B. writes:
Doc- I saw an article about DRescapes discussing leaving the US for the Dominican Republic. It might actually sound good, but here is the question. My stack of phyzz is a little over 12,000 ounces WITH AN AVERAGE cost of $30.93. So it is currently worth about$415,000. Lets say silver goes to $150 per ounce in 2015. My stack then would be worth about $1.8 million- but that would be in 2012 dollars.
They say silver holds your purchasing power. So wouldn’t it still have the purchasing power of $415,000 in today’s terms? If the Dominican Republic does not inflate their currency like the US wouldn’t the silver be worth over there the same as it is here now? Even if I stay in the US wont my purchasing power in 2015 still be the same as it is now no matter what the dollar value is 3 years from now?
I seem to be very confused. Help. Thanks again in advance. B.
B.,
To answer your question in a word- No.
Yes, silver preserves purchasing power- this simply means that central banks cannot inflate its value away by printing it into existence.
Even in a free and naturally trading market however, all commodities and currencies ebb and flow in value over time-becoming overvalued and then undervalued based on basic supply and demand funamentals- nothing is ever fixed and frozen in value continually. This is why there were problems with the bi-metallic gold and silver standard that the US was on for over 200 years. The dollar value as well as the ratio of silver to gold was fixed by the government- causing distortions and hoarding as the metal currently overvalued by the official fixed ratio was converted into the undervalued metal at the artificially high official exchange rate.
For an example of this, just look at the silver/gold ratio. It never remains fixed, it is constantly fluctuating (it narrowed to as much as 30/1 in April 2011, and recently hit a high near 60/1 at the end of the recent correction). While both metals will preserve purchasing power, I personally believe that while more volatile, silver has the greater upside potential vs. gold and other tangible assets.
It is highly likely that silver will at least return to it’s historical 16/1 ratio vs gold, if not it’s current mine ratio of 9/1- and not even taking into account the fact that markets typically overshoot the mean during a massive bull market- meaning it is quite possible that silver could temporarily even near a 5/1 or tighter ratio vs gold.
Currently, silver’s value is suppressed historically speaking. Throughout most of history a day’s wages for hard labor/ soldier ranged somewhere between a single silver dime (1/10th oz) to 1oz of silver. In our opinion, silver is extremely undervalued vs both fiat currencies as well as other tangible assets and will greatly increase in value relative to other tangible physical assets over the next 3-7 years (gold, farmland, real estate, etc) as well as obviously vs. fiat currency notes.
Hope this explanation helps your understanding.
-Doc
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/live/s_silv.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/live/s_gold.gif)
I also read the DRescapes article and have a lot of reservations about being on an island, any island with perhaps only Australia as the only exception, during a SHTF scenario. I would question whether or not the DR can support the number of people living there in a self-contained way, assuming that food and other necessities cannot or will not be shipped in from time to time.
As to the value of gold and silver being maintained over time, yes, I believe that they are when we compare them to REAL things rather than fiat currencies. Take oil products as an example. In 1960, one could buy a gallon of gas for about $0.25. A little more or less here and there but this is a reasonably good average price. Here we are today in 2012, 52 years later, and the price of a gallon of gas is about $3.85. Whoa, we say, gas has really gone up a lot! But not so fast there. That 1962 US quarter contained 0.182 oz. of silver. If the silver price today was $33 an oz., this would be equal to $6. Gas is not more expensive in terms of silver. In fact, it is less expensive today than it was 52 years ago as long as we do not price it in terms of inflated fiat currency. As long as we continue to use debt-based un-backed paper money, we will continue to have an inflation problem and both gold and silver will continue to be good anti-inflation stores of value.
I would think that anyone considering the Dominican Republic would have to consider what other country shares that same island. Sorry to say I wouldn’t want to be on the same island with Haiti. The western hemispheres most destitute and desperate country.
Today, both gold and silver are fundamentally undervalued because the modern banking and financial system has grossly overvalued the issuance of both credit and fiat currency.
