click on the chart to download a pdf
Silver has been falling off a cliff for about 135 years at a minimum, having lost something like 70 to 75% of its value in gold. In comparison, the USD has lost about 97% of its value over the same period, but anyone thinking silver can function as a store of value will be sadly mistaken.
Bart, although your comment is a couple of years old, and you will likely never see this reply, I will respond for future visitors to this page. Silver IS a store of value, just like gold. Only difference is that silver's true value, that is it's value without price suppression which it has dealt with even more than gold through concentrated short positions by 2 US banks as a proxy for the "Federal" Reserve to protect the fiat dollar's perceived value, is much higher than gold. We will see silver priced higher than gold in the near future, although it will likely eventually come back to it's geologic ratio to gold of 17:1 in terms of price. Before end of 2010 we will see gold at or above $5000 and silver around $1000, at least temporarily.
Money of all sorts has three functions: to measure value, to transfer value, and to store value. Our present Federal Reserve Accounting Unit Dollars (F.R.A.U.D.) are quite good at the first two on any time-scale that matters. They are, however, absolutely miserable as a store of value.
Right now, silver is very clumsy as a measure of value. As always, it is an excellent means by which to transfer value, and for that purpose I actually like it better than gold. There was a reason the $1 and $3 gold pieces of the 1850s were generally considered to be a pain in the ass. Silver worked way better at that scale and you didn't have to panic if you sneezed.
So, silver is great for transferring value, but for measuring value it's not all that good. Historical data since 1300 AD show that it's also not particularly good at storing value, at least in relationship to gold, farmland, or hammers.
The problem with F.R.A.U.D. is only that they're a terrible store of value, for which we (and the Chinese) have numerous alternatives.
Gold and silver are each excellent ways to transfer value, but they're generally inadequate as a measure of current value. As a store of value, gold is vastly better. Silver is generally adequate for the task at normal human time-scales, but not across centuries.
Guess what? I hold all three … and own a good chunk of productive farmland as well.
"Anyone thinking silver can function as a store of value will be sadly mistaken."
The three monetary metals are gold, silver and copper. With the FED printing the us$ into oblivion true values are bound to reassert themselves. IMO silver will regain its historical 1 to 10 ratio to gold.
Hang on its going to be quite a ride. Next stop silver priced in three digits.
I don't think people get it, at all.. The Fed is not "printing" dollars, the Fed is "lending" dollars – which it will collect back, with interest. Meaning that there will be even less "free dollars" in the future = gold & silver both will go back down..
Don't be so quick to point out others' lack of understanding… The Fed is purchasing US Treasuries from primary dealers as part of its Quantitative Easing program. When the Fed adds to it's balance sheet (i.e. buys something) it's creating new money. So you're correct in saying that the Fed is not "printing" dollars, but only in a litteral sense. When the Fed buy's US Treasuries, it doesn't print the money and send it to the primary dealers. It simply makes an accounting entry on its books, and adds some zeros to the primary dealer's (digital) account at the Fed. Also, it's worth noting that this new money is base money (i.e. M0). That money is eventually lent into the economy (at which point it CAN be converted to CASH that's obviously been PRINTED)and is subject to the money mutiplier effect due to fractional reserve lending. So if the Fed buys $1,000,000,000 in Treasuries, that equates to $10,000,000,000 of NEW MONEY flowing into the economy… in theory. In practice, banks are not lending this money, and are instead letting it sit at the Fed, earning interest (excess reserves held at the Fed are at unprecidented levels).
So in effect, the process works like this:
1. Bank buys Treasury from US
2. Fed buys Treasury from Bank (i.e. this costs the bank NOTHING)
2a. Bank earns commissions from the sale to the Fed (PROFIT!)
2b. Bank's account at the Fed is credited with the amount of the sale
3. Fed pays interest on the Bank's deposits at the Fed (PROFIT!)
4. Banks earn record profits and pay out record bonuses for the "geniouses" that came up with a way to earn FREE MONEY at the expense of the oblivious tax payer.
The Fed IS printing dollars. Ben Bernanke said so himself in a 60 Minutes inteview (and then went on to state the exact opposite during a second 60 Minutes interview; i.e. HE IS OUTRIGHT LYING!!!). Jon Stewart did a good bit on Ben's lie… just google it.
