What is the Value of Silver? Part II

[Junior]

Since the first post I started on silver was hit with mixed signals, emotions, and vastly varying opinions, I figured you might give me one last chance at redemption.

What is the value of silver? How does one know what to value silver at in monetary terms?

I’m looking for hard facts on this one. I need anyone’s help who can give me concrete evidence. Let’s compare now to 100 years ago (1921). You will need to use silver’s price in your country’s currency to assist me.

How many ounces of silver did it take to buy the average family home in 1921? How many ounces of silver buys the average family home now?

What was the average livable wage in ounces of silver in 1921? What is it now?

How many ounces of silver bought you the average car in 1921 (assuming you rather a car over a horse). How many ounces of silver buys the average car now?

How much food could you buy with one ounce of silver in 1921? How much food can you buy now with an ounce of silver?

Of course each question can bring about more confusion like “Well an average home in 1921 is not the same as an average home now. How can you compare the two?” To that I say, take a stab at it! Look for logic to assist in answering these questions. And when all else fails, at least have your thoughts written out with supporting details.

I am truly curious on this and I will graciously accept your thoughts and opinions.

- Jordan Graveline

[swanky]

I like this example: Back in 1900 in London, England, 10 shillings would buy weekly groceries for one member of a wealthy household (this is documented in diary records). That's was half of £1 sterling then, same as half a gold sovereign today. Today that gold is worth £150 ($110), definitely enough for a luxurious weekly shop. So at least gold has maintained purchasing power.

But in those 10 shillings is 1.68oz of silver, at today's market price that would get just £28 ($21), barely enough for a minimal weekly shop. If silver was widely adopted as everyday money like in 1900, the nominal value in £ or $ should be 5x.

Edited October 18, 2021 by swanky

[Martlet]

Questions about what you can buy with 1921 silver are potentially loaded. Here's something from US publication Country Living https://www.countryliving.com/life/g33398396/what-things-cost-100-years-ago/?slide=12

Its a mixed bag.  Property have increased a great deal, while basics foodstuffs cheaper.  Notable that a car is a lot more expensive now, though if you were to look at one from China i suspect it may be closer price. Thats because a large amount of costs in developed world are labour, pensions and regulatory costs. 

So to silver today, its worth $23.20 at time of writing.  The cost of production, energy, transportation, labour, machinery, leases, etc have all changed a great deal in 100 years.  Simple comparisons are flawed and open to manipulation if you want to make a point. 

Edited October 18, 2021 by Martlet

[Junior]

@Martlet But the comparison is not for me to make a point, it is for you to attempt it. If your point is that there is too much manipulation to accurately make a comparison, I accept your position.

[Junior]

@swanky Thank you for your example. A good place to start when viewing these questions in this imperfect scenario 🙂

[Bigmarc]

https://www.hillarys.co.uk/back-in-my-day/

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

According to chards (your biggest fan) the price of silver was 17p per Oz. 

Today's price £17.00

1921.                               2021

house £320 (1882oz)...£250,000 (14705oz)

car £270 (1558oz).........£18000 (1058oz)

food £0.59 (3.5oz).........£5000 (294 Oz)

wage £178 (1047oz)......£31000 (1823oz)

food prices seem way off so not sure about that one.

 

 

 

 

 

[Martlet]

15 minutes ago, Bigmarc said:

https://www.hillarys.co.uk/back-in-my-day/

That's a great link, well presented data. Not sure where your got 2021 numbers from.  When i ran, food gave £23, and looking at the break down i'd say thats Waitrose prices (or even Harrods).  For the per ounce of silver, 1921 would have been 3.1 oz for the basket, 2021 would be 1.4 ounces. Purchasing power of silver in the supermarket has doubled in 100 years. 

Interesting one is petrol, usually see this as driver of inflation.  Both the US example and this UK one show a large fall in prices of petrol, once you account for taxes applied today that weren't then. 

Edited October 18, 2021 by Martlet

[Bigmarc]

1 hour ago, Martlet said:

That's a great link, well presented data. Not sure where your got 2021 numbers from.  When i ran, food gave £23, and looking at the break down i'd say thats Waitrose prices (or even Harrods).  For the per ounce of silver, 1921 would have been 3.1 oz for the basket, 2021 would be 1.4 ounces. Purchasing power of silver in the supermarket has doubled in 100 years. 

Interesting one is petrol, usually see this as driver of inflation.  Both the US example and this UK one show a large fall in prices of petrol, once you account for taxes applied today that weren't then. 

Ahhh per basket, thought it seemed off. Didn't look any further. I also wondered about the spot price as it was a pre decimal era.

 

Edited October 18, 2021 by Bigmarc
More info

[sellerstacker]

2 hours ago, swanky said:

I like this example: Back in 1900 in London, England, 10 shillings would buy weekly groceries for one member of a wealthy household (this is documented in diary records). That's was half of £1 sterling then, same as half a gold sovereign today. Today that gold is worth £150 ($110), definitely enough for a luxurious weekly shop. So at least gold has maintained purchasing power.

