In days gone by silver was not an investment it was money, in fact silver passed through more hands in everyday commerce than any other real money including gold. I state real money to distinguish silver money from modern paper money, which has flooded the world “money” supply the past three decades.
Silver held absolutely no value as an investment when it circulated as money, it served its function perfectly, unit of account, means of payment, and most importantly as a store of value. In 1993 the United States had been off the silver standard for almost thirty years and people forgot how an honest monetary system worked.
You see the need for financial planning and making assumptions on the inflation rate and future economic conditions are for the most part unnecessary when honest money rules the day. Why? Because the common man knows how much saving they will need in the future. The monetary value is the same in ten, twenty, thirty, fifty or hundred years when the monetary system is honest. In actual fact the prices of things generally move down slightly due to stable money and the ability of people to improve products and services and the natural competitive nature of the free market.
But alas, the facts are the U.S. government cut all ties to silver as money in 1965, and Nixon closed the gold window in 1971 for international gold settlement. At that time neither precious metal was “considered” money officially. Perhaps at this point we might consider both the precious metals to be “investments” because the paper price of the metals was now determined as their value as commodities.
But unique commodities they are because silver and gold have been recognized as wealth in and of themselves for over 5000 years. Traditionally, savings and investment were two separate things, saving was “money” and investment was that money put to some use, either loaned at interest or perhaps used to build some real estate or purchase part of a business (stock investing).
So today most silver investors are not really investors in the traditional sense, they are people with knowledge of history and understanding. They know many important facts that most investors never will learn.
You cannot borrow yourself rich – it might work short term but not forever.
Real savings must be in something of intrinsic value since all paper currencies eventually fail. This is a fact pure and simple, yet people believe that some power beyond them will be able to make it different this time.
Watering the milk (printing more “money” than goods or services) never works.
Spending beyond your means leads to bankruptcy whether individual, city, state, or even Government.
Printing your way out of this problem creates an even bigger problem, creating more credit that cannot be paid back will not solve the problem (study the Weimer Republic and their hyperinflation).
Eventually people will use their financial “survival” instinct and get rid of dollars by buying anything with lasting value, silver and gold top that list.
As more and more people catch on and move to protect themselves the paper price of both gold and silver move up to levels that most people at this point would find hard to believe.
So, silver is an investment in seeing clearly how the world works and taking action that is being vindicated by the marketplace, but don’t let anyone tell you it is money after all money is not an investment!
Mr. Morgan publishes a private newsletter for serious precious metals investors. He hosts the web site: Silver-Investor.com. He has been a private economist for over two decades his background in engineering , with an advanced degree in Economics/Finance. He has been interviewed on Don McAlvany's radio talk show, Financial Sense Newshour, Hard Money Watch, and appeared on television. Currently he does an internet radio wrap up each Friday discussing the economy and precious metals. Mr. Morgan was published in Global Investor regarding ten rules of silver investing. Currently, he is writing a book on silver.
Last Three Articles by David Morgan, Silver Investor
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