It has been a little more than 2000 years ago when the world’s initial forms of money were gold and silver only. When looking back at the market of that time, the ratio of silver to gold was 12 to 1 on an average. That was the exchange rate between these precious metals! Twelve ounces of silver to 1 ounce of gold! It varied, of course, in different places during those times. But that was the average! Today the ratio is nearly 60 to 1. If we consider history a reevaluation is eminent.
- The silver circulating in the market was 12 times higher than gold.
There was even a time when the price of silver dropped straight down to 1/100th that of gold’s! This was the time when US government by the decree signed by FDR, Silver Purchase Act of 1934, augmented its stockpile of silver to about 3.5 billion ounces.
At the start of the year 1960, silver was priced at $1.29 every ounce (Boy, I wish I had a truck of silver then but I digress). The increase in its price was because paper money or US dollar in circulation was too copious.
- Abundance in currency supply caused silver price to rise.
People saw an opportunity for silver to rise even higher. The fastest way to purchase silver was to bring your dollar bill to a bank and get it changed. Then melt coins to get silver and sell it for a profit. Every one was buying silver that way. Due to that fact, in 1965, silver was not included in the minting of US coins. Have you noticed the copper content on the side of your post 1965 quarters and dimes?
When gold standard was abolished and currency supply increased even more, prices of silver were from $3 – $6. Those that have lots of silver made a big profit selling them through the year of 1970. Coming from $1.29 to about $6 – who wouldn’t sell?
- Abolishment of gold standard and too much supply of paper money were the reasons why price of silver rose.
Towards the end of 1970s, silver prices were climbing too fast. People, instead of selling were again buying silver from here and there. By the end of that year to the beginning of 1980, silver climbed from $5.00 to the highest price of $50.00 an ounce.
- People came rushing in buying silver… this rush catapulted the price of silver to $50.00.
Points for analysis:
- Silver in circulation was 12 times more than gold, now the silver of the world has shrunk to almost no stockpile. Silver is getting too rare. More gold does not mean price will go down but silver will catch up.
- Inflation – paper money printing gone wild, too many currency in circulation. Government can’t stop printing, needs money to operate on a daily basis. Debt increases daily. Gold and silver will catch up to all the printed money circulating. It will be the biggest reason precious metals’ price will spike.
- Investors see gold as the winner right now and eventually will become too high of a price for them to acquire. All will turn to silver that’s catching up to gold’s value. Ratio between 2 metals could be at 1:1!
- All will rush to get silver… this has happened before, the price of silver catapulted! Since there is a very limited supply of silver and demand is too high, price will be ‘limitless’!
This is Economics 101 – the PRICE is HIGH if demand is high while supply is low. Silver will be too rare but cheap right now! If you acquire more silver today at the spot price, you’ll be raking all the benefits before everyone else comes rushing in! PUT yourself in front of the crowd!
“Fighting the evil force of personal poverty both your and mine”