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Thread: What is wrong with silver?

  1. #61
    Contributing Member Henry Rogue's Avatar
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    Quote Originally Posted by oyarde View Post
    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.
    I'm sure you are right. You have contemplated/studied this a lot longer than I. Maybe the question of when silver is no longer undervalue isn't the right question for my answer. Maybe the right question is; when does our saved silver become the common medium of exchange? Scarcity gives PM its credible value, but we need enough of it in enough hands to hit that critical point to make a useful medium of exchange and not just a store of value. I think it would be hard for me to part with it if I didn't think I will eventually receive silver or some other appropriately valued PM in exchange for a good or sevice I provided. Unless I am in a desperate situation. I understand that RFNs are a mandated currency, but if only a few thousand single RFNs were in existence. No mandate could make it the primary medium of exchange. I do understand that once a sound money is in use it need not be expanded, but i'm talking about the amount and amount of people needed to reach wide spread use as money.
    Last edited by Henry Rogue; 11-04-2012 at 10:09 PM.



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  3. #62
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    I , again , can only guess that at some point the FRN's are not going to be accepted by everyone or for everything , I suppose , hopefully if some , are like me, they are not going to need to exchange much , for anything, then there will be those that have a special skill ( think , medical ) , or good , say , part for a machine ( that you need ). At that point , depending on your locality , currency, could be , silver , copper coinage , barter , ammunition, food, work in trade for a service etc. Gold for only , very major things .Do not think FRN's will be in the local picture.

  4. #63
    Contributing Member Henry Rogue's Avatar
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    Quote Originally Posted by oyarde View Post
    I , again , can only guess that at some point the FRN's are not going to be accepted by everyone or for everything , I suppose , hopefully if some , are like me, they are not going to need to exchange much , for anything, then there will be those that have a special skill ( think , medical ) , or good , say , part for a machine ( that you need ). At that point , depending on your locality , currency, could be , silver , copper coinage , barter , ammunition, food, work in trade for a service etc. Gold for only , very major things .Do not think FRN's will be in the local picture.
    I think I see your point, instead of one big economy. There will be a bunch of small local economies at first. Using what's available to them.

  5. #64

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    quit focusing on the manipulation and start focusing on the low prices to accumulate. Any talk about precious metals manipulation should be celebrated by any stacker. I think most of us know the end game, so how is it bad if we have more time to plan and prepare for the eventual collapse?

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    I view time , as good, unless you are in prison, time, is good .

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    Quote Originally Posted by Henry Rogue View Post
    I think I see your point, instead of one big economy. There will be a bunch of small local economies at first. Using what's available to them.
    I suspect so , pretty sure that would be the way where I reside most of the time. I will have heat , water , food, means of protection , ability to grow , harvest , lamplight , If something is needed I was unable to forsee to plan for , then I will be able to trade, purchase it, etc

  8. #67

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    Silver has 2 types of demand: industrial demand and spectulative demand.

    Industrial demand has been increasing due to production of items such as solar panels, which use a LOT of silver. Silver consumption by solar panel manufacturers has climbed about 50% annually the last few years, and is expected to continue.

    Spectulative demand, on the other hand, is much more volatile. There was the huge 2011 bubble, when silver more than doubled in price in a 6-month period, before crashing again.


    Silver mine production rose considerably in 2011, and is expected to grow at 6% in 2012. Commodities are generally safe havens for investors during economic downturns such as the recent recession. However, that means the opposite is also true. During large economic growth, investors will generally leave commodities and get back into stocks. I think we will continue to see economic growth coming out of the recession, but who knows....we really will have to see, since the trillion dollar deficits really pile up.

    I think given the demand and supply outlook, I think silver will steadily increase in price over this next decade.

    This is just my opinion, focused from an economic and finance perspective. Personally it might be smart to add silver to a portfolio, but I would never only invest in silver....I think a few of the posters who suggest to only invest in commodities over the long term might be a little deranged on this issue. Commodities over the long term is a very low yield investment. For example, from 1981 to 2010 gold made about 5.3% per year, while the Dow Jones returned 19.1% per year. If you invested $1 in gold in 1981, in 2010 you would have $4.71. If you invested $1 in the Dow Jones in 1981, in 2010 you would have $189.39.
    The Heart of Conservatism is Libertarianism - Ronald Reagan

  9. #68

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    Quote Originally Posted by Henry Rogue View Post
    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?
    As long as our government has legal tender laws, outright prohibitions, taxes and other barriers to entry for competing currencies, there is no way that silver will circulate as a normal competing currency. FDR confiscated gold because banks were facing bank runs, and were in default. No matter what, everyone was taking a haircut. Rather than label the banks frauds and oversee bankruptcies, FDR chose to treat the victims of fraud as "bad investors".

