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<p>[QUOTE=&quot;InfleXion, post: 2137881, member: 29012&quot;]The funny thing about herd mentality is that the more something goes up in value, the more desirable it becomes. As long as fiat currency is stable and functional, most people won&#039;t see any reason to own metals. Betting that will always be the case is a risky bet in my opinion for the very reason you&#039;ve touched upon; equilibrium.</p><p><br /></p><p>When dollars were originally conceived, they were denominated in grains of gold or silver, which were real money for thousands of years. Dollars were a measure of value in gold or silver, but today we have it backwards.</p><p><br /></p><p>The Coinage Act of 1873 was a major step away from equilbrium, as it ended bi-metalism. After going to strictly a gold standard, we still had gold and silver certificates in paper form. It was certainly a convenient change, but ending the bi-metal standard took us further away from equilibrium, because you need two honest currencies to keep each other honest. Even the most honest of currencies won&#039;t stay honest for long without another honest currency to hold it accountable.</p><p><br /></p><p>These certificates were redeemable for the silver or gold they represented, for a time, but eventually the government printed paper beyond its capacity to redeem in order to fund the military industrial complex, and subsequently closed the gold window in 1971. While money was technically being printed out of nothing before that, it was under the ruse of redeemability. Since 1971 the flood gates were opened, and people seem to have forgotten what money came from. What we call money now has no tangible backing. Rather it is only the promise to repay debt, which is what money is today; debt, not actual value.</p><p><br /></p><p>Going back to the Coinage Act of 1873, the reason that bi-metalism was ended was because the gold to silver ratio was fixed before that. Lack of a free floating exchange rate for the two metals meant that people would trade for whichever one they could get for cheaper than the fixed rate on the open market. This caused people to hoard silver, the more undervalued metal of the two, and thus it largely disappeared from circulation.</p><p><br /></p><p>We didn&#039;t originally have a fixed gold to silver ratio when the US was formed in 1776, but within 1 year of the First Central Bank of the US coming into the picture the gold to silver ratio was fixed at 15:1 at the behest of Alexander Hamilton and the approval of George Washington, against the protests of Thomas Jefferson. It was this fixing of the ratio in 1792 that set the wheels in motion, and we have been growing further and further from equilibrium ever since as more and more money has come into circulation without equivalent increase in its backing, to the point we are at today where there is no backing at all.</p><p><br /></p><p>The dollar has lost over 98% of its value in the last century. Using that as a baseline, a century ago a dollar was worth what $100 dollars are worth today, and an ounce of silver was the same as a dollar back then.</p><p><br /></p><p>I don&#039;t think the question is what direction the price of silver and gold need to move in to reach equilibrium. The questions in my mind are why are so many people ignorant of the answer, and why do so many people value something that has so little value? I should be thankful for the opportunity to be a step ahead of the herd, but I&#039;d rather trade that for a currency that doesn&#039;t prey on its users.</p><p><br /></p><p>It doesn&#039;t much matter to me what the price of silver is in dollars, because dollars aren&#039;t something I can trust. Eventually equilibrium will be achieved, and until then I will be waiting. It doesn&#039;t really have anything to do with all the taboos being thrown about that are not mutually exclusive to being a stacker. Using labels says a lot more about the labeler than the labelee.[/QUOTE]</p><p><br /></p>

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