What is the Value of Silver?

[SidS]

2 hours ago, HawkHybrid said:

 

@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

What would be interesting, for me at least as I always like to take the devil's advocate approach, is what is the value of paper? Specifically the paper used to print dollar bills.

What was the intrinsic value of the paper in a $1 bill when printed in 1900, comparative to the value of paper in a modern $1 bill? Has paper risen, or fallen in value? If it has fallen is it roughly in line with how silver has performed, or completely different?

[HawkHybrid]

1 hour ago, sixgun said:

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

that's because silver is a rubbish store of value that failed to hold it's 2011 price of ~$50.

it's not that silver never reaches it's 1900 inflation adjusted price, it's that there are no (longer term substantial volume) buyers

at that price. not being able to find volume buyers at a spot price of $40+ means the silver price should fall until you can find

volume buyers totalling each years annual physical production. this is not manipulation, it's market price discovery.

 

HH

[HawkHybrid]

57 minutes ago, SidS said:

What would be interesting, for me at least as I always like to take the devil's advocate approach, is what is the value of paper? Specifically the paper used to print dollar bills.

What was the intrinsic value of the paper in a $1 bill when printed in 1900, comparative to the value of paper in a modern $1 bill? Has paper risen, or fallen in value? If it has fallen is it roughly in line with how silver has performed, or completely different?

missing the bigger picture?

in volume the physical cost of a $1 bill might cost less than 5 cents.

so you are focusing all your efforts on 5% of an items valuation because you are obsessed with the

outdated idea of physical intrinsic value. when instead you could research, debate and widen your

understanding of what makes the 95% valuation of currency what it is. knowledge and experience

don't have a physical intrinsic form but they can be extremely valuable.

 

HH

[Junior]

I am actually really happy that there are so many different opinions on this topic! Now I want to throw this into the mix. I can see how people don’t like my math on the value of silver being what I calculated it as ($600). I understand the connection between silver and people seeing it at 35ish dollars per ounce as more in line with how the price is today.

However, what if we severed the link between paper and silver and instead focused on the link between gold and silver?

Then we have a ratio of 16:1 (maybe 15:1) silver to gold in the year 1900, but that ratio is far stretched now. Why then is the silver price no longer a 16th or 15th of the price of gold? Why are we not looking at a price of silver closer to $110 or $118 per ounce which would correspond to a 16:1 or 15:1 ratio while gold sits at $1774 present time?

Certainly we haven’t found much more silver than gold deposits over the last 120 years. Can someone clarify this for us all?

[Bigmarc]

16 minutes ago, Junior said:

I am actually really happy that there are so many different opinions on this topic! Now I want to throw this into the mix. I can see how people don’t like my math on the value of silver being what I calculated it as ($600). I understand the connection between silver and people seeing it at 35ish dollars per ounce as more in line with how the price is today.

However, what if we severed the link between paper and silver and instead focused on the link between gold and silver?

Then we have a ratio of 16:1 (maybe 15:1) silver to gold in the year 1900, but that ratio is far stretched now. Why then is the silver price no longer a 16th or 15th of the price of gold? Why are we not looking at a price of silver closer to $110 or $118 per ounce which would correspond to a 16:1 or 15:1 ratio while gold sits at $1774 present time?

Certainly we haven’t found much more silver than gold deposits over the last 120 years. Can someone clarify this for us all?

15 to 1 was the only time it was really manipulated in my opinion. Like I said before, sir Isaac Newton valued it at 4.25 lb of silver to one Oz of gold in 1710 it stayed like that for 200 years. Back then silver was currency. It's pointless comparing it to gold now, it's industrial. Try comparing it to copper, it's used in the same application. One of the main reasons I am in silver is because I see it as a industrial metal alongside, copper, aluminium, palladium and platinum. Each of these metals have increased in value 100s if not 1000s of percent over time. Silver will have its day once it gets past the store of value label, that was a long time ago before electronics, before solar panels and I very much doubt banks hold it in their vaults anymore. When was the last time you have known Someone to buy a new silver dinner set? I don't even think it's viewed by the wealthy as must have anymore. I have read somewhere that between 2028 and 2033 we will start running out of mined silver. Unless they start mining under the sea, we will have our day.

