banks and the "giants" as FOFOA calls them, which is the generationally super wealthy or the "super producers", are who establish what money is. It has always been gold. The fact they do not hold silver is not a plus, but a minus.

    There is no manipulation on the physical silver market. Just like we are seeing gas shortages because of price controls, we would be seeing physical silver shortages if in fact there was physical silver manipulation. There isn't and to keep saying there is makes the hard-money movement looks tin foil hatish.

    To say an item that is infinitely divisible is to expensive to buy in any quantity is just wrong. You can buy gold in grams or if need in 1/10ths of grams.

    On what time frame are you using to get your 16-1 ratio and why must it hold true today?

    Relatively to gold, silver's price largely set by industrial demand. Gold's price is arbitrary. It is arbitrary because it is real money. Also, it is not practical to have money based in a metal that will be consumed.

    So as a commodity silver may go higher(because of demand and/or inflation), but I do not believe it will go higher because it will turn into money again. If/when gold retains its status as the only real money, means its price must rise to replace the purchasing power of all currency today. FOFOA estimates 1oz will be worth about $55k in purchasing power of today's dollars. I do not see a similar move in silver.
    Interesting.
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  6. #35

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    I think many smaller Central Banks will monetize and stock up on silver.

    Much like the poor man buying silver because gold is too costly to purchase in practical amounts for him, the same can (and will likely) be said of smaller Central Banks.

    South American/latin coutries come to mind. Mexico as well.

    I'm not saying that will happen, I just view it as likely.

    Quote Originally Posted by cubical View Post
    The central banks and the "giants" as FOFOA calls them, which is the generationally super wealthy or the "super producers", are who establish what money is. It has always been gold. The fact they do not hold silver is not a plus, but a minus.

    There is no manipulation on the physical silver market. Just like we are seeing gas shortages because of price controls, we would be seeing physical silver shortages if in fact there was physical silver manipulation. There isn't and to keep saying there is makes the hard-money movement looks tin foil hatish.

    To say an item that is infinitely divisible is to expensive to buy in any quantity is just wrong. You can buy gold in grams or if need in 1/10ths of grams.

    On what time frame are you using to get your 16-1 ratio and why must it hold true today?

    Relatively to gold, silver's price largely set by industrial demand. Gold's price is arbitrary. It is arbitrary because it is real money. Also, it is not practical to have money based in a metal that will be consumed.

    So as a commodity silver may go higher(because of demand and/or inflation), but I do not believe it will go higher because it will turn into money again. If/when gold retains its status as the only real money, means its price must rise to replace the purchasing power of all currency today. FOFOA estimates 1oz will be worth about $55k in purchasing power of today's dollars. I do not see a similar move in silver.
    "Like an army falling, one by one by one" - Linkin Park

  7. #36

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    Quote Originally Posted by Seraphim View Post
    I think many smaller Central Banks will monetize and stock up on silver.

    Much like the poor man buying silver because gold is too costly to purchase in practical amounts for him, the same can (and will likely) be said of smaller Central Banks.

    South American/latin coutries come to mind. Mexico as well.

    I'm not saying that will happen, I just view it as likely.
    Being a smaller central bank in possession of large amounts of gold is also a liability. Just look at Libya

  8. #37

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    Quote Originally Posted by Seraphim View Post
    I think many smaller Central Banks will monetize and stock up on silver.

    Much like the poor man buying silver because gold is too costly to purchase in practical amounts for him, the same can (and will likely) be said of smaller Central Banks.

    South American/latin coutries come to mind. Mexico as well.

    I'm not saying that will happen, I just view it as likely.
    There COULD be some sort of bi-metallic monetary system in the future, but I doubt it. There is no need.

    And remember, the money of the "poor" both on an individual and country level, is not where you want to be. The poor is who will be "selling" their money for basic needs. More sellers, less value. And people won't want silver because those who have/respect it are poor(minimal producers) and holding an IOU with them as a counterparty is not worth much. You want to be on the side of the super producers.

  9. #38

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    Quote Originally Posted by cubical View Post
    The central banks and the "giants" as FOFOA calls them, which is the generationally super wealthy or the "super producers", are who establish what money is. It has always been gold. The fact they do not hold silver is not a plus, but a minus.

    There is no manipulation on the physical silver market. Just like we are seeing gas shortages because of price controls, we would be seeing physical silver shortages if in fact there was physical silver manipulation. There isn't and to keep saying there is makes the hard-money movement looks tin foil hatish.

    To say an item that is infinitely divisible is to expensive to buy in any quantity is just wrong. You can buy gold in grams or if need in 1/10ths of grams.

    On what time frame are you using to get your 16-1 ratio and why must it hold true today?

    Relatively to gold, silver's price largely set by industrial demand. Gold's price is arbitrary. It is arbitrary because it is real money. Also, it is not practical to have money based in a metal that will be consumed.

    So as a commodity silver may go higher(because of demand and/or inflation), but I do not believe it will go higher because it will turn into money again. If/when gold retains its status as the only real money, means its price must rise to replace the purchasing power of all currency today. FOFOA estimates 1oz will be worth about $55k in purchasing power of today's dollars. I do not see a similar move in silver.
    1st- No one establishes what money is at the top. Ron Paul talked about this when he flashed his silver ounce in front of Bernanke 9 months ago... money comes in a natural way not by edict or government force. People at the top can claim Gold is money but if the entire globe bought into silver and tipped the scales so that silver was actually worth more than gold (I never expect this to happen this is just a hypothetical argument) then Silver would be money and Gold would be the poor man's silver- no one and no one thing are greater than the Free Market. No one determines what money is, people determine what money is, and 5000 years of economics tells us that BOTH gold and silver are money.

    2nd- Silver Manipulation is long past the point of conspiracy, it happens, it's been happening CLEARLY for the last 2 years. If you dismiss this you dismiss it at your own peril. There's an amazing amount of information out there about it, JP Morgan is being investigated for it as we type back and forth, whistleblowers have come out and admitted it. It is going on and it's not a tinfoil hatish position to take. There is also a physical shortage on silver and has been for quite some time now... we now consume silver faster than we can mine it and even the USGS said only a couple of years ago it would be the first element to disappear from the periodic table.

