Investors worried about the highly
leveraged fiat monetary system based on massive debt and derivatives need to
read the new book, “The Silver Manifesto.” This book
was written by David Morgan and Chris Marchese of Silver-Investor.com.
The primary purpose of writing The Silver Manifesto is to educate the
reader as to why there is no way out the financial morass by the political
class or the financial elite. In order accomplish this objective to examine
every aspect of the silver market including:
• A monetary of history of silver from 3,200 B.C. to present day,
with additional attention paid to the monetary history of silver in the
United States. These chapters examine a vast array of topics
including the origin of money, the storied history of silver’s use as money
since the advent of handwriting, the various coinage acts, the free banking
era and the constitutionality of fiat “paper money”
• An in depth analysis of the supply-demand dynamics in the
market, past, present and in the future. We examine “peak silver”,
industrial demand and most importantly investment demand and where it is
headed in the short-to-medium term.
• In order to fully understand and appreciate the predicament the
worldwide fiat monetary system is in, we walk through and explain the process
of fractional reserve banking, maturity mismatching and the various stages on
inflation. This is also necessary to understand intervention induced
price suppression in the silver and gold markets.
• Money and Banking is also vital to understanding the only
correct explanation of the cause and effect of the modern day business cycle,
developed by Ludwig von Mises. In this loaded chapter, we through
the ins and outs of Austrian Business Cycle Theory. We focus on interest and
economic calculation, capital formation and accumulation and the market
process. We also compare and contrast how economic growth and increased
credit expansion backed by real savings vs. the central bank induced business
cycle.
• These chapters build upon one another, applying everything to
the current circumstance of the U.S. and global economy.
• The crux of every currency crisis is debt, which is exactly what
the global economy and especially western world economies are saddled with
today. This examination of the “debt bomb” is critical to comprehend
why a wave of currency crisis will occur in the near future.
• Is It also important to understand how to put together a
precious metals portfolio, including owning physical metals and an
examination of various leveraged instruments to price of silver and gold.
One of these has to do with investing in mining stocks and how to pick one.
• The final chapter examines the bigger picture, that is the
underlying issues i.e cultural, etc.
David and Chris were nice enough to provide me with a few excerpts from
the book. Here are a few:
Silver’s Use as Money: a
Brief History
While it is unclear who the first people to mine silver were, we can trace
silver
mining and silver used as money back to 3400 BC in Mesopotamia (although some
argue that silver mining began before that, in Hungary, closer to 4000 BC).
This was also beginning of writing, and correspondingly, journal entries.
These entries were for local trade, which had various standards as a unit of
account, such as silver and animals, amongst several other goods,
illustrating that even 5,000 years ago, the market chose silver as a medium
of exchange. While this money system was very primitive and remained so until
coinage came about, it didn’t stop other societies from using silver as a
monetary unit nor did it impede the advancement of the monetary system.
The first instance of bimetallism, actually the use of three metals, began
1,400
years later (2000 BC) in Egypt. The monetary system evolved and had
definitive weights for trade purposes as well as exchange rates against one
another….
The Lydian System
An immense advancement in the monetary system was made by the Lydians, who
were the first to utilize coinage (silver and gold) for monetary purposes,
which first
occurred around 700 BC. The Lydians were the first to not only coin money but
to also develop the first system of coins, initially making them from gold
and silver alloys. They were also the first to establish retail shops.
Some argue it was King Alyattes who developed and then first coined the
stater, while others argue it was King Gyges who first circulated this
coinage.
These small oval nuggets circulated throughout
the East. As you can see, the oval
nuggets were not 100% homogenous, so technically could not be called coinage.
King Gyges ruled from 690 to 657 BC, while King Alyattes ruled from 610 to
550 BC. Historians tend to link King Gyges with the first coinage and system
of coins. These coins were actually not silver or gold, but rather an alloy
of the two. Later, the son of King Gyges, King Croesus, greatly improved the
smelting technique of his predecessor via separating silver and gold from the
electrum. While either King Alyattes or King Gyges came up with the first
coinage and system of coins, King Croesus originated the first bimetallic
system of coins, with an exchange rate between the two, as follows:
1 gold stater = 8.17 grams of gold
1 silver stater = 10.89 grams of silver
1 gold stater = 10 silver staters
(8.17) x (1) = (10.89) x (10) OR
Gold-to-silver ratio = (108.90/8.17) = 13.33
Chapter 4: Silver Demand Dynamics
Silver has two demand dynamics. First, as discussed in the first two
chapters of this book, is its monetary aspect, which dates back over 5,000
years; but also, because it is or was essentially an industrial metal “ahead
of its time,” it will soon show how vital it is for its many uses in
industry. The potential future use in industry is so significant as to be
essentially unlimited. We will be looking at the industrial aspect, followed
by the fabrication and monetary aspect and forecasts……
Let’s put silver’s industrial demand growth into perspective and explain
why it has unique dynamics unlike most other investments. In 1990, industrial
demand totaled roughly 275,000,000 ounces. Just nine years later, industrial
demand surged over 36% to 375,000,000 ounces. This means the compound annual
growth rate was just over 3.5%. Over the next decade, ending 2010, industrial
demand surged roughly 115,000,000 ounces to 510,000,000 ounces, or 36% +/- or
3.12% compound annual growth rate. Note that this was in the face of a rapid
silver elimination from the photography industry, making it that much more
impressive….
————–
I highly recommend getting THE SILVER MANIFESTO book if you
want to get a great understanding of history of money as well as all the
different dynamics of the silver market. You can find out more about
the book the website, THE SILVER MANIFESTO, or you can
get a copy at Amazon.com.