    A bully on a playground punches you in the nose, pushes you down and takes your shit. FDR, the playground police, comes up, hears both sides, and says, "Alright, that's it. If you're going to fight over it, then nobody gets anything". And FDR promptly takes your shit. Which he leaves with the playground bully for safe keeping.

    Quote Originally Posted by cubical View Post
    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.
    Ah, but we weren't talking about sea shells or paper.

    "But did you know that China was practically dumping its silver a decade ago?"

    You were specifically talking about silver.

    Those who produce set the standard for what they will accept in return for their goods.
    In a free market only. With legal tender laws, fiat declarations of exchange value, and barriers to entry for competing currencies, it is the government that sets the standard for what others will be forced to accept in payment of private debts, as well as what people will be forced to acquire for payment of public debts.

    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.
    I didn't say anything about price. I said that "Gold AND Silver were artificially suppressed for use as current money by the Congress" - that had nothing to do with price, and everything to do with whatever Congress did that caused either or both hard specie to disappear completely from circulation. Legal tender laws, the value ratio decreed by fiat in the Coinage Act of 1792, the refusal to even coin silver any more for the public in the Coinage Act of 1873, and the list goes on, as anything that served to artificially drive any specie out of circulation served as a "suppression", not of price, but of general usage.

    Gold is simply waiting to reclaim it's global monetary status and silver is being used as a commodity.
    Lots wrong with that.

    Both gold and silver are being used as commodities.
    Both gold and silver have enjoyed "global monetary status".

    To "reclaim its global monetary status" is a circular argument, with some baseless assumptions. Neither can be said to be "waiting" for anything. As inanimate elements, they are what they are, and both elements are ready and 'waiting' for anything at all. It could be accurate to say that some goldbugs are waiting for gold to reclaim global monetary status.

    Prices were not set in ounces of gold, but dollars.
    The other way around. Dollars were "set" in ounces of silver, and gold Eagles, the UNITS that were established in ounces of gold (which is all the "gold standard" means) were given a government-declared exchange value that tied gold Eagles to silver Dollars by fiat.

    Obviously it was corrupt. The point is the value of gold rose and the value of silver dropped, just like all other commodities.
    You are implying that gold is not "just like all other commodities", when in fact it very much is. In your mind, I think there is something magical about gold that makes it "global money", above all other commodities, even though you haven't identified what that quality or property is, and even though history doesn't bear that out.

    Anything that circulates as money automatically takes on greater value because of greater demand for its use as money, aside from its other uses. ANYTHING AT ALL. Gold, silver, fiat currency, you name it. If it is used as money, whether in a free market or by government force, increased demand will result in increased exchange value. And the reverse is also true. If something that is circulating as current money is removed from circulation, even if by government act or by force, the added value will be removed.

    The Coinage Act of 1873 had precisely that effect. With a single act, government effectively removed silver from circulation, which is the all-important reason that gold rose in value, while the value of silver dropped. It was not because gold was so much more wonderful and special. It was due to a market fundamental as a vast portion of the overall money supply was removed, which left greater ARTIFICIALLY STIMULATED demand for gold.

    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.
    What the hell? Where did you come up with that?

    We already established that the value of silver dropped due to demonetization. The same thing could have happened to gold had it been completely demonetized. AS IT HAS BEEN IN THE PAST.

    The industrial value of silver surpassed its monetary value? That is like saying that the scrap metal value of a Sherman tank "surpassed" its functional, working military value after its demolition by a bomb dropped from a B-52. It didn't "surpass" it. There was no race once the tank was rendered useless by force. Likewise, there was no "wanted to get off obviously" about it silver specie, because the "industrial" value did not "surpass" its monetary value until AFTER the monetary value rug was yanked out from under the holders, completely DEMOLISHED by the government B-52 called the Coinage Act of 1873.