    3rd- Silver's price is currently being driven by industrial demand which points to it's gain being even greater. Right now silver is already going up because of the fact its use in industry is increasing AND common people are driving towards it as an inflation hedge. You do not get that double edged sword with gold.

    4th- Right now Silver is at about a 55-1 ratio to gold. As little as ten years ago that ratio was 75-1... the ratio continues to get smaller and smaller and will continue to get smaller and smaller. I contend it will hit 16-1 for a number of reasons... 1st... that was the centuries old average prior to the 20th century, 2nd consumers trying to protect themselves against inflation WILL BE FORCED to go to Silver because they cannot afford gold. (As for the smaller amounts... why would you buy 1/10 of OZ of gold for 170$ when you could get 5 OZs of Silver for roughly the same price?)

    Furthermore... if Gold hits 55k in purchasing power in the future and the ratio stays exactly the same at 55-1 that means silver should hit 1k in purchasing power.

    Which means your silver would go up about 33X what it is today while your gold only goes up at around 31-32X... the gains are still greater in Silver (understandably it's not by much but we're also assuming here that it stays at 55-1- If it went to even 40-1 we're talking 1250$ and much greater gains in Silver overall... if it hits the historic 16-1 ratio at 55k were talking about 3400$ silver and at that point we'd be talking gains of 100X what it is today)

    There's much much more potential in silver still.... if the Ratio goes to 16-1 the gains won't even be close with gold... with the ratio staying exactly the same (which I think is a hard assumption to make) then you're still getting a slightly better return with silver overall.

    And while i'm certainly not here to make the case AGAINST GOLD (I Love gold, i'll be asking for some for Christmas) i'm trying to say that to dismiss Silver's potential to the point where you're going to start selling it off for ONLY gold is foolish because there's a lot of gains to be made in silver. It's smart to hold both because Gold is much more stable than Silver but the gains in Silver are potentially MUCH greater than gold.
    Last edited by NoOneButPaul; 11-03-2012 at 03:55 PM.
    It's just an opinion... man...

  10. #39

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    ^^

    Cubical did mention he is holding silver in the near term because he sees more short term upside and will convert to gold.

    In fact, I am inclined to do the same.

    I will sell my silver for RE/gold/service/goods.

    Also note, Cubical...that on the side of silver, there are a lot of poor and middle class folk. When it comes time to value their labor in specie, it will be done so in silver, not gold. This is a function of demand. Sell side = using it to buy stuff. Demand side = labor pricing.

    2 cents.
    "Like an army falling, one by one by one" - Linkin Park

  11. #40
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    Quote Originally Posted by W_BRANDON View Post
    That's cool. What's your most prized silver piece?
    Tough call , probably more than several , but my personal favorites, for various reasons ( condition , how long I looked for , price etc) , 1921 dime, 1921 S Walker half, 1904 Morgan ,1884 O Morgan , 1876 CC quarter , 1876 & 77 CC dimes, 1927 Peace Dollar , 1850 O Half Dime, 1902 O Barber half.... I probably,have,less than $250 in them, total. My favorite coppers, are two 1909 S's and my 1914 D ( exceptional price on all three and very happy with the condition of two of them ).
    Last edited by oyarde; 11-03-2012 at 04:22 PM.

  12. #41

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    Quote Originally Posted by Seraphim View Post
    ^^

    Cubical did mention he is holding silver in the near term because he sees more short term upside and will convert to gold.

    In fact, I am inclined to do the same.

    I will sell my silver for RE/gold/service/goods.

    Also note, Cubical...that on the side of silver, there are a lot of poor and middle class folk. When it comes time to value their labor in specie, it will be done so in silver, not gold. This is a function of demand. Sell side = using it to buy stuff. Demand side = labor pricing.

    2 cents.
    When the time comes i'll do the same but the ratio is going to have to close in considerably from 55-1 before I think about doing it. I also think you should ALWAYS hold both.
    Last edited by NoOneButPaul; 11-03-2012 at 04:00 PM.
    It's just an opinion... man...

  13. #42

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    Below 20-1. Agreed.

    Quite frankly, I am of the belief it will go below 12-1.

    Quote Originally Posted by NoOneButPaul View Post
    When the time comes i'll do the same but the ratio is going to have to close in considerably from 55-1 before I think about doing it.
    "Like an army falling, one by one by one" - Linkin Park

  14. #43

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    Quote Originally Posted by NoOneButPaul View Post
    1st- No one establishes what money is at the top. Ron Paul talked about this when he flashed his silver ounce in front of Bernanke 9 months ago... money comes in a natural way not by edict or government force. People at the top can claim Gold is money but if the entire globe bought into silver and tipped the scales so that silver was actually worth more than gold (I never expect this to happen this is just a hypothetical argument) then Silver would be money and Gold would be the poor man's silver- no one and no one thing are greater than the Free Market. No one determines what money is, people determine what money is, and 5000 years of economics tells us that BOTH gold and silver are money.

    2nd- Silver Manipulation is long past the point of conspiracy, it happens, it's been happening CLEARLY for the last 2 years. If you dismiss this you dismiss it at your own peril. There's an amazing amount of information out there about it, JP Morgan is being investigated for it as we type back and forth, whistleblowers have come out and admitted it. It is going on and it's not a tinfoil hatish position to take. There is also a physical shortage on silver and has been for quite some time now... we now consume silver faster than we can mine it and even the USGS said only a couple of years ago it would be the first element to disappear from the periodic table.

    3rd- Silver's price is currently being driven by industrial demand which points to it's gain being even greater. Right now silver is already going up because of the fact its use in industry is increasing AND common people are driving towards it as an inflation hedge. You do not get that double edged sword with gold.

