What is the Value of Silver?

[Junior]

What is the Value of Silver?

 

By: Jordan Graveline

 

What is the value of silver? To answer this question, we must first ask ourselves: What is the value of a dollar? This question has plagued the modern investor, tax payer, and overall general consumer for many years. I will attempt to show what I believe the value of silver is by using the declining purchasing power of the US dollar.

To start, I consider myself a young man with very little experience in the matters of economics. However, where some people see that as a weakness, I see it as a fresh pair of eyes, not yet corrupt by the system. So let us begin....

Firstly, here is a chart that shows the declining purchasing power of the US dollar. It only goes as far as 2019, but it gets the point across.

Starting at the year 1900, we can see that a US dollar was valued at one dollar. So why is a US dollar not valued at one dollar now? The answer is silver. A dollar coin minted in 1900 is made of 90% silver and contains 0.7717 troy ounces (or 24 grams) of silver content. A dollar created now does not contain a speck of silver. Now that we have a workable link between a dollar and silver, we can start to calculate what the value of silver is.

Using the chart above, if the value of a US dollar is approximately $0.04, we can use this to value silver. Here comes the math:

24 grams of silver was valued at $1.00 in the year 1900. Now that same dollar has fallen to $0.04.

24 ÷ $0.04 = $600

Since 24 grams is not a troy ounce, we need to multiply 24 grams by 1.295833 to get 31.1 grams (one troy ounce)

Now let's recalculate to adjust for a troy ounce of silver.

24 x 1.295833 ÷ $0.04 = $777.50

This is what I believe silver's value should be in US dollars (using 2019 data). Now of course, if the value of the US dollar should decline further, a simple adjustment could be made in the formula. Simply replace the '$0.04' with the new amount and calculate again.

Just for fun, let's do a US value of $0.001 (a tenth of a cent)

24 x 1.295833 ÷ $0.001 = $31,100 (rounding)

Will silver ever reach this absurd valuation? I think the better question is: Will the US dollar ever become worthless? If so, anything divided by 0 equals infinity. So it's not a question of how high can silver's value reach, but how low will the value of the US dollar go?

Edited October 14, 2021 by Junior

[SidS]

The US dollar will become worthless, as will every other fiat currency - maybe not tomorrow though and maybe not even in my lifetime, but all fiat currencies in history have failed sooner or later.

[Rll1288]

Which ones?

[SidS]

The paper currency of ancient China, the French livre after the assignats, the German papiermark of the 1920s, the Zimbabwean dollar. When they cease to have a monetary function and are utilised as something else, I'd call that game over for the currency.

The German mark of the early 20s were used as wallpaper and burned as fuel on fires.

[Junior]

To ask which currencies have failed throughout time is almost equivalent to asking someone to count numbers until they reach the very last number. It cannot be done. But if you are looking for some recent examples in History that are within 100 years; Germany in the 1920s, Hungary in the 1940s, Yugoslavia in the 1990s, Zimbabwe in the 2000s. And Venezuela present day is failing hard as well. Now if you consider that all currencies are failing simultaneously, the only way you realize your country's currency is failing is you'll see it failing faster relative to other currencies. 

[Rll1288]

24 minutes ago, SidS said:

The paper currency of ancient China, the French livre after the assignats, the German papiermark of the 1920s, the Zimbabwean dollar. When they cease to have a monetary function and are utilised as something else, I'd call that game over for the currency.

The German mark of the early 20s were used as wallpaper and burned as fuel on fires.

Sorry wasn't trying to be controversial ... but that's my point those ones may have failed but were replaced by others i.e. Germain Reichmark become the Deutchemark and now we have the Euro... huge devaluation then a reset to another form of Fiat CCY... 

[Rll1288]

24 minutes ago, Junior said:

To ask which currencies have failed throughout time is almost equivalent to asking someone to count numbers until they reach the very last number. It cannot be done. But if you are looking for some recent examples in History that are within 100 years; Germany in the 1920s, Hungary in the 1940s, Yugoslavia in the 1990s, Zimbabwe in the 2000s. And Venezuela present day is failing hard as well. Now if you consider that all currencies are failing simultaneously, the only way you realize your country's currency is failing is you'll see it failing faster relative to other currencies. 

