What I learned about Gold and Silver in 2014

Back in 2014 I was asked by a friend what I had learned about Gold and Silver.

This is what I wrote to him.

Money is:

… your time and effort creating wealth and is your freedom to spend it. 

What money is and should be:

Currency     

• Medium of Exchange 
• A unit of account 
• Portable 
• Durable 
• Divisible 
• Fungible (Interchangeable) 

Money   

• Medium of Exchange 
• A unit of account 
• Portable 
• Durable 
• Divisible 
• Fungible (Interchangeable) 
• + Store of Value (over a long period of time) 

Historically gold and silver where always monetary used. Gold and silver where always the better means to preserve value over long periods of time. 

Gold and Silver are better situated as money because it is stable in preserving purchasing power. Governments can always increase currency (and therefore reducing the purchasing power per unit), but they can't print gold or silver.
There have existed thousands of Fiat currencies (currency not backed by silver or gold) throughout history and all of them had there value ultimately gone to Zero. 

Since the creation of the FED (Federal Reserve) in 1913 the dollar lost approx. 95% of its value.   
Before 1971 one could actually exchange dollars into physical gold. Thus it was a claim check on physical gold. US President Nixon debased the dollar from Gold in 1971. 

After 1971 the dollar lost much of its value because the government printed a lot money in order to finance the Vietnam war and because foreign countries wanted their physical gold back, paying with their dollar reserve money.
The currencies of other nations have the same problems as FIAT currency as the dollar.   

What does this mean to a normal 'worker' today?   

• You spend a certain amount of what you earn on daily living. 
• You save money for pension, live insurance or normal savings. 

But all your savings are subject to devaluation because of money printing and deficit spending of central banks and governments. That would mean you might not be able to receive as much money back as you hope for your retirement or other purposes. Your money have been stolen from you.   

The lies and manipulation of markets   

• There is strong evidence that economical statistics are manipulated to the 'better' in order to disguise the collapse of the current financial system. 
• There is strong evidence that the current value for gold and silver is manipulated in order to enable central banks to speculate and profits as long as possible. 
• There is strong evidence that the main stream media does not tell you the truth about market manipulation 

Examples:

In 1933 the US government confiscated all privately held gold. Everyone was payed the official price for gold but the gold had to be turned over to the FED. At that time one ounce of gold was worth approx. $ 20 dollar.   In 1934 the FED re-valuated gold to almost $ 35 dollar/ounce. Therefore stealing money from the people who held gold in the first place. 

From 1935 to 1967, each year, one would need to pay $ 35 Dollar to buy back the one ounce of gold.
Between 1968 to 1980 – each year different values between $ 39 and $ 612 Dollar.
Between 1981 to 1990 – each year different values between $ 317 and $ 459 Dollar.
Between 1991 to 2000 – each year different values between $ 280 and $ 385 Dollar.
Between 2001 to 2010 – each year different values between $ 272 and $ 1227 Dollar.
Since October 2010 the price for one ounce of gold never went under $ 1000 Dollar; peaked in 2011 at almost $ 1900 Dollar and stands the last year (2013 – 2014) at average of $ 1300 Dollars.
Remember that for the $ 20 Dollars of 1933 one would need to earn between $ 940 – $ 1200 Dollar in 2010 to buy the same goods.
(source: http://www.measuringworth.com/)

Central Banks and Gold

Central Banks do 'business' by 'leasing' gold, speculate with gold and paper gold. Over time this meant that today it is believed that central banks actually do not own physical gold anymore. That could also be the reason why Central Banks want us to believe that physical gold does not have a significant role in the financial world anymore. This is true only as long as there is confidence in FIAT money and that it will have value in the future. Historically however all FIAT currency collapse approx. every 40 years.     

What about silver?   

• Historically silver has been used as money for 1000's of years too 
• The ratio of gold to silver mined is approx. 1:9 
• The gold to silver ratio historically valued is between 1:12 – 1:16 
• Today’s gold to silver ratio valued is approx. 1:60!! 
• Almost all gold ever mined is still there today. 
• Silver has become an industrial product which gets increasingly rare and is 'lost' in waist – most of the time can't be recycled. 
• Today one troy ounce of silver (31,1 grams) are valued approx. $ 21 Dollar / € 15 Euro 
• The historical and biblical wage per day for a worker (12 hours) was 10th ounce in silver (= approx 3,1 grams; one ounce is 31,1 Gram). This would cover the cost of living for a family for one day and possibly savings too! 

  Are you and your family able to live from $ 2 Dollar a day (food, clothing, rent etc.)?    

