Thursday, 13 January 2011

Silver: A True store of Value

Silver: Store your Wealth
anciant mexican silver
Hundreds of years of silver trading
For years silver has been traded in the open market for food, clothing and shelter. Silvers use as a medium of exchange dates back to ancient times and has been used by the majority of the Earths population up until recent years.

Silver and Gold were known Internationally as a means of exchange. Gold has always been traditionally the "bigger" (more expensive), brother of silver but both have played the same part in providing a great store of wealth.

Silver in Currency since 560 BC
The use of silver in currency began somewhere close to 560 BC with the reign of Croesus, the King of Lydia. This continued throughout the years up until the early 20th Century, when silver in currency slowly began to discontinue.

Silver currency was used in many countries, including but not exclusive to: Great Britain (Crowns, Florins, Shillings) , USA (Dollars, Half dollars, Quarters), Canada (Half Dollars, Quarters) , Mexico (Peso) and Spain (Reals).
Useful links: British Silver Coin Content | USA Silver Coin Content | Canadian Silver Coin Content

modern currency british pound sterling notes
Modern Currency
The currency used in today's World is a paper currency. Silver stopped being used as a monetary exchange in the majority of countries due to its true value exceeding its face value. To put it simply, a US silver dollar was worth more in its silver content than its overall monetary value.

Countries no longer backed its currency with silver and gold stockpiles. Today's money is backed by government bonds.

The problem with modern currency
When silver and gold based currencies were used, the market was not as open to manipulation as it is in today's paper based currency. The governments of the World could not simply "print more silver". Silver and gold had to be mined, which meant that currencies based on these precious metals had more worth than currencies of today.

A paper currency under the right circumstances, can be subject to massive inflation. Governments will print more money which in turn brings the value of that currency down.

Silver today
Silver today can still be found in coin form. Many countries produce and mint silver bullion coins and bars. Australia is famous for its Koalas and Kookaburras, USA for its American Silver Eagles. Great Britain, China, Austria, Mexico, Canada, New Zealand and many more countries throughout the World produce silver bullion which is sold openly to the public for little more than its silver value.

silver kilo kookaburra

A 1 ounce bullion [999 pure] Silver coin of today can be bought for around £28 [$40]. Silver is becoming ever popular in the international market as a means of protection for wealth. The growing middle classes in China and India are swaying more and more toward the traditionally known "poor mans gold" silver. As gold prices rise, silver coins and jewelry are becoming the more affordable purchase.

Silver: A True Store of Value
One popular example to explain the retaining wealth [video] aspect of silver and gold is the "gallon of gas theory":

In 1970, 3 silver US dimes could buy you a gallon of gas.

Today, in 2011, the same 3 silver US dimes can still buy you a gallon of gas.
Gold and silver should not be seen as an investment opportunity as such. Gold and silver should be seen as a "store of wealth" and an insurance policy against inflation and unforeseen circumstances.

1 comment:

  1. thanks for this post its really interesting i bookmark your blog for future stuff like this..

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