    4th- Right now Silver is at about a 55-1 ratio to gold. As little as ten years ago that ratio was 75-1... the ratio continues to get smaller and smaller and will continue to get smaller and smaller. I contend it will hit 16-1 for a number of reasons... 1st... that was the centuries old average prior to the 20th century, 2nd consumers trying to protect themselves against inflation WILL BE FORCED to go to Silver because they cannot afford gold. (As for the smaller amounts... why would you buy 1/10 of OZ of gold for 170$ when you could get 5 OZs of Silver for roughly the same price?)

    Furthermore... if Gold hits 55k in purchasing power in the future and the ratio stays exactly the same at 55-1 that means silver should hit 1k in purchasing power.

    Which means your silver would go up about 33X what it is today while your gold only goes up at around 31-32X... the gains are still greater in Silver (understandably it's not by much but we're also assuming here that it stays at 55-1- If it went to even 40-1 we're talking 1250$ and much greater gains in Silver overall... if it hits the historic 16-1 ratio at 55k were talking about 3400$ silver and at that point we'd be talking gains of 100X what it is today)

    There's much much more potential in silver still.... if the Ratio goes to 16-1 the gains won't even be close with gold... with the ratio staying exactly the same (which I think is a hard assumption to make) then you're still getting a slightly better return with silver overall.

    And while i'm certainly not here to make the case AGAINST GOLD (I Love gold, i'll be asking for some for Christmas) i'm trying to say that to dismiss Silver's potential to the point where you're going to start selling it off for ONLY gold is foolish because there's a lot of gains to be made in silver. It's smart to hold both because Gold is much more stable than Silver but the gains in Silver are potentially MUCH greater than gold.
    1. Yes, people at the top do establish what money is. The super producers are the ones at the top. If Canda/Russia/Brazil/Saudi Arabia said gold is money(super producer is relative and can be countries or individuals/families with large wealth), but Africa disagreed and only used silver, who's "money" would you desire to have? Africa is poor and minimal producers, which is the opposite of Canada, China etc

    2. If physical silver was manipulated, why can I go to gainesville coins right now and buy as much physical silver as my heart desires? Actual "shortages" in anything is rare, rather only higher prices. btw there is never a universale shortage of money(ie medium of exchange/store of value)

    3. What gives silver most of it's value is the exact opposite of what gives gold it's value. Why would you want your money as a commodity that will be consumed in the future? You believe copper, nickel, wood, oil are money as well?

    4. Yes, I know the GSR hs been all over the place in the past, but why do you pick 16-1? Why is that correct? I will answer your question with another question. Why buy 5oz of silver, when you can buy 200oz of nickel? Point being, volume is meaningless and in fact it would be easier to have to use as little as possible.

    Again, why does the 55-1 ratio have to stay? You have too many preconceived assumptions about the future that is misguiding you today. And if the ratio stayed the same, the gains would be EXACTLY the same. That is math.

    As I said, I do own silver, but I will not be buying silver in the future. Silver currently moves in the same direction as gold, but at an exponential rate. I will probably start to trade the silver for gold around the $50 level, when I guess gold will be about 1900 or 2000. If I think things are really about to blow, I plan on being almost entirely in gold.

  15. #44

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    Quote Originally Posted by cubical View Post
    3. What gives silver most of it's value is the exact opposite of what gives gold it's value. Why would you want your money as a commodity that will be consumed in the future? You believe copper, nickel, wood, oil are money as well?
    I don't know if I would phrase it that way. At the most fundamental level, absolutely everything that has value in exchange is, technically speaking, a form of money. It may not be a common 'medium' of exchange, but if it has value in exchange for anything, it is money. That includes anything that cannot be stored or reused, but only consumed, including labor--the only currency that some have to trade in.

    Anyone who doubts whether oil is money doesn't understand the first thing about what has kept FRN's the global reserve currency since 1973. Most of the world's oil is priced only in fiat dollars, making oil a fiat currency by proxy. Oil has an exponentially increasing exchange value derived from the facts that:

    a) oil is always in demand;
    b) the supply of fiat currency that everyone must acquire to buy most oil from its sources is being exponentially inflated, and
    c) constant consumption and ever-limited "current" capacity assures constant, continual scarcity

    Because demand for oil is not going away, and because the supply of oil on any given day is truly finite, its value "as money"--even by proxy--only increases as more of it is consumed.

    What gives silver its value is an amplification of what gives gold its value for similar reasons. Like gold and silver, copper has been used as money since BCE, and that has everything to do with history, and nothing to do with belief.

    Why would you want your money as a commodity that will be consumed in the future?
    Aside from whatever amounts have been lost along the way, MOST of the 'junk' coins--gold, silver, nickel and copper--that were minted but are not in circulation, are still above ground and in existence in coin form. Junk coins are constantly traded and stacked, but most are not being smelted into bullion or sold for consumption elsewhere. The ONLY reason these are not circulating as coinage, and therefore in greater demand as current money, is 100% due to government force, and government meddling.

    If gold was as plentiful as sand on the earth it would be in use everywhere, of course, and I'm sure highly prized nonetheless. But it would also be valueless as money, owing to its lack of scarcity. The fact that a commodity that is used as money may also be 'consumed' as a commodity (not recycled and kept above ground, like gold), amplifies its value as money for that very same reason, as continual consumption is a sure-fire mechanism for continually assured scarcity.

    The less of anything that is in demand there is, and the more expensive it becomes to produce, the more valuable it becomes, regardless of its usage (coinage or destructive consumption).

  16. #45

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    Quote Originally Posted by cubical View Post
    2. If physical silver was manipulated, why can I go to gainesville coins right now and buy as much physical silver as my heart desires? Actual "shortages" in anything is rare, rather only higher prices. btw there is never a universale shortage of money(ie medium of exchange/store of value)
    Quick answer on this one - because you're not buying any serious volume. Watch what's happening with Germany and their gold reserves unfold before our eyes to see what happens if a major paper silver investor decides to take physical delivery. Panic (and hilarity, if you're inclined to humor) ensues...
    “If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen.”