    Gold's value is not derived from its usefulness, just like dollars are not currently valued because of its usefulness.
    That's another head-shaker and a half. Holy crap! How are you defining "usefulness"? Because jewelry is a "use". The fact that it may have no function or utility other than artistic and aesthetic in that particular "use" is absolutely irrelevant. It is a "use" for which it is most definitely valued, and always has been, for thousands of years. UNLIKE FIAT DOLLARS.

    Gold derives value for a plethora of reasons, monetization being A BIG ONE, but all of which contribute to demand for gold, including its MANY USEFUL PROPERTIES as a commodity. You won't get me into a comparison war on the virtues of gold versus silver, because they are BOTH amazing metals, with unique, and highly useful properties, EACH SUI GENERIS. But to say that it is not "currently valued" because of its usefulness is to be completely blind to its MILLIONS of different NON-MONETARY uses!

    If gold was completely demonetized, it would lose some of its value in the process, but would still have great value, based on its desirability, usefulness and suitability to many other purposes, all of which are CURRENT.

    And are you really trying to imply that FIAT DOLLARS AND GOLD have a lack of non-monetary usefulness in common? Do you honestly believe that gold and fiat currency, if not monetized, would somehow be comparable in usefulness and at par with one another in terms of exchange value?
    Last edited by Steven Douglas; 11-05-2012 at 12:12 AM.

  10. #69

  11. #70

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    Ah, but we weren't talking about sea shells or paper.

    "But did you know that China was practically dumping its silver a decade ago?"

    You were specifically talking about silver.
    No I was talking about things that used to be viewed at money, but faded.


    In a free market only. With legal tender laws, fiat declarations of exchange value, and barriers to entry for competing currencies, it is the government that sets the standard for what others will be forced to accept in payment of private debts, as well as what people will be forced to acquire for payment of public debts.
    In the short run, yes, but the government can not overtake the market forever. Which is why we have things pop up at money here and there, but gold remains.



    Both gold and silver are being used as commodities.
    Both gold and silver have enjoyed "global monetary status".
    You really think gold get's its value as a commodity?

    You really think silver gets(most) its value as money?

    To "reclaim its global monetary status" is a circular argument, with some baseless assumptions. Neither can be said to be "waiting" for anything. As inanimate elements, they are what they are, and both elements are ready and 'waiting' for anything at all. It could be accurate to say that some goldbugs are waiting for gold to reclaim global monetary status.
    Central banks, governments, "giants" like the Rothchilds, Saudi Princes etc all accumulate and/or hold gold. They do not accumulate silver.



    You are getting very emotional about the topic, which is common among silverbugs. Just answer me these questions. I am curious to know your reasoning.

    First, are you "for bimetallism"? If yes, why not trimetallism? Also, why do we need more than 1 money to value things against?

    If not, I assume you are for some sort of competing currency system. If yes, why will silver win out?

    Do you believe TPTB will actually lose out in the next financial system?

  12. #71

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    Quote Originally Posted by Danke View Post
    Interesting.
    Look at it in terms of the 1979 to 1980 run up in price. Silver tended to have an upper limit at which jewelry, dining ware, and scrap silver became so valuable as ingots or coin, it went to the smelter.
    Out of every one hundred men they send us, ten should not even be here. Eighty will do nothing but serve as targets for the enemy. Nine are real fighters, and we are lucky to have them, upon them depends our success in battle. But one, ah the one, he is a real warrior, and he will bring the others back from battle alive.

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  13. #72

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    Quote Originally Posted by cubical View Post
    No I was talking about things that used to be viewed at money, but faded.
    ...or was legislated out of circulation, more to the point.

    In the short run, yes, but the government can not overtake the market forever. Which is why we have things pop up at money here and there, but gold remains.
    "pop up as money here and there" -- whatever that means. You make it sound as if gold indeed has "remained", while other forms of money besides FRN's have only popped up and back down again. Are you or anyone you know trading using gold as a medium of exchange? As money? Governments are, but that's not a free market. When's the last time you made a routine exchange for something using gold that involved something other than a medium of exchange? Where does gold, let alone anything else, "pop up", let alone "remain" as money in a regime like the one we have now?

    You really think gold get's its value as a commodity?
    The foundational part of gold's value, of course, and always. As a commodity. Did you think that if gold was artificially demonetized everywhere in the world that jewelers and their buyers would suddenly find themselves with a lot of cheap or free gold on their hands? Gold (AS ANYTHING) only gets an additional exchange value boost, based on additional demand whenever one [of its many] uses is money.

