Why We Should Be Buying Silver
Looking at a chart of the Dow Jones Industrial Average we see boom and bust cycles lasting about 20 years each. We will start with the bear market that began in 1929 after the boom of the 20's. The Dow peaked at 381 in October of 1929 and was in a bear market until 1949. At that time the Dow began a new bull market from the low of 162 and lasted until 1969 and went to 1,000. We begin another bear market in 1969 that ends early in 1982 due to the creation of the 401k plan. The bull market that just ended launched in 1982 from 777 and ended at 14,165 in October of 2007. This massive 25 year Bull Run is due for a correction. Past economic corrections have ended with the Dow to gold ratio at one to one. In other words one share of the Dow was equal to one ounce of gold. The last time this occurred was in 1980 with the Dow around 850 and gold climbed to 880. During the great depression the Dow bottomed at 41 and gold was 35 dollars. Keep in mind that GM did not fail during the great depression. Now with the Dow at 8150 and gold 910 dollars, either gold would have to increase by 900% or the Dow would have to lose 90% of its value for the ratio to be one to one.
However there is a much greater risk today, because the dollar is backed by nothing. For the first time in the history of the world we have a global fiat currency. In every past instance of a nation trying the fiat currency experiment, the currency collapsed. Recent examples are Argentina, Iceland, Hungary, Ukraine, and Zimbabwe. No one can predict a global currency collapse but certainly the possibility exists now more than ever before. Fiat currency has a 100% failure rate. Therefore the risk in all paper investments is great.
Some wise investors would argue that silver has no downside risk and has the potential to be worth many times what it is trading for today? Silver's purchasing power has been more than 100 times what it is today in past history. It has been successful for more than 5,000 years. It could be argued that silver has a fundamental reason to be worth more today than ever before in history? Silver has so many industrial applications today that we have been consuming more than what is being mined. The current price has nothing to do with the supply and demand fundamentals. It is being suppressed because it is the enemy of fiat money. The artificially low price has caused inventories to fall to dangerously low levels. It will take a much higher price to bring all the silver back to the market to meet future demand. When we say silver has zero downside risk. We are not saying silver will never trade for less than it does today. Only that if you understand what money is and what silver is. You will never sell you silver for 15 Federal Reserve dollars or less.
Monetary history is quite clear when government spends without restraint it results in the debasement of the currency. When this begins to happen at a rapid pace people will want hard assets. Silver is the most undervalued commodity in the world today and probably the most undervalued commodity in all of history.
In the Old Testament 20 pieces of silver purchased Joseph as a slave. The silver referenced here was likely a shekel that was less than a half ounce or about 10 ounces of silver. We can buy 10 ounces for 150 dollars today. We can barely get a day’s worth of work for 10 ounces of silver today. In the New Testament 30 pieces of silver bought a Potters field. This would be a little less than 15 ounces of silver. We can get 15 ounces of silver for less than 300 dollars today. In the Gospel of John 6:7 we see 200 denarii, also translated 200 days wages, being related to feeding 5,000 people. One denarius was a man’s wage for the day in ancient Rome. A Denarius is one tenth of one ounce of silver. If a tenth of an ounce of silver was an average daily wage today, it would be worth 100 to 200 Dollars or 1,000 to 2,000 dollars an ounce. In America before the Federal Reserve Act, you could purchase a medium home for about 500 ounces of silver. Why was silver so valuable in past history and so cheap today?
What is being forgotten today is that silver is money. In the Hebrew Old Testament the same word is used for silver and money. In the language that is used in more than 50 countries money is synonymous with silver. The Federal Reserve System is a debt based system and is unconstitutional. It is in opposition to all our founding documents in America. According to the U.S. Constitution only gold and silver are to be used for money in America. The treasury of the United States alone has the authority to issue currency. The U.S. dollar was pegged at 371.25 grains of fine silver when it was created in 1792. The United States Government used to issue a silver certificate to use for payment. However a silver certificate was not money it was a receipt for your silver. It certified that there was one dollar in silver was on deposit in the treasury of the United States of America payable to the bearer on demand. Your receipt stated that you could get your real money on demand.
The Federal Reserve note that we have today is backed by nothing. The Federal Reserve is not a government agency. Its name is a deception. As in the case of all fiat money, it will be worth less and worth less until it is worthless.
Until we take back America from the money changers, silver and gold is the only way to protect the fruits of our labor. Our money is not safe in paper investments until this system of tyranny ends. Bob Livingston writes in his July 2009 newsletter. “Do insiders who are shoving trillions of fiat dollars to their elite friends know what they are doing? Of course they do! What appears as financial irresponsibility to the American people is organized theft on an unimaginable scale. The recent market crash should demonstrate more than ever the need to own gold and silver coins in your physical possession. But with the gold to silver ratio at 70 to 1 when its historic ratio is 15 to one silver looks very cheap compared to gold.
Even if you are not concerned with a collapse of the dollar consider the history of boom and bust cycles. We are coming off a 20 year bear market in precious metal and a 25 year bull in stocks. The dollar started a downward trend in 2002 and has lost over 40% of its value since then. It makes sense today to have at least an equal portion of hard assets, to paper assets. Do your own research. Don't take anyone’s advice on where to invest the fruits of your labor.
We are able to buy directly from a mint that has been in the silver bullion business since 1974. I have met with the owner personally, and find him to be a man of very high integrity. He has provided us with great service. He has filled all our orders within 3 weeks. He has also provided us with the lowest prices we have been able to find, and we have been helping people get silver for over 5 years.
We feel silver is the investment that everyone will be talking about in a few years as the best investment of a lifetime. The only regret you will have about silver is if you did not take advantage of it while the price was so low.