Pirocco
Well-Known Member
After having put sunglasses on.
Why? Because any currencies prime property is trust. That's where it begins, and where it ends.
Where does trust origin from: from the knowledge that its production cost is high and that "watering" it is much harder because comes at a big cost, unlike fiatcurrency.
There, a wall of text answered with a nutshell of text.
And I said that!
My point was the production cost of silver, relative to the production cost of other products alike fiatmoney.mmissinglink said:@ Pirocco, correct me if I'm wrong, you perceive blobs of silver to be money? Assuming that you do, based on the most reasonable definition of money I have come across, you are wrong, blobs of silver is not money. You also assume, I believe, that by stacking silver you perceive that you are are storing wealth. With this I could agree unless you equate this stacking as insurance...then I disagree. Insurance is a guarantee against loss. The assumption that silver is insurance is faulty because the value of silver as a unit of account today is pegged to sentiment, by-and-large. Sentiment ensures anything but a guarantee against loss. Hoarding "chocolate diamonds" could be seen by some as insurance by those who perceive chocolate diamonds to be valued independently from sentiment....but like silver, they are not. By stacking silver blobs you are accumulating silver blobs for sure but you are not necessarily storing wealth and certainly you have no insurance tucked into that mattress in the form of metal blobs. What's my tiny stack or your giant stack (
Silver has no intrinsic value. Silver is more or less just like diamonds when it comes to how it's value is derived. You can raise the issue of the diamond cartel price fixing to argue that the value of diamonds is "a fix" but then you would also have to admit that the value of silver today is also subject to similar manipulation. The value is derived at mainly by sentiment (ie, the London fix).
What if for X thousand years, tin and rhodium, instead of silver and gold had great sentiment as a unit of account attached to it and tin was used as money for 4 thousand years and not silver? You'd be shoving blobs of tin under your mattress instead of blobs of silver, right? Anything that derives it's value largely as a result of sentiment can become largely devalued (less valuable) in time. Silver has no magical spells that it can cast to maintain sentiment for it at the level it is today. By stacking silver, you are assured to only be accumulating or saving blobs of metal, not holding some sort of insurance policy. That's because something considered to be insurance would have to have the component of being able to reliably protect against loss and there's no certainty that silver will preserve its value over time nor is there any certainty that silver will be ever viewed or treated as money by most people in most societies in the future.
My use of the word "investing" in this thread means: taking money and purchasing some goods (silver in this case) for the purpose of preserving or increasing wealth. In other words, I trade in my money to buy a few blobs of silver because I believe that this investment of my money will preserve or grow my wealth. I know that there's always risk involved with investing in something that derives its value through sentiment just like if I were investing my money into stacking chocolate diamonds (which to those who are curious....I am not). I see this transaction as investing not buying insurance. Is there risk to investing in silver or land or chocolate diamonds? Yes, absolutely because the value of these investments is sentiment-based.
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Why? Because any currencies prime property is trust. That's where it begins, and where it ends.
Where does trust origin from: from the knowledge that its production cost is high and that "watering" it is much harder because comes at a big cost, unlike fiatcurrency.
There, a wall of text answered with a nutshell of text.
And I said that!