    You really think silver gets(most) its value as money?
    Is silver being used as money now? Did you miss the part where the Coinage Act of 1873 crashed the value of silver?

    Like gold, when silver is used as money it also gets an additional exchange value boost, based on additional demand for that purpose. If you are trading with someone in a free market (free market in both currency and goods and services) and the seller will only accept silver, or the seller is offering a better deal if you pay in silver, yer gonna hafta getcha some silver, or go without, or pay the difference. That 'hafta getya some' spells greater demand, and increased exchange value.

    When gold and silver freely circulate as money, the monetary version of the metal will always track with the commodity version (like now), albeit at a slightly higher exchange value. It is next to impossible, however to give an actual value breakdown that accurately attributes an exchange value component due to a specific use.

    The important thing to note here is that gold, unlike silver, is CURRENTLY used as money, albeit by governments, and not the general population.

    Central banks, governments, "giants" like the Rothchilds, Saudi Princes etc all accumulate and/or hold gold. They do not accumulate silver.
    Yeah? I've also heard that when Saudi Princes go to Monte Carlo, they don't bother with chips worth less than $25,000, and even those are treated like so many pennies and nickels. And did you know that when I play Monopoly, I don't even bother with Baltic and Mediterranean, and will trade them almost immediately?

    SO?

    You will never get me to attack gold's value in terms of its very important role as one form of money. My only attack is on the either/or argument, as if gold was something so special that it was the only form of money that truly mattered. We really wouldn't know that unless gold and silver actually circulated freely, without any government distortion or interference. So even debates about this are meaningless to me, unless you are actually advocating artificial barriers to entry for anything other than gold, or any kind of "legal tender" status for anything at all. If that was the case that would be the chink in your armor. Because if there really is something wonderful, magical, mysterious and special about gold as money that no other commodity has (ONLY in a free market, and absent ALL government interference), then the existence of any other competing coined hard specie should produce absolutely no objections, and should not bother you in the slightest. If, however, you think gold needs any government protection whatsoever against any competition, then you've already lost.

    First, are you "for bimetallism"? If yes, why not trimetallism? Also, why do we need more than 1 money to value things against?
    Firstly, I assume that you understand what "bimetallism" is. For those who do not, it does NOT mean the coinage or circulation of two different metals as hard specie. Specifically, bimetallism is the FIAT DECLARATION of their "market" exchange values one to another.

    So the answer is an emphatic NO. I am not "for bimetallism". As for trimetalism, we have that already, under our so-called bimetallic "standard" (a misnomer, as it is no standard at all). Gold EAGLES, Silver DOLLARS, and Copper CENTS ALL have a government declared exchange value, one to another.

    If not, I assume you are for some sort of competing currency system. If yes, why will silver win out?
    That's just it. You are the ONLY one making a declaration that one would "win out". Not me. What does that mean, exactly, to "win out"?

    If gold, silver, copper, nickel, platinum, iridium, and any other hard specie that joined to compete in the free currency market party, and they all floated against one another as competing specie, with no artificial barriers to entry, each would finds its own exchange value. Neither Thiers NOR Gresham's Laws would be in effect -- even against former fiat currencies (FRN's, YUAN, EUROS). Not even they would necessarily be driven out of circulation. They would just find their market values along with the rest.

    Each hard specie's exchange value would be different from the others, and would always fluctuate, but NONE OF THEM would "win out" in terms of one being so preferred that the rest are driven completely out of circulation. For that bullshit to happen you need some form of government interference. Otherwise, that would be like saying that among MasterCard, Visa, Diners, American Express, travelers checks, etc., (or name a list of different country currencies) one of them would "win out". And yet...there they all are.

    Of course, one specie may become more popular, or more commonly used than the rest. Is that what you mean? If so, then I would argue that both silver and copper are slam dunks--with plenty of historical evidence to back it up. More people have always bought more silver than gold, only because it is more affordable and convenient in its divisible forms. It's not called the "poor man's gold" for nothing.

