Asked myself - Why do I buy Silver?

Are the only four options cash, PM, entrepreneur, or Wall Street? If you decide Wall Street and entrepreneurship aren't for you, are your only remaining options cash or PM?

The reason I ask is because the ONLY way I can see the relevance of the declining value of the dollar being used as justification for owning PM is if cash and PM were your only two investment options. (Even if such limits are self imposed, they're still valid IMHO)

Seeing as there are still lots of investment options that are better than cash or PM, why use the possibility of sitting on cash for a hundred years as justification for anything besides the idea that sitting on cash for a hundred years is possibly the worst investment option ever?

Heck, if I were trying to promote a craptastic money market account that averaged 3% interest for the past 100 years, I could do very well by showing someone how much better off they'd be by depositing their money in such an account than they would be hanging on to cash. After 100 years, $100 in cash would still be $100 in cash, but it would only be worth about $5 in 1913 dollars. Money invested in my money market account would grow to $1,979, or $105.13 in 1913 dollars! (Inflation has averaged 2.95% over the past 100 years, so 3% is just a tick over inflation.)

But, even such a lame money market account would have paid better than silver, because $100 worth of silver from 1913 would only be worth $1,341 today.

To me, all of this means that holding silver is a good way not to lose too much of your wealth over the long run. However, I think it is a much better strategy, especially in the long run, for your objective to be increasing your wealth, and PM ownership has never been a good vehicle to increase wealth.

 

Log in or Sign up to hide this ad.

I will do as little as possible that aids wallstreet, this zombie economy, or that zombie queen with the gaudy red lipstick, no matter what it costs me.

 

I completely understand. I can't afford to do the same since I do want to retire some day, but those are valid ethical constraints that limit your investment options. If they are limited to the extent that cash and PM are your only two options, then the graph in the OP is certainly relevant.

 

OK, that is fine. But what about owning farmland, owning rental properties, or other investment alternatives. When a lot of people say "stocks" they mean any investment that grows, stocks are just easy because there is little you need to do to own them. I have done very well with farmland, getting current income and capital appreciation. However, I have to deal with the renter, filling out paperwork and paying property taxes, etc. As such, its not for everyone. Stocks are just easier to hold, but I really don't care if you dislike them. You could still hold things like rental houses, farmland, commercial real estate, etc to generate a better long term return. Heck, buy a bond from your local city government or municipality. The investment world, like Blaubart says, is not limited to stocks, (which I understand some hate), pm and currency under the mattress.

 

When you bought into stocks early in the century you bought into a growing, fossil fueled economy. There was over 3% growth for all that time. Nowadays we are at the peak of oil production, and we are lucky to have any growth at all. Hence, PM's hold value, while having a share of a declining economy may not make sense any more. I have a theory of investing I call the silver, shotgun and solar panel strategy.
Silver represents anything like PM's, real estate and hard assets. Shotgun represents anything you do to secure your wealth and home. It could include security systems, gardens, locks, bulletproof walls, etc. Solar panels represents anything you use to make your own food and energy. I don't think you can go wrong with any of it.

 

Peak oil production? You do know the US will be oil independent in less than a decade, and we could be one of the largest crude oil exporters after that, right? We are already exporting LNG because we have no use for all of the natural gas overflowing from our wells today.

 

Thanks for making this an interesting thread, enjoying reading it, since I started it.

As a 50 year old father of a 12 year old daughter, I have to say I have no clue what the future holds. I believe in diversification, but I don't believe you can diversify just within stocks. They tend to be more highly correlated than I originally thought.

So PM accumulation is part of my plan to give my daughter something of a head start in life. Also have a brokerage account for her under the Uniform Gifts to minors act, (UGMA / UTMA) since legally minors aren't allowed to own stocks in their own names.

Either silver will be a shiny, heavy cheap burden for her one day, or it may have more value than it does today.

As I read more about it this week, an increasing worry would be a repeat of the government seizing pressure metals again, as they did in 1933 and 1934 if they became increasingly scarce or increasingly valuable, or if the dollar becomes unstable.

I'm starting to sound paranoid, perhaps I am.

 

Well - Fracking is not quite what you think, if oil is $80 a barrel then it makes money, however if the Saudi's open the spickets ($10 to produce) an collapse the price of oil, then the Bakken doesn't look so good...I do think we have a trillion barrels but at today's costs, that is $75 barrels and that does not even count if the EPA wants to stop it......(see coal).

LNG - well not exactly, you see we flare off 30% of the Bakken gas as there is no infrastructure to get the gas to market. I remember asking my dad about this in the 70's......too expensive so burn it off....

Its overflowing alright. It is not winter...last year NatGas prices shut my place of work down, not $3 a therm but $50....not as plentiful as you think. The LNG terminals are so we can sell to Europe and Japan at $10 a therm...once that starts what do you think our price here will be? $4 a therm? Not gonna happen. Foloow the money.....