    - SAMUEL ADAMS

  17. #46

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    Quote Originally Posted by W_BRANDON View Post
    I'm thinking about keeping what silver I have and just putting my savings henceforth into low risk (low-yield) investments like t-bills and CDs.
    Diversification is well and good. But T bills and CDs right now? With bazillions in 'liquidity' in the banks and inflation already rampant, you really consider something tied to the value of the FRN to be low risk? Seriously?

    Negative yield is certainly low yield. It also costs you. I would suggest you rethink that one. If you're in treasuries and cds, when (not if) the value of the dollar drops there's not much to do but bend over.
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  18. #47
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    Bronze arrow heads were once used as money, now that is function there . Dating , Archaic , from around the Black Sea.

  19. #48

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    I own some 2014 AGQ calls...bought 'em when spot silver was 31.60...position declined by 25% after yesterdays cartel hit...fucking bastards....JPM and company need to be indicted...shorting 180 million ounces is beyond criminal.
    Last edited by DFF; 11-03-2012 at 07:58 PM.

  20. #49

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    Quote Originally Posted by DFF View Post
    JPM and company need to be indicted...shorting 180 million ounces is beyond criminal.
    They can't do it alone. They get by with a little help from their friends.

  21. #50

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    Y'know, it would be funny as hell if some well-heeled individual, company, or sovereign government bought 180 million ounces on Monday and requested physical delivery...watching these bastards run for cover would be one of the greatest spectacles ever. LOL
    Last edited by DFF; 11-03-2012 at 08:15 PM.

  22. #51
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    Quote Originally Posted by DFF View Post
    Y'know, it would be funny as hell if some well-heeled individual, company, or sovereign government bought 180 million ounces on Monday and requested physical delivered...watching these bastards run for cover would be one of the greatest spectacles ever. LOL
    I would like to see that delivered , what would delivery fee be ??

  23. #52

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    Quote Originally Posted by Steven Douglas View Post
    I don't know if I would phrase it that way. At the most fundamental level, absolutely everything that has value in exchange is, technically speaking, a form of money. It may not be a common 'medium' of exchange, but if it has value in exchange for anything, it is money. That includes anything that cannot be stored or reused, but only consumed, including labor--the only currency that some have to trade in.

    Anyone who doubts whether oil is money doesn't understand the first thing about what has kept FRN's the global reserve currency since 1973. Most of the world's oil is priced only in fiat dollars, making oil a fiat currency by proxy. Oil has an exponentially increasing exchange value derived from the facts that:

    a) oil is always in demand;
    b) the supply of fiat currency that everyone must acquire to buy most oil from its sources is being exponentially inflated, and
    c) constant consumption and ever-limited "current" capacity assures constant, continual scarcity

    Because demand for oil is not going away, and because the supply of oil on any given day is truly finite, its value "as money"--even by proxy--only increases as more of it is consumed.

    What gives silver its value is an amplification of what gives gold its value for similar reasons. Like gold and silver, copper has been used as money since BCE, and that has everything to do with history, and nothing to do with belief.



    Aside from whatever amounts have been lost along the way, MOST of the 'junk' coins--gold, silver, nickel and copper--that were minted but are not in circulation, are still above ground and in existence in coin form. Junk coins are constantly traded and stacked, but most are not being smelted into bullion or sold for consumption elsewhere. The ONLY reason these are not circulating as coinage, and therefore in greater demand as current money, is 100% due to government force, and government meddling.

    If gold was as plentiful as sand on the earth it would be in use everywhere, of course, and I'm sure highly prized nonetheless. But it would also be valueless as money, owing to its lack of scarcity. The fact that a commodity that is used as money may also be 'consumed' as a commodity (not recycled and kept above ground, like gold), amplifies its value as money for that very same reason, as continual consumption is a sure-fire mechanism for continually assured scarcity.

    The less of anything that is in demand there is, and the more expensive it becomes to produce, the more valuable it becomes, regardless of its usage (coinage or destructive consumption).

    The following is a good piece from an article on fofoa(my bold). The entire article is good, but to get to the silver portion search for the "Easy money" heading and start there.

    http://fofoa.blogspot.com/2010/12/focal-point-gold.html

    ---------------------------------------------------------------------------------

    "To be honest, I really don't know if silver is overvalued or undervalued today at $30/ounce. But if you are counting on the industrial fundamentals of silver for your moonshot like the Zero Hedge article is, or on a busted paper market like the "vigilantes," you may be in for an unpleasant surprise. The same fundamental arguments that are used today were also used back in 1982. [3] In gold, at least, we know that jewelry demand rises and falls opposite the price of gold. [4] But then again, gold is money, right? So, is silver still money?

    Easy Money

    Silver was certainly used as money in the past. So why not again today? Maybe the people will rise up and demand silver money! Maybe China, or somebody else, will remonetize silver and start a new silver standard, right? After all, China was the last to use a silver standard.

    I don't mean to pick a fight with silver. In fact, I write this post with a heavy heart. But there is so much silver hype right now that I feel I owe it to my readers to at least try to spell out Another perspective. And China is certainly on the minds of the silverbugs these days. How often have we heard about China encouraging its citizens to buy gold and silver lately? (There's that "gold and silver" again.)

    But did you know that China was practically dumping its silver a decade ago? And to this day it is still a large exporter of silver. Not gold. Just silver.(China = super producer!) In 2009 China exported 3,500 tonnes of silver. That amount will probably be cut in half for 2010. The drop is due to increases in both industrial and investor demand, but also due to China's recent move to stem the shipment of all natural resources leaving its shores.

    I'm sure many of you know that China was the last country on Earth to end its silver standard back in 1935, in the middle of the Great Depression. But do you know why? And would China ever want to start a new silver standard? Does it make any sense now that they've sold most of their silver? And what has changed since 1935 that would make them want to go back?

    Something very interesting happened after Jan. 30, 1934 when Roosevelt devalued the dollar against gold. The price of gold went up 70%. What do you think happened to silver? Did it go up more than gold? Did it shoot the moon? Was it leveraged to gold? No, it dropped like an unwanted rock.

