May 1st is the day to buy silver!

It's just a matter of definitions. By real money I mean sound money, and only metals are sound money because they can't be created out of thin air, and they are the only things in the universe that meet the requirements of both a unit of account and a store of wealth - fungible (any oz = any oz, unlike gems), divisible (cut in half or melt it, no value lost), durable, and portable. Metals are not circulating as currency but government coins do have face value as well and are still technically money by every definition.

Fiat currency is also money, but it's not sound money. The lack of durability is it's main drawback, which applies not only to it's physical existence but also to it's buying power which is the primary drawback in that it is not a reliable store of wealth having lost over 98% of its value in the last century since the Federal Reserve took over that responsibility, back when gold was cheaper than silver is today. Having dollars in the bank over that period vs. gold is no contest.

Since metals cannot be created out of thin air they are supposed to be protection against currency inflation. As the amount of currency increases the amount of goods and services it represents are allocated a larger slice of the monetary pie, and resources that do not increase at the same pace as currency expansion will rise in price as the percentage of the currency supply they represent remains largely unchanged. I say "supposed to" because they are not allowed to function in their role as supply and demand dictates when the metal exchanges can create faux supply with paper contracts as well as divert demand into these paper contracts and away from the physical metal they represent, so it's a double whammy in that regard. But in the battle of man vs. nature we can only postpone the inevitable.

 

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QE3 didn't help (well not for long), silver was at about $33 when it was announced if I remember correctly. The day they announced it silver spiked up to $34, and maybe hit $35 a couple days later but has been moving downward since..

 

QE1 and QE2 were a huge boon to metals on speculation of inflation expectations, also because they were a huge shot in the arm at once as opposed to an open ended IV like QE3 and QE4 are. It wasn't that inflation suddenly jumped up because of QE, although that will be the end result.

The inflation is still looming unless they destroy all that currency. The reason it hasn't hit yet is because there is no velocity on all those dollars, which is because the too big to fail banks are sitting on it. They need it to keep their balance sheets solvent, so it's not being spent. It won't result in inflation until it hits the market. Velocity is what causes price inflation. Inflating the currency supply only leads to price inflation IF those dollars are spent. The word 'inflation' is ambiguous without defining what is being referred to - price or supply. Price inflation can happen without supply inflation if people are spending a lot and turning dollars over quickly enough.

The only way inflation won't eventually happen is if all the QE dollars are destroyed before being spent, meaning the banks would have to take massive losses after all that free money (GAO audits show $16 trillion in SOMA loans were given out along side of TARP and need not be repaid, and who knows what else is going on under the table since that took a couple years to come out). That just won't happen since the banking business model is dependent on having those QE dollars, without which the counter party risk chains would fail as they lose their ability to "make markets", lose trust in each other, lending stops, and the whole thing crashes under the weight of double-triple digit leverage all based on the same underlying asset (hundreds of trillions of derivatives / credit default swaps).

So it's a waiting game. It will either inflate eventually as those dollars hit the market (only going on now to a very small degree), compounding velocity, or if not then all paper/electronic assets will go to zero as the leverage unravels and we will go back to a barter system temporarily, after which only tangible assets will have value, the dollar will be replaced as the USG defaults on its debt, and people will measure value in gold and silver once again so the price will be irrelevant, and it will just be a matter of how many ounces you acquired before then.