    The GOLD DOLLAR, minted from 1849–1854, was the smallest gold coin ever minted by the US. It was 13 millimeters in diameter (about 2/3 of a dime), and weighed a mere 1.672 grams. It was 90% gold, 10% copper, with 1.504 grams gold content. At today's gold price of $1684, one of those little freshly minted coins would be the equivalent of carrying an $89 dollar bill around, in a very tiny little coin. A silver dime, on the other hand, is like carrying a couple of bucks. Much more convenient. Silver "wins out" every time. Jesus wasn't betrayed for thirty pieces of gold, and to my knowledge, no casino ever created a slot machine for gold coins, even under a de facto gold standard.

    That's what gold is like under a hard specie regime. The average person does not walk around even a hundred dollar bill in his pockets, nor do they even have hundreds of dollars at their usual disposal. And even if they did, there is always the issue of change.

    Do you believe TPTB will actually lose out in the next financial system?
    No. Not in my lifetime. Given the average person's ongoing ignorance of money, banking and finance, and since the powers that be have yet to lose out in all of recorded human history, I have no reason to believe that this will change substantially. But I am not concerned about them. I believe that there are enough people who are becoming educated and aware, who are communicating as never before now with the advent of the internet, that a new NICHE TBTB is emerging. And once that niche gets a toehold, it/we won't lose out either.

    I don't care if more Titanics are built. I fully expect that will continue to happen. What I do care about, and am willing to trade bullets and blood for, are those who have the gall and audacity to explicitly prevent others from building life rafts of their own. Real ones, not force-tethered to any ship, and not prone to obligatory, legally mandated leaks, and not forced to go down with any ship.
    Last edited by Steven Douglas; 11-05-2012 at 08:51 PM.

  14. #73

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    That's just it. You are the ONLY one making a declaration that one would "win out". Not me. What does that mean, exactly, to "win out"?

    If gold, silver, copper, nickel, platinum, iridium, and any other hard specie that joined to compete in the free currency market party, and they all floated against one another as competing specie, with no artificial barriers to entry, each would finds its own exchange value. Neither Thiers NOR Gresham's Laws would be in effect -- even against former fiat currencies (FRN's, YUAN, EUROS). Not even they would necessarily be driven out of circulation. They would just find their market values along with the rest.

    Each hard specie's exchange value would be different from the others, and would always fluctuate, but NONE OF THEM would "win out" in terms of one being so preferred that the rest are driven completely out of circulation. For that bullshit to happen you need some form of government interference. Otherwise, that would be like saying that among MasterCard, Visa, Diners, American Express, travelers checks, etc., (or name a list of different country currencies) one of them would "win out". And yet...there they all are.

    Of course, one specie may become more popular, or more commonly used than the rest. Is that what you mean? If so, then I would argue that both silver and copper are slam dunks--with plenty of historical evidence to back it up. More people have always bought more silver than gold, only because it is more affordable and convenient in its divisible forms. It's not called the "poor man's gold" for nothing.
    Yes all those things listed will have exchange value with one another, but if the industrial need for all of those, except for gold, dropped, the value would drop as well. This is NOT the case for gold. Sure silver could be priced at $10,000 per ounce right now and be used solely as money, but it is not. That place is and has been reserved for gold. If you want to gamble that this will change in the future, then that is fine.

    I don't want what the "poor" hold. The poor have to "sell" what they have for the everyday things. A large group selling means the value of what they are selling will remain suppressed. You will not see the Saudi Princes selling their gold to buy their next meal.

  15. #74

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    Quote Originally Posted by cubical View Post
    Yes all those things listed will have exchange value with one another, but if the industrial need for all of those, except for gold, dropped, the value would drop as well. This is NOT the case for gold.
    That is an assertion only, without any argument or line of reasoning whatsoever offered.

    If the industrial need for ANY of them dropped--gold included (why did you exclude it?) -- some of its value would drop as well. Gold is not immune to the laws of supply and demand, regardless of any source of that usage/demand or supply.

    Let's say that I am a semiconductor chip-maker, and I have a large cache of gold used for packaging integrated circuits. I develop an inexpensive process that ELIMINATES the need for gold altogether. I patent that process, and use it myself. I also license that technology very cheaply to all my competitors (who also have a cache of gold for the same processes). What happens to all that gold that is no longer needed? We don't store it or throw it away. It gets sold on the open market. Furthermore, no new orders for gold are placed. It is a pretty well known fact that selling things on the open market places downward pressure on prices down.