In a truly just World, gold and silver would be stable in value, and there would be no need to hoard them- the Biblical parable of the brother who buried his Father’s money comes to mind. However, we do not live in such a World- at least not yet. We live in a World where what’s right and just has been made illegal, while that which is against God’s will is celebrated and rewarded.
Fortunately, this situation cannot last forever- any empire built on deception and thievery is doomed to fail, sooner or later. Once the average American realizes that paper promises, whether in the form of bonds, fiat currency, or stock certificates, are growing increasingly worthless, the demand for wealth preservation will send both gold and silver to the moon, both in dollar terms, and relative to other commodities, goods and services.
Also, people are brainwashed into thinking that fiat currencies have values which is why they rejected the uses of gold and silver as a medium of exchange and banks don’t accept it as payment. People don’t even know the value of these two metals so it is easy to rip them off.
B, even if, somehow, all the industrial uses for silver were circumvented and it was left to solely function as money again, it would STILL slowly gain value by intrinsic rationality. This is because recovery of precious metals from the earth slightly lags human population growth by about a quarter pwecent each year on average.
Now, the other quandary in your question, as to whether a prospective new domicil may be ‘responsible’ in its ’monetary policy’ and thus side-step price effects of currency inflation, is also a superfluous consideration because of the banknote scheme’s globally universal construction. Banknote currency can only be loaned into circulation at interest (or taxed, if issued direct from a government). The currency, being THE ‘money’, is systemically inflationary because the interest (or supportive taxation) can only come into existence by ever greater inflation, commensurate with the interest as it compounds. As the cost of living rises from inherent currency depreciation, willingness to borrow dwindles until a critical point of ‘debt saturation’ occurs and stops the issuance of new currency to offset the compounding interest and at some length the sheer quantitu and frequency of defaults causes the currency to implode (about the same time as food and ‘austerity’ riots begin).
This brings us back full circle to silver in its role as money. Once the banknote scheme self-destructs, the only truly logical alternative is re-institution of metallic currency valued rationally in juxtaposition against the grand spectrum of all other goods-at-market. Clearly, at that juncture, silver and gold (along with copper as supportive base level ‘street’ media) will encounter immense ‘rises’ in practical ‘worth”. In fact,however, it will be the other goods-at-market which will adjust to the maximal circulation of precious metals to have distribution under that constraint.
Bottom line … if you’re tempted to leave America because of its currency … there’s no escape better than what you’ve already provided yourself with.
If this person truly has that much silver, by now they should already know the answer to their question. The question could have been asked using smaller amounts as an example and it would be more believable. I would never give a detailed inventory of my silver to anyone, especially over the Internet. Good luck getting that much silver out of the country anyway. Years ago, when I was still blond and dumb, I walked into a bank to deposit a brief case full of silver, I could barely hold, into my safe deposit box. The eyebrows went up on all the tellers and the bank manager watched in disbelief.
Fiat self destructs it is going to affect the entire world. Nowhere is going to be safe from rioting. With food prices headed up next year the poor are going to be in even worse shape financially and some small banana republic is not going to be safe. The USA is a large country with lots of open spaces. Buy some land and get moved and part of the local community while you still can. Things go bad these small communities will be turning people away at gunpoint.
Already there, I will be one of them with my ’84 Ford F-150 and a rifle blocking the road. They wouldn’t shoot a girl would they?
Don’t kid yourself, folks…..nobody can say what silver will be “worth” down the road.
The only thing that you can safely bet on, based on thousands of years of history, is silver will be worth SOMETHING compared to paper’s history of eventually being worth NOTHING.
That alone is reason enough to buy silver.
Especially considering all other options.
Don’t forget that all fiat currencies are related to the US dollar so if the US dollar has a massive inflation, then other fiat currencies will also suffer from it. Your PM’s value will go up in terms of all fiat currencies. Watch the video below for more information about the global economic collapse. At least I’m sure that silver will preserve your purchasing power.