You might have missed the "bigger scope", aka the relationships between things. Don't start with 'silver is industrially used' (I assume that's what you mean with 'destroyed' lol), but ask yourself why it is. The answer is because of its lower price. In some past the values of gold and silver differed much less. Then America was discovered and with it, large deposits. That made silvers value drop a lot, and that in turn made it attractive as an industrial metal and that resulted in its 'destruction'. Ask yourself this question: what would have happened if America had have large gold deposits instead of silver? The opposite would have happened. Golds value would have decreased and the same would have happened (of course not in same industrial applications since in the end, they are different metals different properties). The current situation is that America's silver is largely 'consumed', aka converted in at current price unrecoverable state. The total above world stock is even comparable to golds one, and the estimated underground/unmined stock is just 19 times bigger than golds one while the value ratio is 40-50. So, as you said, its value has to rise, BUT that will in turn cause less industrial use. That's how economy works. They have to find cost-alternatives for its industrial roles and if not found, increase the price of the related end products which in turn makes demand for them drop. So its 'destruction' is strongly related to its value, like anything. So if the silver price rises then the destruction will drop. This is stability. In the case of gold, now it is being stockpiled to hell, because its too expensive for a big industrial role. But that in turn should drop its price over time, bigger supply makes price drop which in turn also make its mining harder to do at the same cost. So, the argument pro gold contra silver you see is bogus. Because economy is a chain of relations that produce trends that end in equilibria.
LoL ... the 'Big Bang'. What is it supposed to be expanding into? How did the ingredients of the big bang exist before the big bang? It's one of those official 'the Earth is flat' type propaganda.
[youtube]http://www.youtube.com/watch?v=K2Y7Z2i-9Ao[/youtube] I admit, I'm a huge fan of this show...
If the currency converter says it's so that's good enough for me lol http://www.xe.com/ucc/convert/?Amount=1&From=AUD&To=XAG cheers -noa
I don't agree with your conclusions here sorry. The context of silver as an industrial commodity being reduced in demand only applies when there's a practical alternative. The problem is that in many instances, there IS no alternative OR that the alternative is even more expensive than silver anyway. To compound that issue, silver's industrial use is comprised of trace amounts in most instances anyway, where a ramp up of silver price to 10x what it currently is now will have a negligible impact on the industrial demand. Now as I mentioned before, the last time Australia used Silver in it's currency (1966), the people were awake to the value of silver and the fact it would increase beyond it's face value over time. This in effect caused hoarding of the money which in turn undermined the principle use of money as currency (as people wouldn't spend it). The 1966 run had to be cancelled before the year was complete and Silver has never been used again as currency in this country. (more info : http://www.cruzis-coins.com/50c/1966.html) The EXACT same thing would happen today if silver was remonetised and shortages would soon exist in the metal. Hence, silver cannot be used as currency and effectively wouldn't qualify as money either. So in the context of silver being viable as 'money' by definition, I would say no because it cannot tick all the boxes. By clinical definition on the term 'Store of Value' goes thus : 'Over time' being the key point on this one. Silver quickly outstrips it's face value 'over time' when used as currency because of the commodity vector. Don't get me wrong, it's more 'money' than fiat ever will be and historically where silver was only a monetary metal it ticked all the boxes perfectly, but the only real money the world has now is honestly gold. Even with precious metals being removed from all currencies across the world over the last 50 years, GOLD still remains the one that the banks and governments store and hold because of this fundamental reason. Does that mean you should hold gold and not silver? Absolutely not! I'm 90% Silver myself because of the underlying fundamentals. But when it's all said and done, all roads lead to gold as money and in the future when silver supplies dwindle due to consumption, this will become more obvious.
http://australianpolitics.com/constitution-aus/text/chapter-5-the-states Section 115 States not to coin money A State shall not coin money, nor make anything but gold and silver coin a legal tender in payment of debts. ----------------------------------------- Silver WAS and IS money. Besides, you need to understand the historical nature of money. It's just something tradable for something else. A roll of toilet paper can be money, just as a stack of greenbacks can be. Just just has to find a willing participant in a trade to be money. I think a better goal would be universally acceptance. Does gold and silver have value in 99.9% of cultures of the world? Yes. If you want a more compelling argument head over to FOFOA and read the archives. The section written by Aristotle as trail guide has pages on the far distant role of gold as money. Everything he wrote works for money as well. Basically, think of silver as a high density store of value. Gold is better has it store more value per density. I'll start a new thread on 'Using gold and silver as money' in your wallet...
