I received an email from someone that got me thinking about coins vs bars and silver vs gold – and talking to your neighbors. All of this is pretty heavy stuff – in some cases, literally. And, we jump into all of it with a great degree of trepidation. I mean, do we REALLY understand what we’re getting into?
There really is a lot that we don’t understand, so we have to take a lot on faith as we decide to prepare for an uncertain future. In fact, I’m here to tell you that I myself approach all this with a great deal of fear. Could I be wrong about all this?
Yes, I could be wrong, but the chance of that is pretty slim. As I look around at the insanity of what is going on in our world, I cannot imagine how everything could work out in the way that the talking heads of the mainstream media seem to imply. So, let’s talk about one of the few, sane options that you and I have.
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Buy As Much Silver As You Can Carry
A friend of mine was leaving Taiwan for the US, so I bought him a 10 oz. bar of silver. And, I was amazed at how heavy it was. That chunk of metal had some serious heft to it. And, that made me realize that you wouldn’t be able to get very far, if you put any serious amount of money into silver, and then had to run for the hills with it in your backpack.
If the price of silver was $20/ounce, just $29,166.85 would buy over 100 pounds.
note: there’s a rather complex computation involved in how I got that figure. A troy ounce is NOT equal to a regular ounce. Troy ounces are heavier than a regular ounce (or, International avoirdupois ounce). And, all precious metals are weighed in either troy ounces or grams/kilograms. To give you an idea of the difference between ounces and troy ounces, here’s how they convert into grams:
1 troy ounce = 31.1034768 grams
1 ounce = 28.349523125 grams
Can you carry 100 pounds?
I might be able to lift it, but I wouldn’t get very far with it. So, if I plan on bugging out when everything falls apart, I wouldn’t be able to buy very much silver. However, since I plan on sticking around (i.e., ‘bugging in’) in a collapse situation, I can buy a whole lot more silver.
(You could say that I’ve already ‘bugged out’ by choosing to live in Taiwan. However, Taiwan is a rather densely populated island. If things get really bad here, there’s really nowhere to run to. So, I might as well buy as much silver as I can.)
Those of you with full and heavy ‘bug-out bags’ will still want some silver. Trading a gold coin for a bag of groceries doesn’t sound like a good bargain to me. A silver coin would be a much better deal.
But wait. Is that the only reason why I am so interested in silver?
The Case For Silver
Would you believe that I like silver because I’m stingy?
I don’t like paying full price for ANYTHING. Everything is better when it’s on sale. And, right now, silver is at ‘bargain-basement’ and ‘firesale’ prices. I mean, silver is probably the best deal on the planet.
WARNING: I’M ABOUT TO MEANDER ALL OVER THE PLACE
AND THROW LOTS OF NUMBERS AT YOU!
[scroll down when your eyes glaze over]
Gold/Silver Price Ratio
Normally, the relationship between gold and silver is less than 16-to-1, or one troy ounce of gold would be equal to just under 16 troy ounces of silver. As the industrial revolution took off, as well as the rise of financial markets, that ratio got distorted. Here’s a graph to help illustrate:
What does this graph tell you?
The price of silver is manipulated. And, it’s been manipulated since the beginning of the Industrial Revolution in the 1870s.
Industrial Uses For Silver
Why did they do this?
Well, industry needs silver. Lots of it, so they want to keep the price of silver as low as possible. But, the manipulators have a problem. They’re running out of silver, and the demand for silver is going to take off. But, lets talk a little bit about the uses of silver before going on.
Here are a few pages that talk about silver in greater detail:
All of that is pretty cool, right?
How Much Silver Mined vs. Gold
But, here’s the bottom line. Over half of all the silver being pulled out of the ground is consumed (you saw that right, CONSUMED) by industry. And, by comparison, only about 10% of gold is used by industry. (However, gold doesn’t get consumed since it is virtually inert – meaning that you can almost always get it back.) Okay, so hold onto that fact, because I’m about to throw another bit of information at you.
There are currently 8.52 ounces of silver mined for every ounce of gold.
Available Silver vs. Gold
But, wait. We know that about half of all silver is consumed (never to be seen again) by industry – while just 10% of gold is used (not consumed) by industry. So, what’s the proper ratio?
4.25 vs. .9 or…
[pause for a little algebra]
…3.825 ounces of silver for every ounce of gold
But, there’s ANOTHER fact to pay attention to. (And, it’s VERY important.)
[drum roll, please]
There’s a limited amount of silver in the ground. In fact, we are beginning to see the possibility where we may reach a peak in silver production. When that happens, a decline in production will begin. (Here’s another discussion of Peak Silver: http://blog.milesfranklin.com/peak-silver)
Do you think that industry is going to stop consuming silver, just because there has been a decline in silver production?
Nope. They’re going to keep consuming it. And, this is an important thing to remember because it points to a decline in the supply of silver – long term.
Price of Silver to Rise
For those of you who remember economics 101, what does a decline in supply do to the price of something?
A decline in supply forces the price to go up.
This means that silver has a much brighter future that gold. In fact, it is even possible for silver one day… in the very long term future… for silver to be more valuable than gold. But, let’s get back to the hard numbers.
A Bigger Rise in the Price of Silver – Gold/Silver Ratio
Remember that graph that I showed you?
The gold/silver price ratio?
Right now, it’s just over 65 ounces of silver to an ounce of gold. Do you think that this ratio is going to continue, especially since the amount of silver stored in warehouses has declined dramatically?
Nope. That ratio of 65-to-1 is going to dramatically change over the next few years. The next question is what the proper ratio is going to be?
Remember that before the Industrial Revolution, that ratio was 16-to-1. What would the price of silver be right now at that ratio? Today?