EDUCATE YOURSELF!!! You should really read this link. It is a detailed explanation of money creation and how modern banking actually functions. It was prepared by the Fed Bank of Chicago:
… any words about why silver has dropped off and been so volatile in the last 135+ years,
when it had been relatively stable in comparison for quite a while before that?
strange to me that the price of silver is so low compared to gold, when it is so much more widely used in industry, and in much lower supply. It's getting used up, and the amount now available is quite a bit less than available gold.
Ray, it now over 2 years later….the end of 2011….and the price of gold and silver continues to get smacked down by TPTB. Gold today is $1,580 and Silver is $27.96. Heaven knows where it will go in 2012, but it continues to be obvious that the USD is under assault and the Yuan is the rising star. Maybe 2 years from now someone will comment on my post.
The price of gold is up, silver is up, real estate prices are stable-ish, oil is still very expensive.. Maybe things aren't over priced, maybe the dollar just lost value. And as the amount of dollars in circulation is increased every year, I expect the prices of nearly every thing to go up. Including gold and silver.
I am curious why silver dropped from 2.0 to 0.5, any one any ideas?
paradigm shift in silver
( and the other asset class )
Recent comments by Eric Sprott, Ted Butler and others suggest a looming shortage of silver due to price manipulation by bullion banks acting as proxies for the Fed, ECB and other Central Banks. Price suppression has occurred, as a result, and above-ground physical inventories of silver less than half that of gold.
In addition, there has been a remarkable demand shift. China was a net exporter of silver until very recently, but is now a very large importer. No doubt, a significant reason for this shift is silver use as an industrial metal, and more specifically, China's large solar panel industry. However, China also has a very sizeable investment demand, and the new Gold Exchange that will open in Shanghai in June 2012 will further add to this regional trend.
Finally, and perhaps most telling as to silver's future direction, is the investment demand for Canada's Silver Maple Leafs and U.S. American Silver Eagles. The entire output of Canada and the U.S.' silver mines in 2011 was used solely for minting these coins. This, and Chinese demand, strongly suggest that silver's value relative to gold will increase significantly in the years ahead.
Silver, as priced in gold, is really, really low. Near an all-time low in fact.
But so is everything else! Nearly every chart on here is at or near an all-time low. One explanation is that all kinds of goods and services are hitting lows, when priced in gold, and doing so simultaneously. That can't just be coincidence, but is there anything about the global economy that would explain that kind of behavior, simultaneously across so many sectors?
Wouldn't a much simpler explanation be that the charts are all near all-time lows because of the denominator that they all share, namely gold? And shouldn't we expect that silver and other commodities with real intrinsic value (as opposed to fiat money with no intrinsic value) will revert to the long-term average, as they have done over and over again historically?
"Wouldn't a much simpler explanation be that the charts are all near all-time lows because of the denominator that they all share, namely gold? And shouldn't we expect that silver and other commodities with real intrinsic value (as opposed to fiat money with no intrinsic value) will revert to the long-term average, as they have done over and over again historically?"
I agree with DSW. Gold has been bid up by the fear factor and as a result all other commodities look cheap.
It might be a useful exercise to price in terms of gold certain benchmark silver coins [viz, old silver dollars].
All currencies will go crashing down after US dollar collapse, Euro will go down and euro countries with it, then US will start going down and Asia will follow. The .gov will announce a new monetary system and NWO will come into effect, there will be poverty and unemployment worldwide, social and political unrest, some kind of war will commence, the populations will dwindle bringing total under 500,000,000 as the 'The Georgia Guide Stones' transcribes up to this day.
But I am still listening to Gerald Celente and Alex Jones and buying silver and bullets and farmland and will miltiple like a rabbit for survival
Click here to cancel reply.
Fields marked by an asterisk (*) are required.
Notify me of followup comments via e-mail
Subscribe without commenting
Sign up to receive our weekly newsletter with insider tips and irresistible offers:
We hate spam, and will never sell or give away your name!
Subscribe to this site's RSS feed.
Call anytime with questions, comments or stories!
Don't buy or sell a security without checking it's value and trend when priced in gold! Order your Custom Charts today!