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US silver


Dragonnumis

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The following website is interesting - https://www.usdebtclock.org/

Lots of interesting statistics (some of them quite scary) The boxes on the right show the dollar to silver and dollar to gold ratio. If I read it correctly this is the "real" worth of metals if the silver and gold standard still applied? so if the printed currency was backed up by physical holdings? In this scenario the gold : silver ratio is about 8:1 today.

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  • 2 months later...

I've just watched a video by SalivateMetal on the dollar-to-silver ratio:

 

But to be honest, I'm not sure what the relevance is of that statistic. If the US government wanted to buy the entire world's production of silver for a year, I doubt they'd have to pay every single dollar in existence to get it (even taking into account the increase in price because of the huge increase in demand). If you consider PMs to be a hedge against inflation, then you can extrapolate from the 1913 price at around 2% per year, then you can work out its expected value today:

$2.64 x 1.02^107 = $21.97

Which is a bit above current spot price, but I'd say it's close enough that it tracks pretty well (in fact, using a current spot price of $18, you get a year-on-year growth of 1.8%).

Similarly, you can figure out the rate of growth in the money supply in that time:

$2.64 x (1 + g)^107 = $3621

Which gives growth g = 7%.

If you take off the 2% for inflation, then the adjusted rate of growth in the money supply is 5% per year. To me, this just tells me that the US economy has grown by an average of 5% per year since 1913, and while I can't seem to find data to hand going back that far, looking at the graph on this page (which charts from 1930) seems to track with that.

To me it seems like people read to much into the dollar-to-silver ratio. There are plenty of other reasons to buy silver, but I'd say it's a red herring that primarily benefits bullion dealers rather than the average stacker.

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