But in those 10 shillings is 1.68oz of silver, at today's market price that would get just £28 ($21), barely enough for a minimal weekly shop. If silver was widely adopted as everyday money like in 1900, the nominal value in £ or $ should be 5x.

I would agree with this but I did not know the dollar had appreciated so much against the pound 🙂

Also, based on the above 5x silver is realistic IMO. Not to forget Silver's industrial applications. One thing we can't forget is that a lot of people will feel that 1/2 sov of gold at £150 may be a bit overpriced.

In the current climate, 4 grams of gold at £150 and £65 an oz of silver is fair value in my humble opinion (now I am going to get called a goldbug I suppose). That said most of us on this forum do recognise that precious metals are manipulated and suppressed, which makes most of us goldbugs anyway 🙂

[Junior]

5 hours ago, Bigmarc said:

https://www.hillarys.co.uk/back-in-my-day/

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

According to chards (your biggest fan) the price of silver was 17p per Oz. 

Today's price £17.00

1921.                               2021

house £320 (1882oz)...£250,000 (14705oz)

car £270 (1558oz).........£18000 (1058oz)

food £0.59 (3.5oz).........£5000 (294 Oz)

wage £178 (1047oz)......£31000 (1823oz)

food prices seem way off so not sure about that one.

 

 

 

 

 

😆🤣😂😆🤣😂😆🤣😂😆🤣😂😆🤣😂😆🤣😂

Edited October 18, 2021 by Junior

[Arcadian]

On 18/10/2021 at 17:56, sellerstacker said:

I would agree with this but I did not know the dollar had appreciated so much against the pound 🙂

Also, based on the above 5x silver is realistic IMO. Not to forget Silver's industrial applications. One thing we can't forget is that a lot of people will feel that 1/2 sov of gold at £150 may be a bit overpriced.

In the current climate, 4 grams of gold at £150 and £65 an oz of silver is fair value in my humble opinion (now I am going to get called a goldbug I suppose). That said most of us on this forum do recognise that precious metals are manipulated and suppressed, which makes most of us goldbugs anyway 🙂

When I was a kid (pre-decimal) half a crown was also known as half a dollar, so a dollar would have been the equivalent of 25p.

[StackemHigh]

In a perfect world silve is worth spot + design = price. The gothic crown was a great example of an old design doing good as the rm hsan't a clue!!!! Churn out a classic with all of the disasters that RM customers deserve and the good ones make a fortune. The rest wish!!! New terrible ain't worth terrible really!!!!!!!!!!!!!!!!!!!!!!

In reality silver is only spot plus 1 or 2 % on a private sale.

 

[Junior]

Too bad the silver/gold ratio isn’t back to its historical/mined ratio. 8-20 ounces of silver to 1 of gold looking pretty sweet in my mind. Truly closer to 8 by most silver miners’ opinions. 

[CANV]

Food production has got massively more efficient , so whilst essential, it’s own huge move to ‘cheapness’ makes it a measure that has moved too much. 
you could argue the same with property/land. As the supply of leverage to buy it has expanded massively.   Neither of these effect silver 

it’s more like what is the true price of everything else compared to sliver which does the square root of eff all.   

[Centauri167]

All those people who stay saying the price of Pm's are so manipulated ... Just look at the gold price the last 10 years, it went up with more than 50%, silver did almost nothing. The market makes the price, in every market there is some manipulation but at the end the demand and the availability makes the price.

[modofantasma]

Interested in the topic going to read back the thread over the week. I found this blog interesting whilst it's not exactly your original question I think it's useful to plot further 

https://alan001946.wordpress.com/tag/half-a-crown/

[Bigmarc]

3 hours ago, Centauri167 said:

All those people who stay saying the price of Pm's are so manipulated ... Just look at the gold price the last 10 years, it went up with more than 50%, silver did almost nothing. The market makes the price, in every market there is some manipulation but at the end the demand and the availability makes the price.

I always think manipulated is a bit of a strong word but when you compare silver to other commodities such as oil, coffee and copper I can understand why others feel it is being suppressed. As for why? I dont really know, maybe something to do with the paper market.

[Centauri167]

15 minutes ago, Bigmarc said:

I always think manipulated is a bit of a strong word but when you compare silver to other commodities such as oil, coffee and copper I can understand why others feel it is being suppressed. As for why? I dont really know, maybe something to do with the paper market.

Those other commodities are traded also on "paper" markets, you should check how many times a barrel of oil is traded before it's get delivered at a refinery ...

 

[HawkHybrid]

8 hours ago, Junior said:

Too bad the silver/gold ratio isn’t back to its historical/mined ratio. 8-20 ounces of silver to 1 of gold looking pretty sweet in my mind. Truly closer to 8 by most silver miners’ opinions. 