Unfortunately you proceed on your past conclusions. That there are no alternatives to something has been said many times in history, until the alternatives were found AND 'more expensive' is used in todays context, silver is now relatively cheap so there was not much drive to search for alternatives, the higher the price would rise, the more effort will be taken, and that includes any effort, including mining of silver itself. As I said, history proves you're wrong, when America & its deposits was discovered the extra supply and consequential price drop resulted in a spike up of industrial use, and here you state that the opposite can't happen. And logic also denies what you say, it doesn't matter if a mobile phone contains 1 milligram or 1 kilo silver, what matters is simply the total amount in tonnes. Do you know that hoarding IS a role of money? Money is a product that can be used as medium of exchange. Money is a unit of account. Money is a storage of value. And people will surely spend it. Think about what you say here. People would buy and hoard silver and never do anything with it? Do you believe that yourself? Money is an inbetween step to what you really wanted. When the time is there, people will spend a silver coin as well as a nickel coin. And face value? Lol, that has a simple solution: put instead of $1 '1 ounce fine silver' on it. Problem solved. Or even better: solve it at the problem origin: cease creating fiatmoney, then there are no price changes other than due to real demand versus supply changes. Also, that silver coins ceased to be used directly (no extra inbetween step to fiatmoney) was simply due to fiatmoney being declared by the central planning thieves as a legal tender currency, meaning that people are forced to see debt as fullfilled when paid in that fiatcurrency. People then got rid of the intrinsic worthless fiat first (until they eventually run out of it and have to return to the second set-aside option: silver coins). So your statement is already due to an externality and not due to silver itself. That's plain non-sensical, every product in the entire economy has a price that is a function of its demand versus supply (and on the wider scale: competition). Supply drops and demand doesn't? Ok, increase price. We buy now 20 breads instead of 10 with an ouncer. The problem you see isn't a problem, it's just denomination. And along another logic path: if the demand for silver increases (for any reason) then price will rise and rising price will cause more financial means to mine and supply will grow. Happens to any product and service. If the supply can't follow the rate then price will increase and industrial demand will drop and monetary use will rise. This happened exactly to gold, silver is just another metal and you treat it like its not. Economy is all about interactions. See above about your persistent face value problem. It's related to fiatmoney creation not silver. Use ounces and solved. NOTHING in the entire economy can have a stable value. The world isn't a steady state environment. Money is just a product. Like any other. Its value is relative to other products. A stable value for a product that is used as silver implies a stable value of all the others. It's not the absolute value that matters, it's the relative. That's the sole foundation of a price mechanism: it expresses the value of one product in terms of another product. Your repeat is as wrong as the original.
So you're saying we go back on the silver standard and things will work just fine and dandy? You don't see any inherent problem with your money being a finite, industrial commodity at the same time? Yes, history had a specific role for silver purely as a monetary metal. My sig indicates I'm very aware of it's role in history - I'm a fundamentals guy after all. But the moment silver became something with a dual vector fundamental (with one base as an industrial commodity), it changed in core function. There are many things through history which have served as money, but it doesn't mean they can always continue serving the same way. In as much as we can't use sticks, dung beetles and grain as 'money' today, silver can no longer form a similar function. Yes, it still has tremendous potential value and will definitely increase your wealth over the long term, but in the context of how you perceive money, there's no way it can possibly tick all the boxes in the current environment. Bear in mind I'm debating this point as per the thread title : Silver not a currency? Let the debate finally end! Silver absolutely cannot be currency and by extention, money for the reasons already mentioned. Gold is the only form of money that has stood the test of time.
Do you know what a discussion is? It's more than just repeating what you said regardless replies. I explained why your arguments and thus your statement is and are wrong. You don't have to agree or discuss. What I said is then for others that read this. Period.
I don't think silver makes a good unit of account because it can be all over the place. You don't want to be making long term business decisions with something that can fluctuate so wildly in value. Just ask precious metal dealers. I doubt it will ever be money again. As we've all seen in the last year or so, Gold is a lot more stable than Silver. I don't think anything simultaneously fits the medium of exchange and store of value functions well. It may require a new paradigm.
The fluctuations origin from a certain situation, namely the market itself and the principle of high frequency trading and the low price. If you want this explained then say so. Price fluctuations are not due a the kind of metal. Of course not.