Good examples except German has gone through three Fiat types and now has the Euro. The others have gone through differing situations i.e. separating into separate Countries, but still have a Fiat CCY. I remember South America in the late 70s/80s where inflation was rife and the CCY worthless but it is still there (a friend bought a car on Credit Card when seconded at a Bank there and when came to pay it off it was 25% cheaper :-)) . BTW not disagreeing that Fiat CCYs are under pressure and Global Economics have changed but will we just see another form?... With the world becoming cashless what will replace the USD? Bitcoin who knows. So therefore when we say Fiat CCYS failing.. do we mean changing?

[Junior]

I see your point on how fiat currencies that fail have been replaced by other fiat currencies that have also failed/are failing. To quote Einstein, "Insanity is doing the same thing over and over again and expecting different results."

So are the big central banks insane? No, they are just corrupt and will probably do the same thing again as they have been for years. Paper currencies can exist, but only if they are backed by the physical (silver or gold). Fiat currencies are decreed as money, but money they are not. 

[SidS]

I have no argument with the fact that fiat currencies that fail are replaced by new (or revalued) fiat currencies, that's sound fact. Where my gripe is, is who loses out when the old currency goes to wallpaper and the new currency arrives? You can bet it ain't the bankers!

[HawkHybrid]

3 hours ago, Junior said:

What is the Value of Silver bread?

 

By: Jordan Graveline

 

What is the value of silver bread? To answer this question, we must first ask ourselves: What is the value of a dollar? This question has plagued the modern investor, tax payer, and overall general consumer for many years. I will attempt to show what I believe the value of silver is by using the declining purchasing power of the US dollar.

To start, I consider myself a young man with very little experience in the matters of economics. However, where some people see that as a weakness, I see it as a fresh pair of eyes, not yet corrupt by the system. So let us begin....

Firstly, here is a chart that shows the declining purchasing power of the US dollar. It only goes as far as 2019, but it gets the point across.

Starting at the year 1900, we can see that a US dollar was valued at one dollar. So why is a US dollar not valued at one dollar now? The answer is silver. A dollar coin minted in 1900 is made of 90% silver and contains 0.7717 troy ounces (or 24 grams) of silver content. A dollar created now does not contain a speck of silver. Now that we have a workable link between a dollar and silver, we can start to calculate what the value of silver is.

Using the chart above, if the value of a US dollar is approximately $0.04, we can use this to value silver. Here comes the math:

24 grams of silver was valued at $1.00 in the year 1900. Now that same dollar has fallen to $0.04.

24 ÷ $0.04 = $600

Since 24 grams is not a troy ounce, we need to multiply 24 grams by 1.295833 to get 31.1 grams (one troy ounce)

Now let's recalculate to adjust for a troy ounce of silver.

24 x 1.295833 ÷ $0.04 = $777.50

This is what I believe silver's value should be in US dollars (using 2019 data). Now of course, if the value of the US dollar should decline further, a simple adjustment could be made in the formula. Simply replace the '$0.04' with the new amount and calculate again.

Just for fun, let's do a US value of $0.001 (a tenth of a cent)

24 x 1.295833 ÷ $0.001 = $31,100 (rounding)

Will silver bread ever reach this absurd valuation? I think the better question is: Will the US dollar ever become worthless? If so, anything divided by 0 equals infinity. So it's not a question of how high can silver's value reach, but how low will the value of the US dollar go?

 

generic analysis that has little to do with the value of silver.

(I know I've missed replacing all of the word silver with the word bread)

 

HH

[Bigmarc]

2 hours ago, Junior said:

Paper currencies can exist, but only if they are backed by the physical (silver or gold). Fiat currencies are decreed as money, but money they are not.

It's no different, in the middle of the gold standard the average wage was £85 per year. At £4.25 per Oz that's 20 Oz of gold, ish. Today the average wage is £26000, at £1300 per Oz, that's 20 Oz of gold. 

[Rll1288]

2 hours ago, SidS said:

I have no argument with the fact that fiat currencies that fail are replaced by new (or revalued) fiat currencies, that's sound fact. Where my gripe is, is who loses out when the old currency goes to wallpaper and the new currency arrives? You can bet it ain't the bankers!