[sixgun]

i hear it said that the ratio of silver : gold coming out of the ground is something like 8 : 1. Silver is more useful than gold.

The price should depend on how much it costs to mine and refine the silver, how much it costs to develop mines. The main cost of production is energy - the cost of energy is going up. Unless there is some sort of invention that makes energy cheap, the cost will keep going up and quite rapidly over the coming years. 

People forget what goes into mining and refining. The days of cheap energy are over unless something turns up.
Silver and gold are stores of energy - they needed a big investment in energy to get that 1 oz coin in your hand. 
Gold is being bought up by many central banks - Silver is a vital component in the modern world  - the physical market will overwhelm the paper market at some point.

At the moment, especially silver is on offer. Don't complain until you have all the silver you want / need.

Edited October 17, 2021 by sixgun

[SidS]

1 hour ago, HawkHybrid said:

missing the bigger picture?

in volume the physical cost of a $1 bill might cost less than 5 cents.

so you are focusing all your efforts on 5% of an items valuation because you are obsessed with the

outdated idea of physical intrinsic value. when instead you could research, debate and widen your

understanding of what makes the 95% valuation of currency what it is. knowledge and experience

don't have a physical intrinsic form but they can be extremely valuable.

 

HH

Not really. We clearly view the world very differently. I'm afraid intrinsic value actually means something to me, be that silver, gold, chocolate or other stuff I like. If I perceive something to have value (to me) then I will aspire to own it, have it or want it. If I perceive something to have little value to me (modern digital appliances, such as iPhones and the like) then I take no interest.

To you this is outdated, to me it's important. It's not that either of us is wrong, we just approach the world with different values.

[Minimalist]

37 minutes ago, sixgun said:

The main cost of production is energy - the cost of energy is going up.

This seems to be the case with everything though - stockmarket (oil-dollar), futures (energy production) etc. The cost of energy isnt marked in with metals because of the manipulation/suppression.

[Minimalist]

2 hours ago, HawkHybrid said:

you are obsessed with the

outdated idea of physical intrinsic value

If you dont have metals in your hand you dont own it. Stop pushing the propaganda of paper/securities/ponzi

[Minimalist]

30 minutes ago, SidS said:

we just approach the world with different values.

It isnt about values though is it? Reality is that if you dont have metals in your hand/possession then you simply dont own it. A "claim" on paper doesnt mean you own it because it requires a process of metaphysics - the physical delivery of the metal into your hands.

[HawkHybrid]

23 minutes ago, sixgun said:

Silver is more useful than gold.

gold has the most uses of any metal known to man.

1 hour ago, Junior said:

Then we have a ratio of 16:1 (maybe 15:1) silver to gold in the year 1900, but that ratio is far stretched now. Why then is the silver price no longer a 16th or 15th of the price of gold? Why are we not looking at a price of silver closer to $110 or $118 per ounce which would correspond to a 16:1 or 15:1 ratio while gold sits at $1774 present time?

in the early 1900's the then coinage laws dictated that a sovereign is equal in value to 20 shillings.

by silver and gold coinage weight this made the gsr ~16:1. however,

£1 sterling literally represented one pound(slightly different to the current day lb) of sterling(92.5%) silver by weight.

using this, by bullion weight of measurement the gsr at that time would be ~48:1

(think of it as why a 1 toz silver britannia is £2, but a £20(£20 for £20 coin) is half a toz? the coinage £ to silver weight doesn't

actually represent the true £price/toz)

you need to go back a lot earlier before silver was actually trading 16:1 by weight.

1 hour ago, Junior said:

Certainly we haven’t found much more silver than gold deposits over the last 120 years. Can someone clarify this for us all?

in ground silver versus gold is estimated to be ~16:1

the demand in silver over the last 120 years has not kept up with it's in ground rarity. we are currently only mining ~9 toz of silver

for every toz of gold being mined. there is a lot of un-mined silver waiting for buyers to turn up at the current price. this explains

why the current gsr is above the ~48:1 that was in the early 1900's.

 

HH

[sixgun]

 

[sixgun]

51 minutes ago, HawkHybrid said:

gold has the most uses of any metal known to man.

HH

More uses doesn't mean something is more useful.