    In response to the falling price of silver, on June 19, 1934 (four and a half months later) the U.S. Congress approved the Silver Purchase Act of 1934 which authorized President Roosevelt to nationalize silver holdings (to buy silver). This decision resulted in an increase in the world price of silver, which forced China to abandon the silver standard in November 1935.

    The US Silver Purchase Act created an intolerable demand on China's silver coins, and so in the end the silver standard was officially abandoned in 1935 in favor of the four Chinese national banks "legal note" issues.

    Remember what Mundell wrote (See Mundell in The Value of Gold). The use of a commodity as money is the overvaluing of that commodity for profit by the monetary authority. When the US started buying commodity silver on the open market (to prop up the price artificially) the Chinese people found it was better to sell their silver coins for melt value than to use them in commerce for face value (which was lower than melt).(value of "money" moved to being exclusively due to its "industrial" use, in this case coinage)

    This effect to China's base money (silver) in 1934 was similar to what the US felt in 1933 and 1971 with gold. The main difference being that the demand for silver in 1934 was artificial (from one single entity, the US govt.) while the demand for gold has always been real, global and market-driven. This price supporting move (not unlike the Agriculture Adjustment Act and other destructive price control measures) by the US caused the "Shanghai Financial Crisis" which lasted from June 1934 until November 1935, finally ending in Currency Reform on Nov. 4, 1935.

    So, in 1934, the US govt. wanted to devalue (set the price of) the dollar against gold and silver. In order to do so, it had to influence the market of each. For gold, it had to inflict capital controls internally and sell gold externally at the new higher price. For silver, it had to BUY silver at the new higher price. Sell gold, buy silver. The same exact thing that happened 45 years earlier with the Sherman Silver Purchase act of 1890.

    ......

    Remember what Another wrote? "Any nation/state can put its economy/currency on a gold standard. They only have two requirements. Own a stockpile of gold and raise the price very high!"

    Why do you think you need a stockpile of gold to start a gold standard? In the case of France in 1870 above, they realized they would have to buy all the excess silver in the world to keep a silver monetary standard. You don't need a stockpile to do that! Yet you don't need to worry about buying all the gold to have a gold standard. You need to be prepared to SELL! That's why you need a stockpile. So what's the difference?

    Could it be that silver is only a commodity today (and for the last 150 years at least) and because of this, any monetary use is not backed by the free market? Any silver standard is an unnatural levitation requiring BUYING of silver by the monetary authority. While a gold standard gives the free market what it really wants, gold, requiring SELLING of gold by the monetary authority.

    Can you find an example where the opposite occurred? Can you show me where a government ever had to buy gold and sell silver (at whatever price or ratio) in order to maintain its system?
    "




    To me, silver has posed as money(so has paper, sea shells etc), but it always ultimately leads back to gold.
    Last edited by cubical; 11-04-2012 at 12:26 PM.

  24. #53

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    Quote Originally Posted by thoughtomator View Post
    Quick answer on this one - because you're not buying any serious volume. Watch what's happening with Germany and their gold reserves unfold before our eyes to see what happens if a major paper silver investor decides to take physical delivery. Panic (and hilarity, if you're inclined to humor) ensues...
    The same can be said for ANYTHING. If you buy enough of it, there will be "shortages", but there will certainly be higher prices.

  25. #54

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    I'm going to pick off quotes from that article and take them on one at a time.

    Quote Originally Posted by cubical View Post
    Silver was certainly used as money in the past. So why not again today? Maybe the people will rise up and demand silver money! Maybe China, or somebody else, will remonetize silver and start a new silver standard, right? After all, China was the last to use a silver standard.

    How often have we heard about China encouraging its citizens to buy gold and silver lately? (There's that "gold and silver" again.) But did you know that China was practically dumping its silver a decade ago?
    Yes, and did you know that a Russian Czar practically DUMPED Alaska? ::: GASP!!! ::: Enough said there, right? What does that tell us about Alaska?

    So frustrating answering morons like the author of that article who are impaired in terms logical weighting or rational thought.

    The fallacy here is the implication that "China", or anyone else, for that matter, is wise, and fully understands the ramifications of what it is doing, past or present--and even if it does understand the ramifications, there is an implicit assumption that there is an underlying objective 'truth' buried under it all.

    And to this day [China] is still a large exporter of silver. Not gold. Just silver.(China = super producer!) In 2009 China exported 3,500 tonnes of silver. That amount will probably be cut in half for 2010. The drop is due to increases in both industrial and investor demand, but also due to China's recent move to stem the shipment of all natural resources leaving its shores.
    Note the emphasis on demand, and the specific classes identified. Note also that 'monetary demand' by consumers in the economy is not named at all, nor are any of the ARTIFICIAL REASONS why the NATURAL DEMAND for silver as current money does not even come into play. NOW, at least.

    Consider Hemp. There has always been demand for certain types of hemp in smokable form. Big giant global market for it (black market et al) to the tune of about $150 Billion per year. There would be NATURAL DEMAND for hemp in other forms, including forms that have no narcotic effects, were it not for ARTIFICIAL suppression.

    Gold AND Silver were artificially suppressed for use as current money by the Congress; first, via the Coinage Act that artificially tied their GOVERNMENT DICTATED (FIAT) "value" to one another. Demand for both metals--as money--were later suppressed in other ways (demonetizing and remonetizing silver along the way). All of this meddling and outright suppression had global ramifications, which had NOTHING to do with either metal's potential NATURAL DEMAND VALUE as money--IF NOT FUCKED WITH.

    I'm sure many of you know that China was the last country on Earth to end its silver standard back in 1935, in the middle of the Great Depression. But do you know why?
    I sure in the hell do. Let's talk about that little nasty global gambit, and put it into some bitch-slapping perspective, for those who think that it somehow equated to a lack of demand for silver as money.

