I’ve got to say – I got on the silver train long before all the trendy, beautiful people did so. For me, I was always in love with the color and luster of the metal, never mind that I always knew what others are only now realizing – silver is an amazing investment. Here’s why:</p><h2>A Bit about Silver</h2><p>I know what you’re thinking – that Eric is cracked and that he doesn’t know what he’s talking about. Gold is the standard. After all, there’s a reason that the US was once on the <a href="http://www.econlib.org/library/Enc/GoldStandard.html">Gold Standard</a>, right? Well it’s true that once upon a time, silver was so common that it was quite literally used for money.
People who collect silver like I do tend to have at least a few Morgan Silver Dollars stashed away somewhere in the old vault (for me, it’s more than a few – along with a full service for 8 of real silverware and innumerable bowls, vases, candlesticks and other accoutrements in silver. My collection was assessed for insurance at pure melt value as being worth in the tens of thousands).
Indeed, until around one hundred years ago, silver was pegged at a value of around 20:1 versus gold. That’s because the United States minted silver dollars and would exchange those silver dollars at a rate of about 20 of them for one ounce of gold. All true – silver was once considered to be money. However, it was and is also used for so many other things, including candlesticks and jewelry as well as christening cups and goblets.
Silver is also useful in conducting electricity and is in fact a vital component in making many modern electronic devices. Yes, your iPad probably has some silver in it, but don’t think that miniscule amount gets you off the hook for doing some real investing in this amazing metal.
Go and grab a twenty dollar bill out of your wallet. Go ahead – I’ll wait right here. Got your money? Good – now toss that thing in the trash. What are you nuts Eric? That’s twenty bucks! Why would I toss it in the trash? Why? Because that’s pretty much all that piece of paper is worth in real terms. It’s just a piece of paper and isn’t worth the paper it’s printed on in absolute terms.
I know, I know twenty dollars is worth twenty dollars, right? Hey, I get it – I earn my salary in dollars too and I admit it, I do keep large chunk in the form of good old fashioned greenbacks. However, I also know that my dollars are worth something only because Uncle Sam says they’re worth something. It’s called a fiat currency and that means that it’s worth what the government says it’s worth.
Used to be, you could take a piece of paper with good ole George’s face on it and exchange it for a set amount of silver or gold. The idea was that the US was holding onto a certain amount of gold for every dollar in circulation. Today, the US Mint just prints money whenever Congress tells them to do so and the money is worth something because well, because…
Basically, if the people of the world ever decided that the United States wouldn’t be able to make good on her debts then your dollars would be about as useful as firewood. There’s nothing backing them up like in the good old days of the gold standard.
I know – I just got through referring to the Gold Standard. That seems to imply that gold is a better investment than silver is. Well, yes and no. First of all, silver, even though it is a much more plentiful metal than gold is, is actually in great demand right now, greater than gold. In fact, it is estimated that silver supplies will not be able to keep up with demand for the foreseeable future, meaning that prices will go up.
Aside from that, let’s be realistic. How much gold can you really afford to buy? Sure, if you’re Donald Trump you can build gold accents on your plane while you fly around bragging about groping women. But for ordinary people, the cost of gold is prohibitive enough that amassing a significant collection of it is kind of hard to do.
Never mind that the stuff is not as negotiable as silver. With silver, if you need to convert some into quick cash, you don’t have to part with all of it. If you have gold, you probably don’t have much and will end up needing to convert most of your gold supply to get the cash you need.
I’ve got to say – I’m not a huge fan of either of the presidential candidates. But one thing I do agree with the Donald about is the shameful waste of money our country has engaged in over the past decade or so. I mean seriously – you spend six trillion bucks in Iraq and then hand it to the nut jobs who chop people’s heads off? What was that all about? Didn’t we go in to bring peace and stability and not a bunch of terrorist nut jobs?
Meanwhile, our infrastructure here at home is falling apart and we can’t seem to figure out how to pay for the basics, like maintaining our bridges and tunnels. Or take a look at New Jersey Transit – The New York Times just ran a whole piece about the disgraceful state of neglect there. Then again, this is the same state that gave us Jersey Shore so, I mean, come on, what can we really expect?
But seriously – hyperinflation is a real possibility. That’s what happens when the government keeps on printing more and more money to pay the debts because, as I said before, they can just print and print and print some more to their hearts content. It’s not like they need to back it up with gold or something.
The thing is, once we print too much of the stuff, it starts to become worthless. That in turns means that the nations of the world will stop accepting dollars as a form of payment. When that happens, that precious twenty dollar bill we talked about before really will be garbage.
Precious metals by comparison hold their value over a long period of time simply because they are a finite resource – nobody is making more silver you know.
If all those reasons weren’t enough for you then consider this – silver is simple beautiful. It’s a lustrous looking metal which makes your home look amazing when you have it on display. I take great pride in displaying my silver collection and so should you.
Silver isn’t getting any more plentiful. It’s not like someone has figured out a way to make more of it. So go out and buy some silver today. You’ll thank me later.