 

51 minutes ago, HawkHybrid said:

in ground silver versus gold is estimated to be ~16:1

HH

  

1 hour ago, sixgun said:

i hear it said that the ratio of silver : gold coming out of the ground is something like 8 : 1.

Edited October 17, 2021 by sixgun

[Junior]

@Bigmarc So if silver went from just being money in the 1900s (and before) to now being industrial due to all these revolutionary uses that our modern society has come up with, then wouldn’t more uses other than money drive up the price?

Realistically, silver was just money in the 1900s and valued at 16:1 or 15:1 to gold. But now, it has way more uses than in the early 1900s. Doesn’t that make it more valuable in modern times?

Why has silver’s value not risen with more important/detrimental uses?

[Bigmarc]

2 minutes ago, Junior said:

Why has silver’s value not risen with more important/detrimental uses?

Exactly, this is why I am in it. We all have different views on the importance of silver but we wouldn't be a member of "the silver forum" otherwise. To me, silver has a unfortunate history where it was once a way counties could pay their soldiers to fight wars. It needed to have a value otherwise they wouldn't do it. Countries would buy their ships with gold and pay their men with silver. Before sterling the money men use to dilute the silver down and soldiers refused to fight (this is where sterling come from, a form of minimum dilution. Silver can't seem to loose this part of its history. Copper has been around just as long, used to make tools, jewelry and then went into alloys. It's only ever been traded as a commodity and still is today. The market dictated its value, which is why it's seeing all time highs today. So to answer your question, unfortunately gold was once pegged to the dollar and silver was pegged to gold and never set free. It has a history that is hard to shake off. Another way to look at it is if silver wasn't used to pay people and stood on that same footing as copper (as a commodity). What would the price had been? Also today if governments tried to pay us in silver what would the price be? (Probably as low as possible). 

[LawrenceChard]

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

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?

I was thinking of contributing to this thread.

I noticed a number of comments which sounded like their authors were confused or unclear, but there were so many, and it would have taken so much time, that I switched off, and thought it better to save my time and effort for something important and constructive.

However I then realised that much of the confusion is caused by the very first post in the topic thread. So I started to analyse the first post, one statement, sentence or line at a time. I didn't get far:

"What is the Value of Silver?"

In terms of what? monetary value in USD, usefulness as an industrial metal, in medicine? The question itself as posed is meaningless, at least without making a few guesses or presumptions.

"By: Jordan Graveline"

WTF is Jordan Graveline? Is he @Junior, or somebody else. Which Jordan Graveline?, what are his qualifications? When and where did Jordan Graveline publish this article? Give us a few clues!. Don't treat your audience with such contempt!

"What is the value of silver? To answer this question, we must first ask ourselves: What is the value of a dollar?"

Why?

What has the dollar got to do with it?

Are you examining the value of silver in terms of "the dollar"? If so, why did you not state this at the start?

Also, which dollar are you talking about. You are based in Canada, so are you talking about the Canadian Dollar, the US Dollar, the Zimbabwean Dollar, or one of the other few dozen dollars? Your readers shoud not have to guess or presums which dollar you are talking about!

Do you even know which dollar you or Jordan Graveline is talking about? Does he know? Are you sure? JHow? Did you understand his article? Did you analyse it? did you question any of it? I can think of many more questions on this point, but let's move on...

"This question has plagued the modern investor, tax payer, and overall general consumer for many years."

Has it really? Are you sure? What evidence is there for any of the three assertions you or the original author makes.

It hasn't plagued me.

Has it plagued anybody else reading this?

Why parrot and quote a sweeping assertion with no evidence?

"I will attempt to show what I believe the value of silver is by using the declining purchasing power of the US dollar."

Purchasing power is respect of what? Silver? Wages? Corn? 

Why not gold?

At this point I was in danger of losing the will to live.

There is absolutely no point me wasting my time reading such a pile of garbage in a vain attempt to try to understand it, when I suspect its original author, and the OP, do not understand it. If any other TSF member understands it, or thinks they do, you can always let me know, although I might not believe you.

I think I will go and read about Fermat's Last Theorem. It may be a challenging read, but at least it will be stated in clear terms without any sweeping assertions, and without requiring any guesswork or assumption by the reader.