    Ergo, if the industrial need for gold dropped its exchange value would drop as well, and by that much. There is no immunity or market principle exception for gold -- as a commodity or as money. If you think there is, don't assert it, articulate it.

    Sure silver could be priced at $10,000 per ounce right now and be used solely as money, but it is not. That place is and has been reserved for gold.
    Reserved? By whom? And do you have a crystal ball in your possession? Because the last time I checked, both gold and silver have been used globally as money many times throughout recorded history. That includes very recent history. As a child, in my lifetime, as late as 1964, I HAVE USED SILVER, NOT GOLD (no "place" was reserved for it for my use then), as money.

    Thus, I think it is extremely safe to assume that both gold and silver will continue to be used as money, together or separately, at various times and places, in the future.

    I don't want what the "poor" hold.
    So what? What you personally want is irrelevant to the argument you failed to address: that silver, not gold, is more convenient for average persons, who are in the decided majority, and whose income and purchasing drives whole economies. That is a reality that has nothing to do with whether or not a Saudi Prince can be bothered with silver, or will not sell gold for food, or whatever irrelevant point you want to make about the exceptions, who are not the rule.

    Another fact you failed to address: Whereas the Coinage Act of 1873 demonetized silver and effectively drove it out of circulation, the US silver purchase act of 1934, which drained China's silver, was for the express purpose of getting silver coinage BACK into American circulation, now that their precious gold was stolen from them. That had nothing to do with rich or poor where the American public was concerned. Gold's "reserved place" was REMOVED. And in its place, we got nothing but SILVER--which worked just fine coming out of the depression, throughout WWII, the Industrial Revolution, and on up to 1964, once the banking system's Ponzi scheme, ONCE AGAIN, finally began to unravel.

    If you want to gamble that this will change in the future, then that is fine.
    You're the only one who is fixated on an either/or scenario, and the only one who is "gambling" between us. I hold both gold and silver, and consider them both extremely valuable. I don't care which one (if it's only one) circulates in the future. I'll be fine. The only difference is that I want both to circulate, and then some.

    I don't want a ONE-TO-MANY relationship between money and goods and services. That has been one of our FATAL mistakes all along. That is myopic, prone to distortion, and dangerous to any economy, as it is all prone to manipulation. I want a MANY-TO-MANY relationship between money and goods and services, because that is the ONLY way for natural market checks and balances to kick in, as exchange values are revealed much more efficiently, such that no one currency manipulation will be met with anything but a swift market correction.

    With only one currency allowed in a basket, gold or silver, all bets are off, because the entire market, and all value of all goods and services are now filtered through a single lens, one that is prone to manipulation, as that single element becomes the tail that wags the entire market dog. With multiple currencies that is not possible. You can have a silver boom, and gold and copper will correct it; a gold rush and silver and copper will step in to correct that, with minimal distortion of goods and services along the way, which are priced in each of them. Furthermore, the currency market itself cannot be hoarded, because it is impossible to corner the market on currency when there are so many in open competition. A shortage of one is an opportunity for another, as it naturally fills the void and becomes that more valuable in the process.
    Last edited by Steven Douglas; 11-05-2012 at 10:35 PM.

  16. #75

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    That is an assertion only, without any argument or line of reasoning whatsoever offered.

    If the industrial need for ANY of them dropped--gold included (why did you exclude it?) -- some of its value would drop as well. Gold is not immune to the laws of supply and demand, regardless of any source of that demand.

    Let's say that I am a semiconductor chip-maker, and I have a large cache of gold used for packaging integrated circuits. I develop an inexpensive process that ELIMINATES the need for gold altogether. I patent that process, and use it myself. I also license that technology very cheaply to all my competitors (who also have a cache of gold for the same processes). What happens to all that gold that is no longer needed? We don't store it or throw it away. It gets sold on the open market. Furthermore, no new orders for gold are placed. It is a pretty well known fact that selling things on the open market places downward pressure on prices down.

    Ergo, if the industrial need for gold dropped its exchange value would drop as well, and by that much. There is no exception to gold. If you think there is, articulate it.
    Sure it does have some industrial uses. But compare this to silver, copper, rhodium and the loss of value wouldn't be close.


    Reserved? By whom? And do you have a crystal ball in your possession? Because the last time I checked, both gold and silver have been used globally as money many times throughout recorded history. That includes very recent history. As a child, in my lifetime, as late as 1964, I HAVE USED SILVER, NOT GOLD (no "place" was reserved for it for my use then), as money.

