The Best Way To Understand The Future Value Of Silver Is To Look To The Past.
So what is the value of silver? To understand the present, and get a glimpse of the future, we must look to the past.
First thing to realize...
Silver's Inflation Adjusted All Time High
$135 or $402 per oz?
"Based on inflation... the 1980 silver price peak would be $135 per troy ounce, based on not-seasonally-adjusted-CPI-adjusted dollars, and would be $402 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars."
- John Williams of shadowstats.com, analyzer of government statistics
Let's look at the historic silver prices, way back to the 1300's. And more importantly, the silver value and silver as currency aspects through the millennium.
Note, as we explore the value of silver, the term "Gold Silver Ratio" will come up. This ratio, also called the "GSR" is simply the value of gold compared to silver.
For example, historically the GSR has been 1:16.
1 gold coin was of equal value to 16 silver coins of equal weight and purity.
Today the GSR is in the 1:40's range signaling us that silver is undervalued.
Here is a 654 Year Chart of the Value of Silver / Gold Silver Ratio from 1344-1998.
The blue line is the silver price quoted in US Dollars from 1998.
The yellow line is the Gold Silver Ratio.
Note the ratio was approx 1:16 up until the early 1800's.
Expect The Gold Silver Ratio To Hit Single Digits
Written April 20, 2011
By: Eric Sprott and Andrew Morris
Follow The Money
You know silver’s doing well when the commentators start giving it the ‘gold’ treatment. Silver’s recent rise has been so spectacular that it’s caught many investors off guard. It’s natural to be sceptical when you don’t know the fundamentals driving strong performance, and many pundits and commentators have been quick to downplay it as a result - much like they do towards gold when it enjoys a run.
Silver is also an awkward metal for them to categorize. Is it a commodity, a monetary metal, or both? And which side is driving demand? If it’s industrial demand, that’s ok, because that’s bullish, (value rising). But if it’s investment demand for silver as currency, well then that’s sort of bearish, (value falling), isn’t it? The fact remains that most commentators have failed to grasp the monetary shifts that silver is signaling today, and in doing so they’ve failed to appreciate just how high it could actually go...
Continue reading about the value of silver.
Brief History of Silver as Currency:
- 3000 BC - The first Silver mines were discovered in Anatolia, modern day Turkey.
- 2500 BC - Silver was introduced into Egypt and considered more valuable than gold. Used in purification rites and valued for its shimmer, beauty and impressive power.
- 475 BC - China was the first country to monetize, (legalize as money) silver.
- 775 AD - The Saxon Kingdom issued silver coins known as "Sterlings". Large payments were made in "Pounds of Sterling", later to be called "Pounds Sterling".
- 1497 - Spain introduced the "Pieces of Eight" aka "Reales". Yes, the ones Pirates used! These silver coins were currency of the Spanish Empire and used widely around the world.
- 1600's - The Mexican Peso evolved into one of the world's most widely accepted and strongest currencies because of its silver content.
- 1794 - The U.S.A. monetized silver coins.
- 1858 - Canada monetized silver coins.
- 1964 - The U.S.A. stopped minting, (turning metal in coins) silver coins due to high silver prices.
- 1968 - Canada stopped minting silver coins due to high silver prices.
- 1971 - The U.S.A., under President Nixon ended the Gold and Silver Standard which cancelled the USD convertibility to Gold or Silver. Since 1971, the USD money supply has grown exponentially resulting in runaway inflation. This may be the reason you are reading this and considering buying silver
- 2011 - The state of Utah in the U.S.A passed a bill legalizing Gold and Silver as legal tender. They hope to protect themselves from the questionable USD with the value of silver and gold. Thirteen other states have proposed similar measures including Colorado, Georgia, Montana, Missouri, Indiana, Iowa, New Hampshire, Oklahoma, South Carolina, Tennessee, Vermont and Washington.
The Significance & Sanity of Silver as Money
By David Morgan Precious Metals Analyst
This article is about silver’s monetary role throughout history, though it should be read as an overview since much more complete works exist on this subject. It is truly impossible to discuss silver as money without mentioning gold’s role as well. At times countries have been on a gold standard or a silver standard or a dual standard.
My aim with this piece is to encourage readers to consider the role they believe silver has in today’s economy. Is silver a monetary metal? Is it an industrial commodity? Is it both?
Pricing Gold and Silver as Money
Written April 17, 2011
By Danny Furman
Recently, I argued that gold and silver are so underowned that assigning target prices to either is a pointless task. The global population today is far greater than any prior time and, unlike most of human history, gold and silver are not exchanged for goods or even widely considered an investable asset class.
Certainly gold and silver, being hard assets, have surged in price along with inflation expectations as quantitative easing continues to dominate the investing world...
4 Super Informative Videos About The Value of Silver and Silver As Currency
Hugo Salinas Price, President of the Mexican Civic Association Pro Silver, interviewed by James Turk
Why Silver? Why Now? The Value of Silver...
Monetary Revolution - Buy Physical Silver - Value of Silver