Coal - cheap $25 MWhr to make....NatGas.....>$50 MWhr. So when your electric bill triples because they got rid of coal and NatGas skyrockets then you will see...


PS.. I can still get a gallon of gasoline for a quarter.....can you with your stock? Yes, but what if a correction comes that we all hear about? The FED now has over 4 trillion in assets.....that is why the Dow is over 17k, not because the economy is growing. If a conservative 50% correction comes....then the party starts..

When I tell people about it, I do it this way. For thousands of years a days wages for physical labor was conservatively about 1 Oz of silver. You could feed and take care of your family with that...

That is $17 a day.....in dollars....think about it....

 

I seem to recall that traditional wage a silver dime....but what do I know.

Buy more stocks...this will be my new signature line soon, very soon.

 

I think you are right.....a denarius is closer to a dime in size.....that just makes it better I guess.

 

Gee, lots to respond to. First, no one in the world has the capacity to drop oil back down to $10, too much demand now from Asia, but the US is in a great position. The problem with natural gas is infrastructure, you are right. But, as we sit here, there are like 12 major pipelines being constructed. The infrastructure will improve. As for last year, that was due to historically cold winter, but if you hedged like I did for my company I never paid more than $9 last winter. Anyone paying $50 simply did not hedge like they should have.

Regarding the economy, boy I sure cannot hire any workers. I used to get 80 resumes for a position, now I might get 8. I have 22 jobs unfilled in my plants paying $60k a year an excellent benefits, and cannot find workers like I used to a couple of years ago. Something is happening in the economy.

Regarding a days wages being an ounce of silver, this simply has not been true very long. In Roman times a days wages for a semi-skilled laborer or soldier was a denarius, only 1/10th an ounce of silver. Only someone like an engineer would earn as much as a full ounce of silver a day. Silver used to be much more precious simply because we didn't have modern technology to extract it. Therefor, I do not think historical value of silver really tells us very much versus today. Today silver is simply one of dozens of useful metals we use day to day. Ancients did not have access to aluminum, nickel, titanium and lots of other metals we take for granted today, so it was such a different time as to be nearly irrelevant to modern society.

 

No Peace, its buy more pm now that its down. It was buy more stock back in 2009 when everyone hated them. Buy assets everyone hates is usually about the best strategy IMHO. I am buying more silver today and less stocks than a couple of years ago. Everyone who thinks I hate pm sure would be surprised by my "pile" that is growing again today after not budging the last few years.

 

Oh we hedged but we use MASSIVE amounts, it killed us that one day. Heck we were told to shutdown to FSL (Electricity), first time ever. We hedge but we get burnt and to be frank NO one saw that week coming. Bad part is we had the roads shut down and we could not run as not enough people. At that point we did not care about price as millions in equipment were at stake, we needed the heat. It was 28 degrees below zero, blizzard, >50 mph winds which made the wind chill so low I did not want to know. We made it through it but when you 100K gpm of water, sure the 12" pipes do not freeze but the smaller ones are fair game...it was terrible and this winter looks to be no better.

Infrastructure is being built but these estimates are based on > $80 oil. The fracking doesnt work when it is less than $75 and we are at $80. Yes the Saudis can crash it, not to $10 but they can put a hurting on the price. The economy is the real threat...demand....

Yeah I have similar issues but I need electrical folks and they are even harder to find.....what is happening to the economy I do not know, yeah yeah unemployment is down to 6%, how many are not looking? If one has industrial skills, they are working if they want to, of that I will agree. The difference I see is wages, just 7 years ago one could raise the wages and get the people, companies however are not raising wages because there is no inflation (cough cough).

Well I kindly disagree with that. True silver was more rare then but there were not 7 billion people. If the fiat system collapses I would bet that silver gold ratio will return to similar levels..from the past. I would be you could feed a small family on 1Oz a day......Of course I could be wrong.....

 

Shhh, I'm trying to make a few on here feel like they've done their duty....

 

I was close on the fracking costs..

http://www.zerohedge.com/news/2014-10-29/why-75-most-important-number-us-economic-hope

 

So can I -- but I couldn't a month or two ago. And two or three years ago, I could've gotten almost TWO gallons for that quarter.

 

The video above gives you a non-usual measuring stick...and his "good money appreciates" series of 3 videos also have good info. I'm not saying it's the end all, but does give you some perspective...

 

Will watch when I get home - looks interesting

 

Well, I'm glad I got so much discussion going. Peak Oil usually does that. I think silver holds its value pretty well, but it's volatile. Look at how it went up and down around 2008 and again in 2011. I think it's on the way down today, but it might mean something is happening again. The fed has said no more QE, and everyone is believing it today. We'll have to see what happens a little later on. I think it might be a buying opportunity again.