10 years ago, gold was $400...Where will silver be 10 years from now?

ChaChing!

Let's not ignore the elephant in the room. Since 1913, the dollar has lost, what, 94% of it's value? Going into the massive QE era, the gov't was looking at Unfunded Liabilities exceeding $100T and NFW to pay them. They're going to break as many promises as they can (sorry Detroit) and they're going to raise as much in taxes as they can politically, they're still going to have to monetize a huge chunk of this tab. Estimates were early on that they have to halve the value of the dollar over the decade (2008-2018). Looks pretty spot on. The debasement of the greenback has been tempered by the debasement of pretty much every steeenking currency on the planet, globalization, lack of wage pressure, dinking the numbers, etc. feh. All of us living out here know street inflation is running 5+%. duh, just like the BLS just started talking about U6 - U bleeding 6! is the unemployment measure showing the real deal at 15-16%.

I digress. I suggest that folks own some physical gold and silver bullion to the tune of 5-10% of the wealth. That's an investment and store of value. More than that is fine, but then you're talking speculation. Speculation of fun but like the casino, you need to understand the rules and risk.s

My grandsons each have a stuffed animal they call their bed buddy. Well, my little stash of pm is my bed buddy.


peace,

rono

 

Log in or Sign up to hide this ad.

Gold price in 1913 was $18.92 and now in 2013 it stands at a staggering $1,333. If past performance is indicator of future results, gold price per ounce could run into five digits.

 

Can any of us wait 100 years?

 

Since someone brought up inflation since 1913, I'd like to point out something else:

Innovation since 1913 in the US.

In 1913, the car to person ratio was about 1.3%. As recently as 2005, that number was 80.4%. We also have electricity in most homes, reasonably suitable and affordable healthcare, public education, enough food to feed the masses and water. Without a fiat standard for money, the growth rate for technology would have left us a lot closer to where we were post-WW2 than where we are today.

 

The former #1 industrial use of silver was photography, with today even x-ray film is being replaced with digital sensors, whereas the #1 industrial use of palladium is catalytic converter use, and the industrial use in automobiles has more than tripled with both the number of new cars, as well as countries which before saw little need, now participates as their pollution problems grow. Also the major mining areas for palladium is in South African countries which are still considered more risky than silver producing areas.

Proponents keep pushing use of silver in solar panels, purification, even in weird medical use, but even with all of the solar expansion, silver keeps stable to dropping. If the world one day eliminates petroleum based cars/trucks, and turn to bicycles, palladium may drop a little although jewelry use is more favorable than silver ( thought of as a cheap piece).

 

and with that said... look at how many are in debt.
To some of your points, electricity was in its infancy and regardless of the Au standard, I believe technology would have done what it has always done without the bankers trying to control it. Technology would have found its way to the masses.

Affordable healthcare? Insurance does not equate to healthcare, there are many who have gone bankrupt and destitute to the so called affordable healthcare. Now we have The Patient Protection and Affordable Care Act, if it was affordable, many would have healthcare and we would not need to gov't to step in.

I will bring this back to PMs and inflation... as long as the math calls for inflation within the money supply we will continue to see an increase in PMs (not paper metals) if it is priced in fiat.
As was stated in another post, PMs in ones portfolio as a percentage is a very smart idea. Not necessarily to make more money but to hedge.
No one can predict where it will be but again, we do know inflation is added to the money supply and therefore the currency is debased each year.

 

Affordable healthcare doesn't mean affordable hospital stays or critical care. It literally means affordable healthcare. Not once did I mention insurance nor critical or long-term care (which are the largest reasons for bankruptcy associated with healthcare). If you recall history, barbers used to be surgeons. That seems really insane by today's standards, but it made a lot of sense under a system that wasn't allowed to grow beyond the limits of the amount of gold currently above the ground.

Debt existed prior to the advent of fiat currency. Debt is one of the oldest institutions of finance. If you mean unsecured long-term debt or consumer debt, it's not accurate to blame that on fiat currency, either. Prior to the existence of Visa, MC, Discover, AMEX, Diner's Club, JCB, etc, consumer credit plans existed. Jewelers would sell rings on credit installments even while we were under the gold standard. Yes, one can argue that debt wouldn't be as prevalent if we were on the gold standard, but that would simply reflect the fact that abolishing of the gold standard allowed for growth of the middle class and the things previously posted.

 

I understand... regarding healthcare. My point is insurance is what has made healthcare in all aspects more expensive. As you stated... the barber was one in the same as the physician and pay was typically in the form of barter.
Once the AMA and the insurance agency held hands doctor patient relationship became a threesome... doctor/patient/insurance.

Regarding debt before fiat, yes. Thomas Jefferson and others during the founding of the country(US) were in and some died in debt.
As for credit cards, just another form of fiat that is Legal Tender for all debts. In other words... debt is tied to fiat in the way laws are written. As time passes, fiat will no longer be in coin or paper but will still be debt in whatever form it takes.
In your jeweler scenario, something that needs to be added is interest as well as taking on more debt than one can handle. If one purchases what one can't afford, then the outcome of the scenario is obvious.
PMs are tangible. Once they were removed, we continue to see countries debt ceilings rise. Ask yourself, why do countries/govt's need debt ceilings? It has been argued that technology has grown because of it, I disagree with this statement. If anything it gave those who controlled the creation and disbursement of fiat more power once the tangible aspects were removed, nothing more/nothing less.

 

Political opinions aside, the advent of insurance companies made it more viable to become a doctor by profession. Prior to that, you would need to do work on the idea of being paid in installments. If you didn't get paid, too bad for you. With insurance companies, at least doctors would have a baseline of income for their practices.