    The global GOVERNMENT market was on a de facto gold standard, courtesy of Franklin Piece Of Shit Delano WHO PROHIBITED GOLD FROM BEING OWNED AND CIRCULATED BY HIS FELLOW CITIZENS. From that time forward, gold was the plaything of the Government Gods Alone. Note that during this same time US Citizens were forced onto a de facto SILVER STANDARD.

    Something very interesting happened after Jan. 30, 1934 when Roosevelt devalued the dollar against gold. The price of gold went up 70%. What do you think happened to silver? Did it go up more than gold? Did it shoot the moon? Was it leveraged to gold? No, it dropped like an unwanted rock.
    This is wrong on so many levels that I want to wring necks just reading this shit. "The price of gold went up 70%"? THE FUCK IT DID. Gold was a price already, denominated in its own weight. It's so-called "price", as thought of by those who utterly lack critical thinking skills, was already distorted and suppressed by more demand notes in existence than the gold those notes represented. Once FDR facilitated legal cover for the THEFT/DEFAULT/FRAUD perpetrated by banks, we no longer even had to pretend that the quantity of stored gold was equal to the paper that grossly misrepresented it. Hence, the "price" of gold only changed in that the quantity of misrepresenting notes finally began to reflect what was already the reality, once FDR caused the paper to FLOAT, as it decoupled from the specie it never accurately represented.

    The price of silver did not drop "like an unwanted rock" (what a specious, piece of shit way of phrasing it). The "price" of just about everything dropped as a direct result of a DEFLATIONARY DEPRESSION. Economic Demand for silver was not low for want of desire or desperate need for silver as current money, but only for want of the ability to obtain any. And that was all because SILVER HAD ALREADY BEEN DRIVEN OUT OF CIRCULATION BY CONGRESS. And that can be laid right at the doorstep of the de facto gold standard that was later corrupted, debased, debauched, and fraudulently defaulted on. Silver was not undervalued. Quite the opposite. We needed currency--ANY currency. And whatever currency was circulating was only increasing in value due it's catastrophically increasing scarcity as it disappeared from circulation.

    So here we are, in a Great Depression, with morons in charge who are figuring out ways to get banks off the hook for their fraud, their crimes. FDR had just pulled the rug out from under Citizens in terms of using gold as current money, which left A VOID for hard specie, and a need for silver as current money.

    NOTE: It was not possible for Roosevelt to move the American Public straight to a strictly fiat currency at that time, because the public was FAR MORE AWARE (although certainly not enough), thanks mainly to the so-called "Hard Money" Democrats, such that Roosevelt had to go through great lengths to assure the American public in his 'Bank Holiday' Fireside Address, that what he was proposing was NOT, he stated emphatically, fiat currency.

    In response to the falling price of silver, on June 19, 1934 (four and a half months later) the U.S. Congress approved the Silver Purchase Act of 1934 which authorized President Roosevelt to nationalize silver holdings (to buy silver). This decision resulted in an increase in the world price of silver, which forced China to abandon the silver standard in November 1935.
    And there's where utter ignorance sets in. "In response to the falling price of silver" MY ASS. That purchase act was not intended as a subsidy, to prop up the price of silver. What kind of oatmeal does this guy have for a brain? The purpose was to NATIONALIZE and REMONETIZE silver, to fill the void left by FDR when he DEMONETIZED gold (internally). The price of silver went up as an wholly incidental result of all the massive buying by the Treasury. We would have been just as happy if the price had remained constant, or even dropped further.

    China abandoned its silver standard ONLY because the US was going onto one INTERNALLY. We needed silver, and much of it was sucked out of China, not from normal market forces, but from an ARTIFICIAL DECREE. Meanwhile, China abandoned its silver standard INTERNALLY ONLY, but they did NOT adopt a gold standard INTERNALLY. Chinese people were not running around exchanging gold on the streets.

    The US silver purchase act of 1934 forced China off its silver standard, not because silver was not in natural demand by ordinary people (on either side of the pond). The act that placed ARTIFICIAL DEMAND on China's silver coins, which in turn forced them off their silver standard in 1935, was in favor of FIAT CURRENCY -- from the four Chinese national banks that were authorized to issue "legal notes". And if we know anything about the issuers of FIAT CURRENCY, it is that they loathe competition. So by all means, their own elitist protectionists would want to export the shit out of silver--all of it, if possible, because it is a direct threat to their own Ponzi currency.

    [QUOTE]And would China ever want to start a new silver standard? Does it make any sense now that they've sold most of their silver? And what has changed since 1935 that would make them want to go back?/QUOTE]

    That's the other part that makes me want to wring an idiot's neck, and that is the aggregate anthropomorphizing of an entire country. "China" wants/does not want this or that. What the fuck is that supposed to mean? Who is this "China" being referenced, which "wants" something? Who ever said that China (the citizens, not the banks, not the government) EVER WANTED TO GO OFF OF IT IN THE FIRST PLACE?

    As long as we're going to play fast and loose with aggregate collectivist and intellectually dishonest blob terms, could it be the fact that even the powers that be in China may now be recognizing that the entire globally inflated fiat currency Ponzi scheme ride is no longer sustainable, and coming to its catastrophic inevitable end? Could it be THAT is reason enough for some VERY SCARED Chinese officials, not wanting to be holding the bag when the new revolution comes after their own fiat currency fails?

    The Chinese powers that be replaced silver with a fiat currency, just as the US powers that be replaced gold with silver, followed by silver being replaced with a fiat currency. There was NOTHING that prevented China from selling goods and services at a discount for the same silver they had sold. But that decision--that choice--was preempted, destroyed, suppressed, by LEGAL TENDER.

    More to follow later, on this guy's logically twisted, intellectually exhausting fantasy house of cards, and his perception of gold and silver and how the market behaves with each in terms of demand under a given utility or function...
    Last edited by Steven Douglas; 11-04-2012 at 04:39 PM.

