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Understanding Gold and Silver with Regards to Rights and Deeds

24649 Views 21 Replies 9 Participants Last post by  Denton
For those who are interested in the value of silver and gold and why those who are really in power prefer you buy with fiat currency.

When [?] Gold And Silver Bottom Is Irrelevant To Your Financial Health | Gold Silver Worlds
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This link is nothing more than a sales pitch.

The gold and silver industry bet too highly on ever increasing prices. They created their own bubble. They have excessive inventories of non-currency coins, bars and ingots. They need fiat currency to satisfy their debts. This is a factual lesson that gold and silver are not money no matter what the Ron Paul cult says.
The point was not to buy their metals, but to explain in a very simple manner how PMs are, indeed, money and a manner by which one may store wealth as well as trade.
Bubble? Excess inventory? You'd better follow the news more. There is no excess inventory.

Don't buy any. You are way to smart. I suggest the stock market might be for you, as well as though unbacked fiat notes. Those are great for dire times, right?
But gold and silver are NOT money. They are commodities that have from time to time been used as money. They cannot function as money today because the demand for money is too great. If gold and silver were used as money today all the world's economies or the world economy (which ever you prefer) would come to a haunt. The need for a money supply is too great to be satisfied by gold and silver.

Money is the medium for exchanging goods and services.

Test this for your self take some gold and silver to the grocery store and try to buy food. You will fail. If gold and silver cannot preform the function of money they are not money. They are things of value with fluctuating values. You likely can find someone to trade you something for gold or silver. In fact you can trade them for actual money. But that alone does not make them money.

Gold and silver in terms of function are closer to gemstones. That is to say they are coveted, relatively rare and highly valued amount prosperous people. They are not money.

Now you are likely going to point out the abuses by governments like the Fed and the money supply. Well governments have been a weakening their money for more than 2000 years. This is just an ignorant attempt by governments to creat value out of nothing. It has been attempted by governments using gold and silver as money just as our government does today with our fiat currency.

The only thing weakening money accomplishes is reducing the value of almost money. Almost money is bonds, treasury notes and the like.

Increasing the money supply need not necessarily weaken a government's money if it keeps almost exact pace with increasing demands for money. A fiat money can have the same problems as gold and silver used as money if the supply is not adequate for the trade of goods and services.

When gold and silver were used as money it too was done by fiat. Which is why they also failed. There was always the struggle between the fiat value of gold and silver money and their value as commodities. Because their value as commodities increase in value more rapidly than their value as money governments make laws against destroying them in their currency form. This leads to hoarding. Which increases the rate of decline in the money supply. Again a shortage of money slows economic activity.

Gold and silver are not money in and of themselves but only by fiat.
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I did not say that fiat money issued by government can reach a point of over supply that they become worthless. No one said that gold, silver, paper, etc. could not be used as money. The point is anything used as money has two values. One is the value as a function of the goods and services that they can buy. The other is the value a function of it's commodity.

I said before and I will repeat it. Gold and silver are commodities that can and have been used as money. They are not actually money.

I have pre-1964 (actually including 1964) US minted coins. They can be used as money for their face value, held as collectables or treated as a commodity. Equal weights of the commodity could not be used as money. It would be foolish to use these coins as money because their value as collectables or a commodity is much greater.

Unless an item meets the function of money it is not money. Neither a gold bar nor a German printed paper,that is not accepted in the market place, are money.

You are stuck with the mind set that value equals money.

Our printed cloth as a commodity is almost worthless as an individual piece. One almost identical piece of cloth can be worth as much as 100 times more than the other when treated as money depending on the printing.
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Now, there are countries that disagree with you to the point that they use silver coins. Vietnam, for example. A shame when Vietnam has this right...
I can find no evidence that Vietnam is using silver coins as money. Can you provide evidence of this?

Now almost every country still mints silver coins like our silver eagles and silver proofs. (I buy a set of silver proofs every year.) These can be used for money but not as their commodity or collectible value.

If silver was actual money then silver coins would command their commodity value at all stores.

Please show evidence Vietnam's silver coins are used to function as actual money and not as collectables or commodity value.
The only thing the government prohibits is counterfeiting. There was a time in the US that because of the gold standard government printed or minted currency was in short supply. Shop keepers actually minted their own coppers. These were generally accepted within the community. Such practices are and we're not illegal.

This is likely the practice you are referring to in Vietnam.

However at the moment any currency stops being generally accepted as payment for goods and services said currency stops being "money."

Confederate currency was once money in the south. Said currency is no longer money. Most, unless in very poor shape, still have value as collectibles.

You can twist and turn all you like but "money" is only money if it is generally accepted as payment for goods and services. Pre-1964 US minted silver coins (dimes, quarters, halves and silver dollars) are still money today at face value. They are worth more than face value as commodities and collectables. Equal amounts of silver in any other form is not money.

You have bought into the lie about silver and gold. These myths have been pumped up by those selling gold and silver.

I hoard silver myself in the form of US minted coins but I never intend to use them as money.
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I haven't seen excessive inventories. I have seen shortages of what I normally purchase which I promise you is not much.
Why do you suppose spot prices have fallen? Anytime prices have a rapid run up there is a rush to stockpile before the next increase. Then demand is satisfied at the higher prices. Prices will fall and continue to fall until low prices create new demand. Depending on the demand prices will either bounce or flatline.

Right now silver seems to have stopped falling and are in a flatline below $20. This says to me there is inventory. Enough inventory that there is no bounce but at a cost that prevents further price decreases.

So my read is we have seen the bottom but we will likely not see anything like the previous highs for some time.

I'm buying with money I never expect to need. (I'm 65. That should give you my time period for "never.") I am only a silver buyer. Gold is just too expensive to justify buying for me.
I just don't understand why you're buying at all? If it's useless, why bother?
Where did I say it was useless? My only point is gold and silver are not money. They can be money but for them to be money they must serve the function of money. The function of money is to be universally (within a nation's market place or greater) accepted as payment for goods and services. Any silver dime, nickel, half or silver dollar is more valuable as silver or a collectible than it's value as money. This is backed up by the fact that any equal amount, to one of our coins, of silver cannot be used universally in our economy as exchange for goods and services. These facts are logical proof that gold and silver are not in and of themselves money.

I collect silver coins because they are more valuable than their face amount as money.

What I cannot understand is why the average person finds this distinction so hard to understand. Ludwig von Mises the hero of Libertarians, founder of Austrian economics author of "The Theory of Money and Credit" agrees with my points; As does Jack Weatherferd author of the "History of Money." Both point out that abuses by governments have devalued their money trying to create value and commodity backed money can prevent this abuse but such comes with the inability of commodity backed money to keep up with expanding economies. This is topped with the advantages countries that have high natural reserves of gold and silver over those with no or little natural reserves.

All money is fiat money. The government either by fiat gives us the type of money we have today or sets and changes the PM backed worth of the money we had in the past.
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