I can't believe people still fall for the 'silver miners opinion that the silver price is too low' charade.

how is it not glaringly obvious that silver miners(who's business is to sell you silver) will only ever

have a one sided view that silver is under priced?

when was the last time you told your boss that they are paying you too much for your labour?

how about each year when you tell them that you deserve a pay rise for the work that you do?

a gsr of below 20:1 is a gimmick that silver pumpers tell potential buyers of silver. it's a sales

tactic that means nothing. read up on it, it was centuries ago when silver was deemed valuable

enough to be valued at it's natural in ground ratio to gold. spoiler, miners 'will not' as opposed to

'can not' mine more than ~10 toz of silver for every toz of gold. reason, they simply can't find

enough buyers for the additional silver that is mined.

 

HH

[HawkHybrid]

51 minutes ago, Bigmarc said:

I always think manipulated is a bit of a strong word but when you compare silver to other commodities such as oil, coffee and copper I can understand why others feel it is being suppressed. As for why? I dont really know, maybe something to do with the paper market.

the silver price is not being suppressed.

it's price is only rising long term in line with inflation as opposed to other commodities whose price exceeds inflation.

silver is falling out of favour. just as platinum has fallen out of favour in recent years versus gold. why would anyone

bet big on platinum if catalytic converters have an uncertain future? similarly why would anyone bet big on silver if

electronic power delivery, traditional photography, etc has an uncertain future? massive technological advances have

been made in computers, which reduces the need for silver, directly or indirectly. eg a solar panel powering a 45W

laptop is going to be physically bigger and need more silver than a much smaller solar panel that is required to power

a 25W laptop. over the generations, modern day 25W laptops are equal or more powerful/useful than the older 45W

laptops that they replace.

 

HH

[Centauri167]

@HawkHybrid: I could not say it better ! You have a clear view on the situation concerning silver.

[Junior]

Open thought to ponder for all on this thread:

If you believe silver is not manipulated, then why do you invest in it?

An investment is suppose to be something you hope will grow in time and gain more momentum faster than inflation can take it away. If you believe silver is useful and that it is currently priced fairly i.e. there is no shortage, the paper markets are not over leveraged, and the price is not suppressed, then why are you in it?

Would it not be a losing investment if you put 10% of your portfolio in silver only to see it go sideways for a decade, two decades, or three, while inflation robs the investment of the original purchase price.

Who here is on “the silver forum” because they think silver will lose in the end?

Your response does not need to be directed to me, I will/do read all responses anyway. And I’m not trying to be malicious. I’m legitimately asking why are you in silver? 

[Bigmarc]

4 hours ago, Centauri167 said:

Those other commodities are traded also on "paper" markets, you should check how many times a barrel of oil is traded before it's get delivered at a refinery ...

 

That's my point. A quick Google of the top ten commodities traded and just seems that silver should behave like the rest. But it doesn't, it just tracks inflation. I suppose it depends which was you look at it. Is it a industrial commodity linked to copper and iron or is it a store of value linked to gold. I personally believe it's stuck in a transition between one and the other. 

[Junior]

3 hours ago, HawkHybrid said:

it's price is only rising long term in line with inflation as opposed to other commodities whose price exceeds inflation.

Just to argue this point: silver averaged $4.03 USD in December 1991. According to US data stats, based on the CPI (Consumer Price Index) i.e. the inflation benchmark, silver should only be $8.13 USD present day (December 2021). Arguing of course that if silver is above this price, it is ahead of inflation. Which would suggest @HawkHybrid is perhaps correct in the assumption that silver’s rise is with inflation (approximately).

However, using shadow stats by John Williams (who used to work with US inflation numbers back before the CPI had been changed by dropping or substituting certain commodities), he comes up with a different number. John uses the original CPI which had a more diverse basket of goods and commodities that would give a more accurate reflection on the inflation numbers. His original formula shows that silver priced at $4.03 USD in December of 1991 should be valued closer to $71.77 USD December 2021. Which would now suggest that @HawkHybrid is incorrect in the assumption that silver’s rise is in-line with inflation. 
 

Silver’s price currently as I write this is $22.37 USD. By the new CPI benchmark, it is ahead of inflation. But by the old benchmark, it is not. Which one is correct? Or more importantly, why did they have to shrink/change/substitute the old CPI basket of goods and commodities?

[Bigmarc]

1 hour ago, Junior said:

If you believe silver is useful and that it is currently priced fairly i.e. there is no shortage, the paper markets are not over leveraged, and the price is not suppressed, then why are you in it?

Safety. 

I have a couple of bits of art, some trading cards with pictures of footballers, some signed prints. All have value and all made of paper. My metals collection is probably the only thing that has real value "in its raw form". If I want to make money, there are 101 other things to do.