  26. #55

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    Google Blythe Masters and then also what Steven Douglas posted above.

    edit: I was refering to Steven's post WAY up the thread, although I don't see anything to disagree with in his last post either. As always, he has done a great job of analysis.
    Last edited by Original_Intent; 11-04-2012 at 05:13 PM.
    "The journalist is one who separates the wheat from the chaff, and then prints the chaff." - Adlai Stevenson

    “I tell you that virtue does not come from money: but from virtue comes money and all other good things to man, both to the individual and to the state.” - Socrates

  27. #56

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    Quote Originally Posted by cubical View Post
    Remember what Another wrote? "Any nation/state can put its economy/currency on a gold standard. They only have two requirements. Own a stockpile of gold and raise the price very high!"
    Let's apply that to personal computers and cell phones, and their beginnings. We first had to stockpile them by the tens of millions, and then we had to raise their price very high? Somebody is 'very high', that's for sure. Was "Another" confusing money with health care, education, or something else just as artificially manipulated and controlled?

    Why do you think you need a stockpile of gold to start a gold standard? In the case of France in 1870 above, they realized they would have to buy all the excess silver in the world to keep a silver monetary standard.
    To "keep a monetary standard"? What unadulterated bullshit. Precisely how much milk did the U.S. government have to buy up and stockpile to keep us on the Gallon of Milk Standard? To "keep" a monetary standard, you just declare the standard (e.g., 1 UNIT = N Mass of whatever element). THERE IS NOT A DAMNED THING FOR A GOVERNMENT TO "BUY", LET ALONE "STOCKPILE".

    France made the same idiotic mistake as the US by adopting a "Bimetallic" standard. It was a FIAT declaration of exchange value ratio between gold and silver (15.5:1), thus ABSOLUTELY ASSURING that France would be on a de facto gold standard with silver DRIVEN out of circulation (see Gresham's Law).

    It was 1871 when the German Empire stopped minting silver thaler coins. Why do you suppose that happened? CAN YOU SAY CENTRAL BANK CONSOLIDATION? Before unification in 1871, Germany had 31 central banks – the Notenbanken (note banks). They were all in competition with one another, with each independent state issuing their own money. In 1870, a law was passed that forbade the formation of further central banks. All of this paved the way for the formation of the Reichsbank in 1876. Ever heard of it? Its legal tender, the Goldmark, was inflated to finance World War I. I assume you are familiar with the rest of the history.

    The abandonment of the silver thaler resulted in downward pressure in value for silver in the US. The Coinage Act of 1873 worsened EVERYTHING. Instead of eliminating the statutory value ratio, and simply allowing silver to circulate on its own strength, floating against other currencies, Congress instead came to the RUINOUS decision to demonetize silver altogether, and put all the monetary eggs into one de facto Gold Basket. It would no longer "buy" silver at a statutory price or convert silver from the public into silver coins.

    The Coinage Act of 1873, which was referred to commonly as "The Crime of '73", artificially depressed silver prices even further. So now you can't mint your own coins, and the government will no longer do it for you either, regardless of demand. The government would, ironically enough, continue to mint silver dollars for export in the form of "trade dollars". Sound familiar? The stupid meddling bastards.

    The Coinage Act of 1873 reduced domestic money supply, which raised interest rates, and hurt farmers and anyone else who normally carried heavy debt. Investors shied away from long-term obligations, and particularly long-term bonds.

    There was already Post-Civil War over-expansion from the railroad boom, the Black Friday panic of 1869, the Chicago fire of 1871, the outbreak of equine influenza in 1872, and demonetization of silver in 1873 which DECIMATED the money supply, such that by September 1873 the American economy was in a full-blown crisis. And it was not because silver or its value simply "dropped like an unwanted rock", unless you are referring to our absolute half-wits in Congress at the time, and their perceptions of what was wanted or unwanted.

    You don't need a stockpile to do that! Yet you don't need to worry about buying all the gold to have a gold standard. You need to be prepared to SELL! That's why you need a stockpile. So what's the difference?
    All completely ass-backwards. You don't have to be prepared to "SELL" to have a monetary standard. You only need remove barriers to entry for people who want to buy. That's the demand side. Don't fuck with it, leave it alone, and the supply side will naturally follow and reach its own levels, without a single statist or monetarist to thank--or even be necessary for any of it to happen.

    [B]Could it be that silver is only a commodity today (and for the last 150 years at least) and because of this, any monetary use is not backed by the free market?
    Free market? What free market? Too many examples to cite, the Coinage Act of 1873 and ALL LEGAL TENDER LAWS prove conclusively that there is NO FREE MARKET WITH REGARD TO MONETARY SILVER OR GOLD.

    The sentence began, "Could it be that silver is only a commodity today...and because of this..."

    Bad form, extremely badly written. The more salient question would start out as, "Could it be that silver is only a commodity today because..." and then actually address and answer that glossed over question?

    Any silver standard is an unnatural levitation requiring BUYING of silver by the monetary authority.
    BULLSHIT! WHAT MONETARY AUTHORITY? When the Coinage Act of 1792 was drafted, the only "monetary authority" was Congress, and not for the purpose of BUYING anything at all. Even the mints were only established so that people would have a place to take their precious metals and have them assayed and COINED into a predetermined shape and size for fungible convenience.

    While a gold standard gives the free market what it really wants, gold, requiring SELLING of gold by the monetary authority.
    WRONG. See above. You have government fixated in your mind as a SOURCE, a SELLER, an ISSUER and ORIGINATOR of money. In a free market, it doesn't work that way. The government doesn't have shit, and it is not a PROVIDER. I don't care what the government has in Fort Knox or anywhere else, or who it stole from to get that stockpile. The gold and silver I own is not part of that. I don't care what tangled, distorted, mutations or messes have been created that give people the illusion that government is a SOURCE, PROVIDER, BUYER or SELLER, as if it really was a "market participant". That is not how it was in the beginning, and is not necessary now. When a mint (ANY MINT, public or private) ISSUES a coin, it is from MY SILVER, MY GOLD.

    Can you find an example where the opposite occurred? Can you show me where a government ever had to buy gold and sell silver (at whatever price or ratio) in order to maintain its system?
    Had to, or did? And what do you mean by "its system"? What "system of its" are your referring to? Either way, I don't care, because it was never necessary, for the reasons stated above.