Also, credit cards are NOT legal tender. Individuals and companies can refuse to accept credit card based payments. That is the entire idea of something being legal tender. As for the jeweler scenario, how does the placement of interest change things? That was already in place at the time, so debt was (and still is) debt.

To say that fiat currency had nothing to do with growth of technology is foolhardy, at best. Without fiat, the billions of dollars spent in development would have to represented by millions of ounces of gold. You may argue that it would be paper backed by gold, but the reality is that commerce would still be restricted by the amount of physical gold above the ground.

The size of the global economy is somewhere in the range of $70-$100 Trillion. 5.6 billion troy ounces have been mined in the history of mankind. If we were still on the gold standard, we would need ~15-20 times the current amount of gold to accomplish the same amount of productivity. That assumes that all of the gold mined was held in global treasuries. We know that isn't the case, so the number would be significantly higher.

There's no way that we could have seen productivity grow at the same rate on the gold standard. Giving governments the power to control the money supply is essential for a technology driven economy. I won't argue this anymore, as your responses to this point have ignored history, technology and context. I feel like I'm arguing with a freshman political science student.

 

Speaking of history, one things that was part of the gold standard that is commonly ignored is the fine old institution referred to as "the company store". Many companies without ready access to gold had to resort to paying their employees with script. These were for goods and services provided to the employee by the company or local merchants who had an agreement with your employer. If you don't mind being paid in script and are happy to shop where your employer tells you to shop, then the gold standard may be right for you.

Some people claim that the price of gold is artificially held down and the true value of gold will become apparent when coupled with currency. If you study the charts comparing the price of gold with dollars and the CPI, you will find that the opposite is true. When the biggest stacker on the block, your government, sets the price on what they will pay for gold and stamps it on gold coins, the fair value is the artificially set. No one will be able to buy gold for more than the government's set price and no one will be able to sell gold for more than face value of the coin. Now that's world class gold price manipulation. The system breaks when various nations become out of sync with each other and gold starts fleeing from one country to another. The true value of gold can only be realized when it is not artificially linked to the currency and subject to the forces of the free market.

 

Good morning!

Education in general changed during those times. The education system and more staying in school made it viable to be a physician. I do not believe insurance allowed doctors to have a baseline, if anything it took control away from the doctors and gave it to the insurance industry.

Credit cards are equivalent to fiat... if the lender accepts CCs as payment they will accept. Cheques, any accepted plastic cards even the new cell phone apps. As a pure exchange one party can say... we do not accept pennies or bills higher than $20.

You are correct, fiat currency brought about more money into a larger technological growth but it is fiat in the form of debt that is the issue. Fiat alone is not the issue, fiat in the form of debt to where the interest becomes unmanageable is the core problem. It is debt in the form of fiat that is the issue.
Once fiat was allowed to float with nothing to back it/keep it in check along with inflation included in the math we have seen what PMs have done since 1965 and 1971. Albeit, it is time consuming but in the big picture it cannot be argued that fiat as it stands in this case as the FRN has been debased since its inception to the tune of almost if not 100% while a Morgan/Peace is at +1530% to its face value and a double eagle is today worth $1270 as compared to $20.

Concerning the global economy... I agree with you in the growth compared to Au. Debt has allowed for 'fast' growth, at the same time that same debt has caused problems.
Do we need to push fast in order for the economy and technology to grow?
An example (personal) I was fortunate enough to be accepted and graduate from a good university. At the time I was clueless but the only way I was able to attend was to become a slave to the lender. The reason many are able to attend college is Ms Sallie Mae. I was fortunate, picked a major to where I was able to pay the loans off. Many who did not have a (what I call) payable major or dropped out are still paying after many many years.
Since we have become a country, that is debt driven we as citizens owe the bankers through the gov'ts IRS $190,000. Can our gov't pay this debt without a 'reset'? Is growth worth it if based o debt? Again, I truly believe that the growth of technology will continue, it always has. The question is at what pace?

I am sorry that you feel that I am a 'freshman' poly sci student who has ignored history. I will not call you the same as I appreciate the debate.
I also do not feel that I have ignored history, we see it differently. You see fiat in the form of debt as a positive to growth where I simply do not and I believe I have showed where it has rendered us in the situation we see today.

I wish you all the best!

 

No, I never said that. I merely said that without fiat currency, technology would never have emerged and grown to the extent that it has since we left the gold standard. You introduced the idea of debt as the big problem of fiat. I pointed out that debt existed prior to the advent of fiat currencies. As I said, nothing will come of this argument, as it's not a debate. You are choosing to freely interpret what I say to be what you're able to argue against.

 

I am not freely interpreting what you have said. I have seen your argument prior to your post(s) and have studied its premise. Concerning fiat tied to debt, as an example look at the the Civil War (the Demand vs US Notes) and look at how they were used to pay dues and debts.

I have agreed that debt has been in place before fiat. My point simply is that once allowed to float along with the how inflation is calculated that fiat as we know it has put the world in its present situation. Positive growth or not, cities are now going bankrupt and many individuals have lost their homes or are upside down. At times slow progress is not bad.

To revert back to my PM point... look at its price today in comparison when fiat was allowed to float. The nature to produce 'paper' inflates/depreciates it. Now add debt to the math.

For your knowledge... I have read Keynes, Friedman, Hayek and Mises. So it is not a argument but a debate and manner of opinion. We can agree to disagree.

Enjoy the day!

 

This a statement that a lot of PM folks say, or at least something close, but there is never an explanation, it seems to be just assumed it is bad, but I am just not seeing it. How exactly is this a bad thing that effects us folks on the street?