It's a good question but why do you think Bankers are the only ones to benefit? Are we talking Bankers as in retail banking or more specifically Bankers as in trading and investments? A larger proportion of companies like BP do not see profits from what they produce but in the trading and investment of leveraged products like derivatives. When the Banking system crashed in 2007/2008 yes it was investment products such as Sub Prime mortgage loans that created a liquidity and credit bubble but from what I saw... the regulators was as much to blame as they didn't manage them. What I think we are seeing is a fundamental change in economic management. How can companies grow year on year at x% consistently and if they fail to do so, get trashed in the stock markets i.e. was expected to make £10bio but only made £9.5bio. Banking has changed but that doesn't mean greedy people have and many of those are not in that industrial area 🙂

Notes of credit have been around since the templars when they would get a provisory note from an Abbey on their deposit of Gold and could cash in at another. Paper money is a promise that its a value in which to barter for other goods. What ever the new world looks like.. this won't change. It will just be called something else.. like Bitcoin etc. For me hold PMs is still a way to store wealth, unfortunately its like any risk profile its returns may not guarantee a high return but it is safer. unfortunately like buying a new release from RM... can it return a better profit i.e. Una and the Lion or Three Graces hahahah 

[SidS]

Investment bankers were the ones I meant, society's leeches - growing fat off other people's hard work.

The problem with modern society is the leech industry is growing and outpacing the actual real wealth creation jobs.

Manufacturing/farming/natural resources are where real wealth and real jobs lie.

Too much in the modern world revolves around what I once heard termed as 'weighing the pig' - one can spend so much time measuring the pig and extrapolating how much it might weigh in future and putting bets on it, and debating the finer points of how much it's grown by, that they could end up forgetting to feed it.

[modofantasma]

Reading an interesting book at the moment. Interesting that a dying fiat currency can be dying for quite some time. The book which I haven't finished puts some interesting points... 

General public view the price of stuff going up not the value of their precious money going down and demand more currency not more sound currency 

When money dies is the book

[Bimetallic]

On 14/10/2021 at 09:22, SidS said:

The paper currency of ancient China, the French livre after the assignats, the German papiermark of the 1920s, the Zimbabwean dollar. When they cease to have a monetary function and are utilised as something else, I'd call that game over for the currency.

The German mark of the early 20s were used as wallpaper and burned as fuel on fires.

That's hardly any. Currencies in rich or developed countries don't fail. Since WWII I can't think of a single currency in a rich country that has failed. Can you?

Replacing a currency with a new one, especially a Euro type situation where it's a new multinational currency, isn't a failure. e.g. West Germany's deutschmark never failed.

Fiat currencies don't all fail. It's not even clear that most of them fail. Dollars, pounds, Euro, Yen, Swiss Francs, all the Nordic currencies, etc – none of those have failed. So it's weird to make claims that are so easy to falsify.

Inflation isn't failure – low inflation is a desired feature, and intentionally engineered. The target is usually in the 2-3% ballpark with modern central banks, and that's generally what the Fed in the US has delivered in recent decades. So a graph showing inflation over centuries doesn't really make any point. People end up with more nominal currency units as inflation unfolds, so saying that currencies lose their value doesn't make any sense, since it ignores the increase in volume.

I think central banking and government currencies are a mistake, and I would eliminate that power in any country I help found. But it's not about physical vs something else – it's just about sound money, money ideally being a market good, and limiting government power. The future is money could be anything, and it might not be metal-based.

[Junior]

Well if anyone is interested in diving into the History of the Gold standard, you might find some interesting bits of information between various countries. For example, in America’s Gold Standard era (1834-1933), they had relatively negligible inflation with gold fixed @ $20.67 per ounce. The purchasing power of gold (and by extension, silver) was retained for the 100 years of the gold standard. Once paper currencies backed by neither gold or silver, inflation rose faster than wages in the currency.

What does this actually mean? It means that physical money like gold and silver can hold their value versus just the fiat dollars that are currently printed out of thin air. 
 

One man that makes this more clear for others is Mike Maloney. He has his “Hidden Secrets of Money” series that takes the History of gold and silver and their purchasing power and simplifies all the History into 10 short episodes. It’s really good. Here’s episode 1…

 

[HerefordBullyun]

Look at the US debt clock in real time against silver and gold that really shows the true value of silver....

[Minimalist]

25 minutes ago, HerefordBullyun said:

Look at the US debt clock in real time against silver and gold that really shows the true value of silver....

I think its more if the cartel applied the real stats to measure it. 