    To me, silver has posed as money(so has paper, sea shells etc)...
    There is no such thing as "posed as" unless you are referring to something "poses as" something else, or pretends to be something that it is not. So paper would qualify as a "poser", because it is a) posing as a promise of whatever it represents, or b) it represents--poses as--evidence of the force of law that declares it as having value. Silver and shells, then, would not "pose" as money. To the extent that they are freely accepted and used, they ARE money.

    Likewise, if we have a shortage of rice in my neck of the woods, and everyone starts to value and use rice as a common medium of exchange, that rice is not "POSING" as money. It IS money.

    ..., but it always ultimately leads back to gold.
    What always leads back to gold? Expound on this "it" that presumably always leads back to gold?
    Last edited by Steven Douglas; 11-04-2012 at 08:41 PM.

  28. #57
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    I haven’t read all the posts in this thread so I apologize if someone has posted something similar. Just thinking out loud. Right now silver or any PM is viewed as a store of wealth against the devaluation of the RFN. I’m thinking the tipping point when silver sky rockets is when silver gets into enough people’s hands that they actually start to use it as money on a regular basis. At that point the governments only recourse is to confiscate or ban it’s use outright. Isn’t that why FDR confiscated gold? Maybe I have it backwards?

  29. #58

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    Yes, and did you know that a Russian Czar practically DUMPED Alaska? ::: GASP!!! ::: Enough said there, right? What does that tell us about Alaska?
    Yes, but Alaska has something that can be valued, similar to a stock or a commodity. They will not dump sea shells or paper and then all of a sudden realize they had some sort of value they were missing.


    The fallacy here is the implication that "China", or anyone else, for that matter, is wise, and fully understands the ramifications of what it is doing, past or present--and even if it does understand the ramifications, there is an implicit assumption that there is an underlying objective 'truth' buried under it all.
    There is a truth to it. Those who produce set the standard for what they will accept in return for their goods.

    Note the emphasis on demand, and the specific classes identified. Note also that 'monetary demand' by consumers in the economy is not named at all, nor are any of the ARTIFICIAL REASONS why the NATURAL DEMAND for silver as current money does not even come into play. NOW, at least.

    Consider Hemp. There has always been demand for certain types of hemp in smokable form. Big giant global market for it (black market et al) to the tune of about $150 Billion per year. There would be NATURAL DEMAND for hemp in other forms, including forms that have no narcotic effects, were it not for ARTIFICIAL suppression.

    Gold AND Silver were artificially suppressed for use as current money by the Congress; first, via the Coinage Act that artificially tied their GOVERNMENT DICTATED (FIAT) "value" to one another. Demand for both metals--as money--were later suppressed in other ways (demonetizing and remonetizing silver along the way). All of this meddling and outright suppression had global ramifications, which had NOTHING to do with either metal's potential NATURAL DEMAND VALUE as money--IF NOT FUCKED WITH.
    Gold and silver price was suppressed when it was officially money, yes. But it is no longer suppressed in the same way. In fact it is not suppressed at all. Gold is simply waiting to reclaim it's global monetary status and silver is being used as a commodity.

    This is wrong on so many levels that I want to wring necks just reading this shit. "The price of gold went up 70%"? THE FUCK IT DID. Gold was a price already, denominated in its own weight. It's so-called "price", as thought of by those who utterly lack critical thinking skills, was already distorted and suppressed by more demand notes in existence than the gold those notes represented. Once FDR facilitated legal cover for the THEFT/DEFAULT/FRAUD perpetrated by banks, we no longer even had to pretend that the quantity of stored gold was equal to the paper that grossly misrepresented it. Hence, the "price" of gold only changed in that the quantity of misrepresenting notes finally began to reflect what was already the reality, once FDR caused the paper to FLOAT, as it decoupled from the specie it never accurately represented.

    The price of silver did not drop "like an unwanted rock" (what a specious, piece of shit way of phrasing it). The "price" of just about everything dropped as a direct result of a DEFLATIONARY DEPRESSION. Economic Demand for silver was not low for want of desire or desperate need for silver as current money, but only for want of the ability to obtain any. And that was all because SILVER HAD ALREADY BEEN DRIVEN OUT OF CIRCULATION BY CONGRESS. And that can be laid right at the doorstep of the de facto gold standard that was later corrupted, debased, debauched, and fraudulently defaulted on. Silver was not undervalued. Quite the opposite. We needed currency--ANY currency. And whatever currency was circulating was only increasing in value due it's catastrophically increasing scarcity as it disappeared from circulation.
    Prices were not set in ounces of gold, but dollars. Obviously it was corrupt. The point is the value of gold rose and the value of silver dropped, just like all other commodities.


    That's the other part that makes me want to wring an idiot's neck, and that is the aggregate anthropomorphizing of an entire country. "China" wants/does not want this or that. What the fuck is that supposed to mean? Who is this "China" being referenced, which "wants" something? Who ever said that China (the citizens, not the banks, not the government) EVER WANTED TO GO OFF OF IT IN THE FIRST PLACE?
    The citizens who held the coins wanted to get off obviously, because they "industrial" use surpassed its monetary value. That is a bad quality for money. Gold's value is not derived from its usefulness, just like dollars are not currently valued because of its usefulness.

  30. #59
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    I am thinking the tipping point for the new high , may be, somewhere in the first few months of next year , as I expect zero growth in the economy, stock market to slide ,that is only my guess.

  31. #60

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    Let's apply that to personal computers and cell phones, and their beginnings. We first had to stockpile them by the tens of millions, and then we had to raise their price very high? Somebody is 'very high', that's for sure. Was "Another" confusing money with health care, education, or something else just as artificially manipulated and controlled?
    You can't raise the price on cell phones or computer because their value is derived from its usefulness and is not arbitrary like in gold.


    You write too long of posts for me to respond to it all. You should post in the comments section of the blog. There are many people who like yourself like to write out very long and detailed responses and who are much better at explaining gold and only gold as money than myself.

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