About $78 per ounce.
The price today?
About $19 per ounce.
The Rise in Gold and the Rise in Silver
But, wait a second. The price of gold is being manipulated HORRIBLY! So, what’s the proper price of gold?
Well, it’s hard to apply a ‘proper’ price to gold, but let’s look at it like this. The amount of money in the world (i.e., global M2) is over $66 trillion. If we took all that money and traded it in for gold, what would the fair price of gold need to be set at, to make such a transaction possible?
Well, let’s see, there are… wait… determining how much gold there is in the world is incredibly difficult – partly, because so many people are hiding it.
- The Gold Standard Institute says that there are between 1.2 to 2.5 MILLION metric tons of gold in the world above ground.
I’m suspicious of BOTH the World Gold Council and the Gold Standard Institute. The World Gold Council would like to calculate as low a number as possible because it supports a high valuation for gold. The Gold Standard Institute would like to calculate as high a number because this supports their argument for a more ‘liquid’ gold standard for currency.
Having said that, I suspect that the Gold Standard Institute has the more accurate figure – for a lot of reasons that I won’t get into here. So, let’s just assume that there are a million metric tons of gold hidden in vaults around the world. Let’s calculate this:
- Multiply 32,151 by 1,000,000 (1 million), and you get a figure of 32,151,000,000, or 32.151 billion troy ounces of gold.
Again, that’s all the gold that has ever been mined in all the history of the world – and hidden away in secret vaults.
The amount of money in the world is $66 trillion – or $66,000 billon. Divide the amount of money in the world by the number of troy ounces of gold, and you get…
$2052.80 per troy ounce of gold
But, you’re only going to get that figure if you raided all the vaults in all the world – assuming that the ‘Gold Standard Institute’ was calculating everything properly.
However, if we calculate using the World Gold Council estimates, there are 5.6 billion troy ounces of gold above ground. Dividing that into our $66,000 billion money supply, and we have a price of…
$11,785.71 per troy ounce of gold
That’s quite a difference, and one day we’ll know which is the true figure. When the price of gold goes up, more and more of the gold hidden away in secret vaults will start to see the ‘light of day’.
Oh, and let’s not forget that the COST of mining gold is going up… and Up… and UP!
But, let’s get back to figuring out a ‘reasonable price’ for silver in the future.
Estimating the Future Price of Silver
I believe that we will rapidly get back to the 16-to-1 ratio of silver to gold, in terms of price. And, I believe that the price of gold is going to double – at a minimum. If the US dollar value of gold doubles, we will see a gold price of $2500 per troy ounce. A 16-to-1 ratio of silver to gold will give us a gold price of…
$156 per troy ounce of silver
The current price of silver is $19.18 per troy ounce, or one eighth the price.
But, what if silver rises to a 4-to-1 ratio, which is FAR more reasonable if you look at the amount of silver that is currently above ground, along with how much is being produced. At a 4-to-1 ratio for silver, the proper value would be:
$625 per troy ounce of silver
Pretty fantastic, right?
[MATH AND MEANDERING IS OVER]
Case for Silver Conclusion
Will we ever see those kinds of prices?
I don’t know, but that’s not all that important right now. The important point is that buying silver is a great idea for three great reasons:
- It’s MUCH more difficult to steal, and therefore less of a target for thieves. (It’s HEAVY.)
- It’s more useful for everyday life, like buying food and fuel.
- It has an incredibly bright future.
The only downside is that it’s difficult to carry around.
So, buy as much silver as you can carry.
And, if you expect to ‘shelter in place’ when things fall apart… well, take all of your money and buy silver. Seriously, get lots and lots.
But, all of this is a calculation that only you can make.
After you have bought all of your silver…
Buy As Much Gold As You Can Afford
Please remember that we aren’t trying to make a fortune here. What we’re trying to do is lay the foundation for your survival so that you can continue doing the job that God called you to do. We all have a purpose for being on this planet, and our job is to continue fulfilling that purpose until the Lord calls us home.
And, survival may mean relocation on short notice, and you might not be able to take anything more than what you can carry on your back. Remember what I said about how much $30,000 of silver weighs?
Yeah, it’s more than a hundred pounds. Do you want to carry all that in your backpack? Take it with you on an airplane?
By comparison, that same $30,000 will buy you less than two pounds of gold.
So, figure out the proper ratio, and then buy as much gold as you can with the money left over (after you have invested in all the other survival essentials).
Please remember that a gold coin may one day save your life. Those fleeing Nazi Germany were able to use gold to get past checkpoints and onto trains and ships that carried them (or just their children) to freedom. You might one day be forced into such a situation. So, think about that as you make your calculations.
As you prepare for what is coming, remember this order of needs:
- Get as close to God as you can. Only HE can see you through.
- Prepare for physical needs – food, water, shelter, etc.
- Buy as much silver as you can carry
- Buy as much gold as you can afford.
Oh, and one more thing…
Do NOT tell ANYONE about your preparations.
- Do not tell them about your silver.
- Do not tell them about your gold.
- Do not tell them about how much food, water, etc. that you have.
That means family, neighbors or even church members. Please only share this information with people you ABSOLUTELY trust. And, when I say ‘absolute’, I mean that you would trust them with your life and the lives of your family.
It really is that serious.
Does that make it hard to talk about preparation?
Yes, so please feel free to pass this article around, along with any other article that you see on this website.
note – I am not offering financial or disaster preparation advice in a professional capacity. These are merely my own thoughts on what I would do in these situations.
If you find a flaw in my reasoning, have a question, or wish to add your own viewpoint, leave a comment. Your input is truly welcome.
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