I was very
pleased today to read Eric Sprott write about how
and why silver will return to use as a currency! I AGREE!
This process will start slowly, but can proceed very rapidly, once it starts.
Fundamentally, it should start out with people first using silver as a form
of savings. Our customers do this when they place orders for silver from us,
Next, people will use silver as a unit of account (as we do in our business
as a bullion dealer). If we are not growing ounces, I'm losing money in
business. After all, I can get capital gains in dollar form in the silver by
letting it sit and do nothing, and watching the price increase. The bullion
trade, actually taking a risk, and doing work, should result in increased
ounces of silver. If I let myself be deceived by "increased
dollars" in the pile of bullion as the price rises, I might actually be
taking losses in silver ounces, and not know it, if I'm not careful. Thus, I
must account in terms of ounces of silver, and use silver as a "unit of
Finally, and this is the last step, people will use silver as a unit of
exchange, or as a currency.
The process of silver being used as money is accelerating now, as Eric Sprott notes that a few mining companies are using Sprott's silver ETF, PSLV (which I respect and have
recommended for a few years now) as a form of savings. Notably, Endeavor
Silver and First Majestic, two great silver mining companies that have the
right management perspective on their own product!
Eric notes the excellent investment fundamentals of silver vs. gold in the
USA, most notably, that investors are pouring about
equal amounts of money into silver as gold. Or actually, investors are buying
slightly more dollars of silver than gold! Thus, investors are buying about
50 times as much silver ounces as gold! (In the USA). And yet, the world only
mines about 11 times as much silver ounces as gold. This means that as the US
dollar fails, and as US investors continue this trend of buying the precious
metals in nearly equal dollar ratios, and begin to actually buy their
"fair share" of the silver and gold markets, and then, finally,
more than their fair share as the dollar continues to inflate, that silver
prices will go up much faster than gold prices.
Here is an excellent article I wrote a few years ago on this topic, of why
silver is money, even though no nation is currently using it as a medium of
exchange, or currency. Please read it as a great review of the fundamentals
of why you need to buy, hold, and save, in terms of silver!
Why Silver Is Money
(Phoenix Silver Summit Workshop Speech)