What is wrong with silver?

[Pericles]

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.

[Steven Douglas]

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.

[cubical]

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.

[Steven Douglas]

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.

[cubical]

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.

[Steven Douglas]

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.