Safehaven | Significance of Silver as an Investment

March 28, 2008

Significance of Silver as an Investment
by David Morgan

In days gone by silver was not an investment it was money, in fact silver passed through more hands in everyday commerce than any other real money including gold. I state real money to distinguish silver money from modern paper money, which has flooded the world "money" supply the past three decades.

Silver held absolutely no value as an investment when it circulated as money, it served its function perfectly, unit of account, means of payment, and most importantly as a store of value. In 1993 the United States had been off the silver standard for almost thirty years and people forgot how an honest monetary system worked.

You see the need for financial planning and making assumptions on the inflation rate and future economic conditions are for the most part unnecessary when honest money rules the day. Why? Because the common man knows how much saving they will need in the future. The monetary value is the same in ten, twenty, thirty, fifty or hundred years when the monetary system is hones. In actual fact the prices of thing generally move down slightly due to stable money and the ability of people to improve products and service and the natural competitive nature of the free market.

But alas, the facts are the U.S. government cut all ties to silver as money in 1965, and Nixon closed the gold window in 1971 for international gold settlement. At that time neither precious metal was "considered" money officially. Perhaps at this point we might consider both the precious metals to be "investments" because the paper price of the metals was now determined as their value as commodities.

But unique commodities they are because silver and gold have been recognized as wealth in and of themselves for over 5000 years. Traditionally, savings and investment were two separate things, saving was "money" and investment was that money put to some use, either loaned at interest or perhaps used to build some real estate or purchase part of a business (stock investing).

So today most silver investors are not really investors in the traditional sense, they are people with knowledge of history and understanding. They know many important facts that most investors never will learn.

You cannot borrow yourself rich - it might work short term but not forever
Real savings must be in something of intrinsic value since all paper currencies eventually fail. This is a fact pure and simple, yet people believe that some power beyond them will be able to make it different this time.
Watering the milk (printing more "money" than goods or services) never works
Spending beyond your means leads to bankruptcy whether individual, city, state, or even Government.
Printing your way out of this problem creates an even bigger problem, creating more credit that cannot be paid back will not solve the problem (study the Weimer Republic and their hyperinflation).
Eventually people will use their financial "survival" instinct and get rid of dollars by buying anything with lasting value, silver and gold top that list.
As more and more people catch on and move to protect themselves the paper price of both gold and silver move up to levels that most people at this point would find hard to believe.

So, silver is an investment in seeing clearly how the world works and taking action that is being vindicated by the marketplace, but don’t let anyone tell you it is money after all money is not an investment!

David Morgan
Silver-Investor.com

Mr. Morgan has followed the silver market daily for over thirty years. Much of this Web site, www.silver-investor.com, is devoted to education about the precious metals.

Mr. Morgan has been published in The Herald Tribune, Futures magazine, The Gold Newsletter, Resource Consultants, Resource World, Investment Rarities, The Idaho Observer, Barron's, and The Wall Street Journal. Mr. Morgan does weekly Money, Metals and Mining Review for Kitco. He is hosted monthly on Financial Sense with Jim Puplava. Mr. Morgan was published in the Global Investor regarding Ten Rules of Silver Investing, which you can receive for free. His book Get the Skinny on Silver Investing is available on Amazon or the link provided. His private Internet-only newsletter, The Morgan Report, is $129.99 annually. To suscribe to the Morgan Report click here.

Information contained herein has been obtained from sources believed to be reliable, but there is no guarantee as to completeness or accuracy. Because individual investment objectives vary, this Summary should not be construed as advice to meet the particular needs of the reader. Any opinions expressed herein are statements of our judgment as of this date and are subject to change without notice. Any action taken as a result of reading this independent market research is solely the responsibility of the reader. Stone Investment Group is not and does not profess to be a professional investment advisor, and strongly encourages all readers to consult with their own personal financial advisors, attorneys, and accountants before making any investment decision. Stone Investment Group and/or independent consultants or members of their families may have a position in the securities mentioned. Investing and speculation are inherently risky and should not be taken without professional advice. By your act of reading this independent market research letter, you fully and explicitly agree that Stone Investment Group will not be held liable or responsible for any decisions you make regarding any information discussed herein.