• In the bible Joseph was sold as slave for 20 pieces of silver (approx. 10 ounces today). 
• Jesus was betrayed for 30 peaces of silver (approx. 15 ounces today) 
• The 30 pieces of silver for Jesus betrayal was enough to buy the potters field – large enough to be used as burial place. 

Would you sell a family member to slavery for $ 210 Dollar / € 150 Euro? Would you betray Jesus or anyone else for just $ 305 Dollar / € 225 Euro? Could you today still buy any field for a field for that money?   

What does this show us?

If historically gold and silver retained their purchasing power this would mean that today silver is totally under valued. Especially when considered that the worlds industrial demand will increase drastically because often silver is an irreplaceable material in modern products. A widespread opinion is that Silver is the most undervalued commodity today and therefor the best means worth investing into. Gold and silver are increasingly accepted as official means of payment throughout the world again. Especially in Arabic countries and Asia – but also in various states of the USA. 

A theoretical calculation of the historical value of silver with today's money:

1:10th ounce (3,1 grams) of silver = 12 hours of work    
Minimum wage for a US soldier in 2012 was = $ 8 Dollars/hour
12 hours times $ 8 Dollar =  $ 96 Dollar
one ounce silver coin (31.1 grams) today = $ 960 Dollar? - probably more?
15 ounce silver (30 pieces of silver in the bible) = $ 14400 Dollar? - probably more?
Price of one ounce silver coin today = ca. $ 21 Dollar 

World events

Almost the entire World production of gold in 2012 (ca. 2800 tons) was bought by China. China encourages its population to own gold and silver. In the past they where forbidden to own it. Central banks in the west want us to believe that gold and silver is not money anymore. 

Since 2009, China, and Russia are the biggest buyers of gold by far, whereas the west (USA, GB and Europe) sell most of their (physical) gold. These countries are buying with their Dollar reserve currencies, they are leaving the World Dollar system. 

An increasing number of counties are doing business with each other in either gold or other currencies than the US Dollar. Especially China, Russia, India and Iran among others. 

Countries that tried to do business deals in gold or other currencies where Libya and Syria.   

Pakistan had declined a IMF recommendation to sell their gold and buy US Dollars with it. 

Germany, at present the 2nd largest owner of gold reserve, asked their US (FED) held gold reserves back to be stored in Germany (2013). The US government initially said this may only be possible by the year 2020. Until today only 5 of almost 1400 tons of gold have been given back to Germany. Some say because the US (FED) does not have the gold anymore (used up for gold and currency market manipulations). They are either not be able to collect all the German gold before the year 2020 or have agreed with the German government to not give it back at all.

Germany tends more and more to do direct business with Russia and China without the Dollar. The US can't sell their dept anymore to other countries (by means of making other countries buy/loan Dollars). In 2014 Belgium was by far the biggest buyer of Dollars than any other country which is very suspicious. 

Nowadays governments force 'savers' to also pay for the bank bail outs – examples are Cyprus and Greece in 2011 – 2013. The EU enforced these terms as conditions for more loans. It is believed that in the future this might also peoples pensions are going to be used to pay of governments depths or rescue financial institutions. The government programs to help the financial systems have only benefited the banks and their speculations not small businesses or ordinary working people. The overall economic situation hasn't improved since the crisis in 2008. Nothing of the initial problems has been fixed. Nobody of the top bankers have been punished for illegal practices in the financial system.   …. can be continued...   

Future:

As world events are not so rosy for the current financial system and because of biblical prophetic events to come, gold and silver can be another means of preparedness. Either to still be able to 'trade' and / or secure your wealth for later.   
Especially silver has this potential because it is at present very undervalued. Today almost everyone could be able to buy one or a few ounces a month; which could be very valuable in the future.
Actually the banker manipulation of gold and silver to keep them cheap enables ordinary people to accumulate these commodities.   

Other qutations:

“Once dynastic China turned to paper fiat currency, their destiny was set: They simply kept creating more and more. Hyperinflation followed, until finally the government abandoned paper, and silver became legal currency for the next 500 years.” 

"If in the pursuit of the means we should unfortunately stumble again on unfunded paper money or any similar species of fraud, we shall assuredly give a fatal stab to our national credit in its infancy. Paper money will invariably operate in the body of politics as spirit liquors on the human body. They prey on the vitals and ultimately destroy them. Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice." George Washington, January 9, 1787”   
 
July 2014 

For a good understanding of how the financial system works please see the documentary from Mike Malloney: The Hidden Secrets of Money