Silver as an investment

During the first 2,000 years that gold and silver were the main currency on earth, there was an average of twelve units of silver, a unit of gold. The silver was thus twelve times less worth than gold. Of course, varied somewhat depending on the era and region. During the Ming dynasty in China were the gold only four times as much worth as the silver and in the old Egypt was the silver and the gold equivalent. But the average difference has been on the 12:1.

It requires no genius to understand why. Gold and silver were at that time free money, which circulated in the world, side by side. The free market set the prices. The price difference was created in the natural way. It means that there probably were twelve times as much silver as gold in circulation, of the law, during this 2000-year period. The market set the price based on the relative difficulty to get over the metal.

At the end of the 1800s did the new technologies, in combination with the majority of silverfynd that the supply of silver dramatically increased. This and other factors got the silver, losing heavily in value and was now not worth more than a hundredth part of the gold. In 1934, during the depression, wrote Roosevelt in a decree, The Silver Purchase Act”. Based on this, bought the then on the world’s largest silverlager. During the fifties bought additional silver, and when the layer was largest, it had collected over 100 000 tonnes of silver.

Despite this step the price of silver in the early 60s to 1,29 dollars per ounce. Not that there was a lack of silver, but for that there was too much currency. Silverpriset had time to simply catch up with the inflation on the valutatillgången. With a price on 1,29 dollars per ounce matched the silver value of an american silver coin. If the price rose further, in this situation, people would be able to go to the bank and collect the coins to melt it down and sell the silver for a better price. This knew the government which forced them to sell off silver to keep prices down.

But it was to no help. For the first time, the public investor is the largest buyer of silver. The easiest way was to simply go to the bank and exchange a dollar bill for coin. This contributed to the market almost were on the coins which forced the government to take away american the silver coins in the mid 60’s. The free market and the public demand had once again forced the government into an impasse.

During the seventies and kept the price at three to six dollars per ounce because the gold standard has been abandoned and valutatillgångens grown. Many investors sold off their silver, and made a good deal.

Around 1979, prices began to rise quickly. People ended up selling their silver, and for the second time in american history became public as the largest purchaser of silver.

Today, they lack most of the governments and styrene silver. All this sales of silver have been hand in hand with the investors have sold their silver. This has got to silverpriset to fall so low that many silver mines have been forced into bankruptcy, because produktionsriset been higher than the selling price.


From the book ”Investeringsguiden for GOLD & SILVER”, M. Maloney

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