And I think you're wrong, period? Your explaination didn't take into context the specific points I made, they simply rehashed it in your own frame of reference and missed the mark. The context of discussion was reiterated because it seems the main point(s) went straight over your head while you were busy lambasting me for being quote : "wrong". Or is the fact I didn't want to simply roll over on your misguided rhetoric that has your goat? You seem to misconstrue the specific context of the definitions and seem to be ticked people are pointing it out. Don't get hung up on the changing face of definitions conflicting with history. In many respects silver is money, but it also comes with some fairly strong caveats and what's more - in the context of the topic title - it cannot be a workable currency in the modern spectrum. It simply wouldn't work.
"The EXACT same thing would happen today if silver was remonetised and shortages would soon exist in the metal." Greshams Law. This statement is correct. If you have Fiat compete with PM's, PM will be hoarded, fiat will be traded away for goods. "I don't think silver makes a good unit of account because it can be all over the place. " The price of the AUD halved(almost) in 2008 vs the USD. The price of Silver halved (almost) in 2011 vs the USD. I don't think the AUD makes a good unit of account. "I don't think anything simultaneously fits the medium of exchange and store of value functions well. " Correct. Save in Gold, spend in fiat. Fiat floats against gold. If fiat is debased, you need more to buy gold. We almost have this situation now actually. All we need to do is stop leveraging gold with paper (GLD, futures, leases and swaps) and you'll know the true floating value against the currency units.
1) The papersilver (futures) market is a relatively small market. It represents only a fraction of the money that the gold market represents. That means that the actions of a few big players has a large impact on the outcome: the spotprice. That is why the Hunt brothers could corner it (until being stopped by the governments and their club). Todays situation is little different than then, it doesn't matter if it's one big entity or a club smaller entities that work together, on purpose or by common interests. This is one reason for sudden price swings, especially on the downside since a papermarket is all about outspeeding others in grabbing profit - the profit origins from others that bought higher - on the short term. 2) Average Joe that hasn't big money and wants to escape the purchasing power losses that a fractional reserve banking account is designed for usually enters precious metals in silver. And it's exactly newbies that usually end up paying the profit of the more experienced. The latter grab profit before them and till the time they realize price has already crippled. On top of that they panic more easily so they sell at low prices too, which lowers the buy back in price of the experienced ones. This is another reason for sudden price swings. 3) The experienced ones are basically taking advantage of high frequency trading markets as such. On a real physical market information travels much faster than the traded product. On electronic markets it does not. These paper/electronic markets are brought into place, and maintained, by the banking system, using privileges, explicitly given or specifically tolerated doesn't matter, by governments. It's even not about trading, it's about outspeeding others in buying and selling. A real trade is exchanging something for something, on a papermarket ones gain implies anothers pain. Something for nothing. You see victory yells like 'I have 100 ounces for free'. That 'free' is their 'nothing'. I'm bashing papermarkets here but that's not the goal, the goal is to make something clear. What I want to make clear is that these experienced rely on the system. They don't buy gold or silver to avoid purchasing power losses due to money creation. The amount delivered contracts is a silly little fraction of the amount traded. Gold or silver acts more as an excuse for the papermarkets existence than as a traded product. The 'system' I talk about is the cluster formed by governments, central banks, and other privileged/benefitted companies or organisations. These buy gold, not as a hedge, ofcourse not, they cause the purchasing power loss since they are the cheapskate-fiatmoney creators. They buy gold for power. To control its market. That's why they have big stocks of it, despite that they don't back their money anymore with it (making it 'fiatmoney). So they support or weaken the gold price according to what suits their fiatcurrency on that moment. And gold mostly isn't taxed. Silver is. This all causes the gold price to appear more stable. This in turn causes people to consider it as more safe. So what happens: the experienced papermarket players buy silver to drain off the newbies arriving on the silver market, and at some point they sell the silver to buy gold. So the silver market suffers a money transfer to the gold market. Above should make clear that the silver market situation is caused by the governments and the club they back. It's exactly those that are now worldwide in big financial troubles. If they use their self-granted privileges to avoid their own defaults or the consequences of defaults, then we will see hyperinflation and an exponentially decreasing market-oriented production (the stuff we need), in the process translating the purchasing power bank accounts represent to zero. The world won't stop though. People have strong incentives to make their situation better. Black markets. With prices discoupled from the systems papermarkets. Have fun with your gold. Hell, the central planners could even dump some gold on the open market, to buy some power and at the same time make the gold price crumble. They have the biggest stocks in the world. Even today they shift the gold between central banks, like the IMF last year (where it btw also dumped 200 ton on the open market). Gold is for the system-dependent guys. Silver is for the people that produce and trade the goodies we need.
do you not think gold and silver at the moment are a good investment? how else would i maintain my purchasing power?
