[We invited David Morgan, noted silver expert and proprietor of Silver-Investor.com, to provide our enrolled members with periodic updates on silver (which is up nearly 20% from the start of the year). He begins this week with an explanation of the mechanics of how it is bought and sold, and details how the dynamics of the physical and paper markets for the metal differ. — Adam]
Revisiting the Case for Silver
Silver is one of the most compelling commodities to own, solely based on the industrial component and supply-demand fundamentals. Yet this isn’t the most important reason to invest in the metal; the monetary aspect is what makes it imperative, given that the fiat money house of cards could come crumbling down, bringing the entire global system to its knees. Along with gold, silver has been the preferred money of choice for thousands of years, as chosen by the market. It is not the barbarous relic that many who fail to understand honest money proclaim; rather, it possesses characteristics that the market finds the most ideal.
It is worth noting what money is and what purpose it serves: first as a medium of exchange, then a unit of account, and finally a store of value. Gold and silver are malleable, rare, portable, divisible, and durable, all characteristics which the market has deemed necessary for something to serve as money. These, coupled with the fact that commodities are homogeneous, make the two precious metals superior to any others as money in both the classic and historical sense.
This is rather obvious to those with the ability to either study monetary history or stop for thoughtful reflection about why these are necessary characteristics, but the subject is still grossly misunderstood by society. Silver can only be inflated to the degree that new silver is mined. Silver coins can be taken anywhere in the world to engage in an exchange, just as gold can.
Fiat money, on the other hand, has failed time and time again, as the inherent nature of government is to usurp as much power as possible to achieve its own agenda without consideration of the consequence. The first step to taking freedom away from the people is to have monopoly control of the “mint.” Once this is accomplished, the government garners ever-growing influence over society and, as history has shown us countless times, an eventual collapse of the currency.
by tomccoy1