[Bigmarc]

2 hours ago, Junior said:

For example, in America’s Gold Standard era (1834-1933), they had relatively negligible inflation with gold fixed @ $20.67 per ounce. The purchasing power of gold (and by extension, silver) was retained for the 100 years of the gold standard.

And 100 years before that, I think it was Issac Newton that set that price in the 1700s.

[HerefordBullyun]

As I write this now https://usdebtclock.org/index.html

 

[swanky]

Why has no one questioned the maths?

On 14/10/2021 at 15:59, Junior said:

24 ÷ $0.04 = $600

What is going on here? Why would you do this?

What if I did this: 24g ÷ $1 = $24
What does that mean? 24g of silver should have cost $24 in 1900?

Edited October 16, 2021 by swanky

[Junior]

@swanky

So the reason I used 24 grams of silver and $0.04 from the chart are as follows:

24 grams represents how much silver was in a silver dollar in 1900 (and other years as well). So a dollar in 1900 represented the value of 24 grams of silver.

Since the dollar is no longer made out of silver, but rather paper, I relied on the chart to give the “value” as it showed in 2019.

The value of the dollar has declined to $0.04 (4 cents) to what it was compared to the year 1900. Which is why in my math I compare 24 grams of silver to the present day dollar’s value. And when you divide 24 / $0.04 = $600 [Thank you @swanky for catching the multiplication. It needs to be division]. In essence, if you pegged the paper dollar to 24 grams of silver, that silver should be valued at $600. 

Does that clarify the reasons why my math is done that way?

Edited October 17, 2021 by Junior

[Bigmarc]

7 hours ago, swanky said:

Why has no one questioned the maths?

What is going on here? Why would you do this?

What if I did this: 24g ÷ $1 = $24
What does that mean? 24g of silver should have cost $24 in 1900?

You can change the currency on this chart, I think it's more to do with exchange rate. 

https://www.chards.co.uk/gold-price/gold-price-history

 

[HawkHybrid]

12 hours ago, Junior said:

@swanky

So the reason I used 24 grams of silver and $0.04 from the chart are as follows:

24 grams represents how much silver was in a silver dollar in 1900 (and other years as well). So a dollar in 1900 represented the value of 24 grams of silver.

Since the dollar is no longer made out of silver, but rather paper, I relied on the chart to give the “value” as it showed in 2019.

The value of the dollar has declined to $0.04 (4 cents) to what it was compared to the year 1900. Which is why in my math I compare 24 grams of silver to the present day dollar’s value. And when you multiply 24 x $0.04 = $600. In essence, if you pegged the paper dollar to 24 grams of silver, that silver should be valued at $600. 

Does that clarify the reasons why my math is done that way?

 

@swanky is correct, your maths(logic) is wrong.

the fact that it was 24g silver for each $1 coin has nothing to do with the depreciation of the dollar.

(does it make a difference if it was 24g = ~370 grains of silver? ie would it now be 370 grains divide by $0.04 ?)

the maths should be: $1(original coin value) divide by $0.04(current coin value) = 25

ie the paper $1 has depreciated by a multiple of 25, so it takes 25 current $1 to equal an old $1.

thus valuing an old $1 to be $25(current dollars) not $600(current dollars).

(what a huge surprise that when you do the maths correctly, $25 per 24g is not that far off from the current

spot price of $23/toz.)

 

the above is for clarification as it's all a moot point, as the analysis is next to irrelevant to the value of silver.

as I've pointed out it before if you replaced 'silver' with bread in your analysis, all of the dollar depreciation

analysis will be just the same and equally representative. dollar depreciation is not a silver specific thing,

it's a dollar specific thing and affects all items denominated in dollars.

 

HH

Edited October 17, 2021 by HawkHybrid

[sixgun]

The often quoted relative value of the old to new USD is that the new one only have 4% of the purchasing power of the old. i have heard this for a number of years so it is out of date. 
i see on this website it says the old dollar is worth $32.66 in new dollars

https://www.in2013dollars.com/us/inflation/1900?amount=1

That being the case 24g of silver would be $32.66 or 1 troy ounce would equal 31.1/24 x $32.66 = $42.32.

The last time i looked the quoted price of silver was not $42.32 new dollars

And so we kill two birds with one stone - i show they manipulate the rate of price increases and they manipulate the price of silver.