Almost two decades ago, I was asked by a significant precious metals dealer in the U.S. to do a presentation on the merits of silver investing. The timing was perfect, and silver was at an all-time low when adjusted for inflation.
Moreover, a silver deficit was eating away 100 million ounces per year. What could be better? Buying low, not only low but the lowest price ever, and what you are buying is in such high demand that the above-ground stocks were being depleted rapidly. What I discovered was people do not buy bottoms! Investors were not purchasing silver. After all, it was coming out of a twenty-year market that hovered around $5.00 USD and stayed there, hardly moving. This, of course, spelled OPPORTUNITY!
WARREN BUFFETT LOVES SILVER
There were a select group of investors who did buy silver. The most notable was billionaire Warren Buffett. Warren talks gold down, but he loves silver. Buffett purchased almost 130 million ounces of silver off the Exchange, and the market rocketed up from five and hit the eight-dollar level very briefly. This was a physical purchase, but long-time billionaire friend Bill Gates bought many Pan American Silver shares.
My conclusion is that the (very) smart money was buying silver. Still, most money managers, pension funds, retirement accounts, family offices, and banks were not interested at an all-time low. Forbes Magazine did a feature article on Buffett’s purchase. It produced an inflation-adjusted price versus time graph, proving that silver has sold for $200 per ounce from the year 1300-to 1600, roughly three hundred years. The all-time high in 1998 ”dollars” was over $800 per ounce.
Now is the time to look at silver again- why? Because silver is almost as cheap now as it was when Buffett purchased it on an inflation-adjusted basis. Secondly, a constantly growing industrial demand predicts that there potentially will not be enough silver mined and recycled in ten years to meet demand. Third, the market is manipulated, which gives pause to many investors, but the truth is ALL markets are manipulated! Yes, stocks, bonds, real estate, commodities—every one of them. The typical pushback is that real estate cannot be controlled. Yet, Real Estate depends on the mortgage rates, and the Central Banks manipulate interest rates. To break it down into simple terms, you are affecting all markets if you can control (manipulate) the price of money!
We are entering the end of significant inflation. The U.S. dollar and de facto world currency are worth just 2% of what it was in 1913 when the Federal Reserve was founded. That is correct. Out of 100 cents just over 100 years ago, only 2 pennies of purchasing power remain. This is a failure, and the banking establishment knows it but will never admit they are the cause.
There is a plan, and it is called Central Bank Digital Currency (CBDC). Banks can be irrelevant in today’s digital era, and the Central Bank could oversee issuing ”currency” directly to your wallet. This is a banker’s dream because they can trace, track and tax every transaction. At some point, cash will be eliminated, and your ”credit” score will be based upon your adherence to the political whims of the ruling class. This is already done in China and is called a social credit score. Go along with Big Brother, and all is well. Show any ”incorrect” behaviour, speech thought, and the amount of currency held in the Central Bank wallet is irrelevant. You will not be able to access your cash because of a poor social credit score. In other words, CBDCs are entirely antithetical to any concepts of sovereignty, autonomy, and Freedom in our modern society.
As this writer has stated, money is power, and those that create ”money” can centrally plan the economy. Most people will sell out for money. It does not take much vision to see most of the political class globally are bought and paid for. Many of the top executives of prominent corporations are politically motivated to make laws that benefit them over others. Corruption is present throughout the system, banking, health, education, justice, and even sports.
The cryptocurrency market promises to become your bank and bypass the established system altogether. This is a noble idea for those that think they have a right to determine their financial transactions without government interference. However, the promise is mostly hype because almost everyone is required to pass a know your customer verification before any crypto can be purchased from an exchange. There are ways to transact in the current crypto world and remain anonymous, but it is outside the scope of this article.
METALS-BACKED CRYPTOS ARE BETTER
There is still much pain in the cryptocurrency concept as many of the thousands of tokens (coins) are worth nothing. Perhaps during this downtrend, this will be sorted out, like the technology stock shakeout in the early 2000s, where many new companies disappeared. Look for something similar to take place in the crypto world.
Some will remain just like Amazon and Yahoo did in the tech wreck. One subset that exists is cryptocurrencies that are backed by precious metals. This is an area where potentially massive growth exists because most of these coins are nothing more than a name and a cut and paste open-source software when the great shakeout occurs.
There is nothing more stable than a troy ounce of silver or gold, and these are genuinely the ”stable coins” of all time. The digital currency required for purchase changes because countries depreciate (inflate) their currencies at different rates.
As an ambassador for the Lode project, we are constructing the digital money of the future- see (https://ag.lode.one/ ) Lode is a community of sound money enthusiasts who have come together to build a more inclusive and fair global monetary system. The comprehensive platform allows anyone to seamlessly send, spend, and pay with digital silver and gold.
It is difficult to instil the importance of sound money in today’s world because so few people understand what happens in a fiat system that fails. We are approaching that day rapidly, and when it occurs, almost every human being will know that you cannot print wealth. The benefits of the Lode project are
Economic history has a profound lesson--having an economy running on bimetallism, which offers all the advantages and none of the drawbacks of government-issued digital fiat, provides stability to ALL people. Furthermore, no guesswork is involved, which means a ”dollar” today has the same purchasing power in 100 years. Now that is monetary stability!
The precious metals have been disappointing to precious metals investors during the first half of 2022. With inflation officially hitting records not seen for 40 years, many are baffled that gold and especially silver have not reacted to the apparent inflation in food and energy prices.
PRECIOUS METALS GIVE YOU FREEDOM
Economics is a study of Human Action, as Mises explained in his book. People will look to whatever means possible to protect themselves from a no more extended trust system. Those living paycheck to paycheck will buy extra food if their budget allows. Those in the middle class will do the same and be wise to have some real money set aside outside of the system.
Once trust in the system, financial and otherwise, is lost, it is almost impossible to get it back. Yes, there could be a ”new order” that the banking establishment have already developed, but it does not have to be your destiny. If enough people placed part of their savings into precious metals, the power of money would come back to the people. It would only take one or two percent of the population. Change the money and change the world, what a concept.
It is still a near certainty that there will be a “run to gold” unlike any witnessed in the past. However, it will be relatively brief and there is a possibility that the market freezes up because precious metals holders are not willing to sell for a currency that is failing.
Is this likely? No, it is more likely that the current system will morph over time into a wholly controlled digital nightmare. However, those who have actual money, either physically or digitally, will have something priceless-- freedom.
Here I mean some financial freedom, but unfortunately, if the powers that be win, Freedom as has been known in the ”free world” will be lost for a long time. EG