    Thus, I think it is extremely safe to assume that both gold and silver will continue to be used as money, together or separately, at various times and places, in the future.
    Reserved by gold. I am not saying I think gold will be the new focal point of the next financial system just because I think gold is better. I am simply looking around at who holds what and what are the characteristics of things that have been money. Gold has always been money or a storage of wealth, its value is arbitrary, and TPTB hold and accumulate it. This is not true of silver(or wood or paper or steel)


    So what? What you personally want is irrelevant to the argument you failed to address: that silver, not gold, is more convenient for average persons, who are in the decided majority, and whose income and purchasing drives whole economies.
    Says you.

    Do you really think we are going to go back to a physical coin currency system again? Historically there was a role for silver because physical coins were in circulation. If you think those days are coming back, then silver might make sense. But I do not think circulating gold or silver coins will ever come back. So there is NO NEED for silver to be a monetary instrument, and on top of the head winds why would it. Maybe in poor countries where physical might circulate, but again I don't want what they poor have, I want what the giants have.


    Another fact you failed to address: *Whereas the Coinage Act of 1873 demonetized silver and effectively drove it out of circulation, the US silver purchase act of 1934, which drained China's silver, was for the express purpose of getting silver coinage BACK into American circulation, now that their precious gold was stolen from them. *That had nothing to do with rich or poor where the American public was concerned. *Gold's "reserved place" was REMOVED. And in its place, we got nothing but SILVER--which worked just fine coming out of the depression, throughout WWII, the Industrial Revolution, and on up to 1964, once the banking system's Ponzi scheme, ONCE AGAIN, finally began to unravel. *

    I didn't fail to mention it because it is not relevant. Many things have been used as money in the past and most have come and gone at the whim of a government entity. Just because your metal is silver, doesn't mean the world goes along with it. You have baggage, like all siverbugs. it's not just the CBs that have a preference for gold. It is the oil states. And the Chinese. And every international monetary system going back hundreds of years. It is the way it has always been and always will be. I assure you that when the dollar collapses, there will be no election for people to vote whether they want the system to be based on gold, silver, or a combination, or some other metal.




    Now I have certainly butchered FOFOA's arguments here, so I will stop. I am still learning their entire "freehold" position, but at least on the surface it makes a lot of sense. Join the blog and start posting. There are plenty of anti-silverbug things said and I am sure you will find someone willing to fully(and more correctly) explain their stance.
    Last edited by cubical; 11-05-2012 at 11:22 PM.

  17. #76

    Default

    Quote Originally Posted by cubical View Post
    Sure it does have some industrial uses. But compare this to silver, copper, rhodium and the loss of value wouldn't be close.
    And you think that is all because it is used as money? Do you think that the fact that 78% of the gold consumed each year is used in the manufacture of jewelry might have just a teensy bit to do with its value?

    Above-Ground Stock of Gold On Earth (in thousands of tonnes)

    Central bank vaults: ~30,000 tonnes
    Coin and privately held bullion: ~20,000 tonnes
    Gold jewelrey held by individuals: ~70,000 - 80,000 tonnes

    And there is no argument from me that while gold is not the rarest or the most valuable metal on Earth, it is, and always has been, the undisputed king of publicly valued metals--primarily because of its use as jewelry--not industrial uses, and not money.

    Reserved by gold.
    That's meaningless. Gold doesn't reserve anything except the time and space required to exist. Once again, you're ascribing something magical to gold that you're not articulating.

    I am not saying I think gold will be the new focal point of the next financial system just because I think gold is better. I am simply looking around at who holds what and what are the characteristics of things that have been money.
    Let's parse that better. You are arguing that gold will be the focal point of the next financial system on the basis of:

    1) Who holds what (TPTB hold and accumulate it), and
    2) What are the characteristics of things that have been money
    a) has always been money or a storage of wealth
    b) its value is arbitrary

    You go on to conclude that "This is not true of silver (or wood or paper or steel)" -- and by "This" you mean the entire compound statement.