Sorry if any of this sounds harsh or overcritical, especially as you are a newbie, and say you are young (or was that Jordan Graveline?).

My questions are constructive. If you work your way through them, find the answers, understand why I asked, then you will have gained a great deal of wisdom.

... No charge!...

😎

 

[HawkHybrid]

2 hours ago, sixgun said:

More uses doesn't mean something is more useful.

more uses does not make it more useful.

it's only more useful if you say it is so because you speak gospel without any need for reason.

why do I think you are constantly spouting rubbish?

 

HH

[HawkHybrid]

2 hours ago, sixgun said:

 

what rubbish.

as I've said before currency inflation does not specifically affect only silver.

currency inflation affects everything that in denominated in that specific currency.

 

why choose silver to protect you against currency inflation when you can choose any other currency inflation hedge?

so far over the last 120 years it's done an appalling job keeping up with inflation and if a crisis hits like in 2020,

the silver price crashes.

 

HH

[ArgentSmith]

Bitcoin has the best track record as an inflation hedge

[Bigmarc]

8 minutes ago, ArgentSmith said:

Bitcoin has the best track record as an inflation hedge

12 years is not much of a track record in bud and in those 12 years I'm not sure how much inflation there has been. 

[LawrenceChard]

18 minutes ago, ArgentSmith said:

Bitcoin has the best track record as an inflation hedge

Wasn't that also true for Worldcom some years ago?  😎

[Junior]

@LawrenceChard To answer a few questions, yes, I am Jordan Graveline. My nickname has always been Junior. So I went with that as my screen name.

I have no doctrine in the study of money or economics, but I am an enthusiast constantly looking for answers.

Perhaps my writing style raises more questions for any readers, but critics are always welcome. Simply helps me become a better writer and helps me get my thoughts out more clearly.

I was using the US dollar which I was not clear on until a bit further down in the article. But for readers not in the US or Canada, can you insert your own country’s currency and arrive at the same article asking the same questions? Has not every currency fallen in respect to silver, gold, oil, bread, steak, fish, or anything else?

Maybe the currency doesn’t matter. It’s the commodity I’m certainly interested in and I take pleasure in gathering opinions that can help me further my understanding.

Thank you all for a bit of everything. History, charts, personal opinions, professional opinions, videos, etc…. Everything helps me form and further my thoughts.

[HerefordBullyun]

[swanky]

 Forgot about this thread, need to follow-up because this point is critical:

On 17/10/2021 at 00:00, Junior said:

And when you multiply 24 x $0.04 = $600

You just repeated yourself. And made maths worse, did you mean divide? I will assume that.

I will try another way - the maths is fundamentally broken, it's not a matter of dislike. Let's analyse the left-hand side: 24g ÷ $0.04 = ?  That means the right value must have the unit of g/$ - grams-per-$ - but you just put $ which is wrong.

To get a $ value on right side, and starting with 24g on the left, then the divisor has to have unit g/$ - grams-per-$. Then maths works out - g ÷ g/$ = $.

Edited October 17, 2021 by swanky
Fix Junior's typo, and fix last line

[Bigmarc]

1 hour ago, Junior said:

@LawrenceChard To answer a few questions, yes, I am Jordan Graveline. My nickname has always been Junior. So I went with that as my screen name.

I have no doctrine in the study of money or economics, but I am an enthusiast constantly looking for answers.

Perhaps my writing style raises more questions for any readers, but critics are always welcome. Simply helps me become a better writer and helps me get my thoughts out more clearly.

I was using the US dollar which I was not clear on until a bit further down in the article. But for readers not in the US or Canada, can you insert your own country’s currency and arrive at the same article asking the same questions? Has not every currency fallen in respect to silver, gold, oil, bread, steak, fish, or anything else?

Maybe the currency doesn’t matter. It’s the commodity I’m certainly interested in and I take pleasure in gathering opinions that can help me further my understanding.

Thank you all for a bit of everything. History, charts, personal opinions, professional opinions, videos, etc…. Everything helps me form and further my thoughts.

Good man, thoughts and opinions is what makes this forum tick. Not all of us wish to read 3000 posts of the three graces.