    Basically, you see governments and the very wealthy accumulating (and even starting to fight over) gold, and not silver. You key in on this, concluding that gold will be the "focal point" of the next financial system. What you fail to see, or perhaps aren't paying attention to:

    You know all that above ground bullion that is sitting around in central bank vaults? It may not (or may) be going anywhere physically, but it is VERY MUCH bought, sold, traded, leased, used as collateral, hypothecated, re-hypothecated, represented by derivatives, you name it. I have no idea what the tangled, morbid, messy web of claims are on all that gold, or how it will all shake out as nations rattle sabers over multiple contradictory claims, but one thing is absolutely certain: ALL of that gold is ALREADY the focal point of THIS EXISTING financial system.

    And here is another thing: If history teaches us anything, it is that the gold held by you is NOT equal to the gold held by governments. Furthermore, just because governments "base" a currency on a precious metal, does not mean that your stock of that metal will be in line to even participate. Even further than that, there is NOTHING to prevent a government from pegging the value of even YOUR gold, and REQUIRING you to sell your gold at a government determined price (patriotic duty, economy needs more gold, good of the country, people suffering, mama needs an operation, etc.,).

    Silver has NEVER been the subject of that kind of a target, that kind of outright confiscation, in recent history. Gold has. That is actually the reason why I prefer silver over gold, and consider gold risky to own, even though I buy and hold both.

    ...silver, not gold, is more convenient for average persons, who are in the decided majority, and whose income and purchasing drives whole economies.
    Says you.
    No. Says reason, logic, and common sense. I actually argued in detail why that is true. You advanced no counter-argument, but merely dismissed it with a two word "Says you." non-argument.

    Do you really think we are going to go back to a physical coin currency system again?
    History says so. Utah says so. And some version of an H.R. 1098 in the future could say so. When the fiat currency finally dies the death, as all must and do at some point in the future, there is a very good chance. It's the only way to crank up the wealth-siphoning machine again.

    Historically there was a role for silver because physical coins were in circulation.
    Oh yeah? Did you miss the part about the US silver purchase act of 1934, and why it was enacted in the first place? The Coinage Act of 1873 put us on a de facto gold standard, and eventually served to drive silver coinage completely out of circulation. There was "a role for silver" in 1934 ONLY because FDR had STOLEN everybody's gold, which left a void that needed filling!

    The US silver purchase act of 1934 was enacted because there was a role for silver that was NOT IN CIRCULATION (but needed to be).

    If you think those days are coming back, then silver might make sense. But I do not think circulating gold or silver coins will ever come back.
    Yes, I do think those days are coming back. The seed for it has been planted in Utah, and is germinating even now. Many other states are looking to follow suit, and cock their snoots at the Fed. There is no question in my mind but that there is a "states' rights" showdown on the horizon, and only because of the Federal governments inept handling of money and finance.

    So there is NO NEED for silver to be a monetary instrument...
    On whose behalf are your speaking when you say "NEED"? Your notion of its importance or lack thereof? We can argue about that. The "need" of TPTB? They have failed us, and I don't give a fuck about them. I personally have a need for Sound Monetary Instruments, and so does the entire economy. Even if people can't articulate or understand what it means, they do feel the grave, and ultimately deadly, life-taking catastrophic effects of a thoroughly debauched currency.

    Maybe in poor countries where physical might circulate, but again I don't want what they poor have, I want what the giants have.
    Well, then put all your eggs in your gold basket, and good luck, as you may end up with neither.

    The Industrial Revolution in the US was built primarily on silver, not gold, as citizens of greatest economic superpower in the world traded almost exclusively in the white metal for thirty years, from 1934 to 1964. That eroded for four years and was finally defaulted on in 1968 -- no more Silver Certificate redemption. Three years later, in 1971, the gold rug was yanked. TWO RUGS--silver for Citizens and gold for Governments--yanked out from under everyone. Nothing but worthless fiat currency from there. Two short years later, in 1973, the PETRO-DOLLAR was born. And even that is coming to an end.

    Join the blog and start posting. There are plenty of anti-silverbug things said and I am sure you will find someone willing to fully(and more correctly) explain their stance.
    No interest on my part. I read through some of it, and don't really see any profit in following "anti-silverbugs" around and trying to get them to see anything. Pearls before swine and all (figure of speech, no offense to them). In the Ron Paul Economics and Sound Money forum, however, I care very much. You may think I'm arguing with you for the sake of our two-way discussion. That is the smallest part of why I am engaging with you. I am arguing mostly for the other readers, and like minds, so that we can all hone our own understanding.

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