The dollar is presently the world reserve currency so the U.S. is the only country that does not have to pay for its imports in a foreign currency. For this reason, the U.S. can’t go broke in the “usual” sense of the word because it can simply print dollars to pay for its debts. However, if world powers unite to replace the dollar as the reserve currency this longstanding gig will abruptly end.
Most countries are forced to buy dollars before they can import goods or buy a commodity like oil. The United States, however, can simply buy oil without transferring the dollar to another currency to balance any existing exchange value (i.e. surplus or deficit).
Despite unprecedented growth and prosperity over the last century, the U.S. owes more debt today than any other country. So what would happen if the dollar was cast aside as the world reserve currency? If oil was no longer priced in dollars, the cost of oil would SKYROCKET for all Americans. The price of transportation also would soar as would the price of commodities and the food we eat. The effects would be swift and dramatic, causing dire and rippling harm throughout the U.S. economy.
If the dollar was removed as the world reserve currency a punishing melt down would likely be felt, making the 2008 mortgage crisis look like a walk in the park. The devaluation of the dollar would lift commodity prices to epic levels, for crops like soybeans, corn, wheat, sugar, as well as other important commodities like cotton, pork, gold and silver. Moreover, as the demand for the U.S. dollar falls interest rates would climb. As mortgage rates climb imagine the harm to an already weak housing market. And as more dollars are pumped into the economy to offset the effects of overwhelming debt, the product of hyperinflation would lead to more people unwilling to exchange dollars for goods.
The debt situation for many U.S. States is currently so bad that several have already begun to take desperate measures to combat collapse. Nearly every state in the U.S. is teetering on the edge of bankruptcy. State collapses could happen as early as in 2011 or 2012…even without the removal of the dollar as the world’s reserve currency. The truth is, we will never be able to pay back the unprecedented amount of money that the U.S. government has borrowed without tremendous pain and suffering.
China has been steadily reducing their treasury purchases since 2009 as well as their dependency on the dollar, as fewer shops in their country accept U.S. dollar based credit cards. China also limits the amount of dollars that can be converted into Renminbi. India no longer accepts U.S. dollars to be exchanged at primary heritage tourist sites.
So what options are available to protect against the effects of hyperinflation or the removal of the U.S. dollar as the reserve currency? A number of options exist, but acquiring precious metals like gold and silver may be well-suited as they are not attached to the U.S. dollar. Both have done well and silver has actually outperformed gold over the last 100 years. While gold has done well by increasing from $256 to $1400 since 2000 (+447%), silver has increased from $4.02 to $29 an ounce (+621%). Silver and gold have proven to be sound investments to hedge against inflation and based upon the historical ratio, the current price of silver should be around $87. It’s not, today, silver is trading around $28. To hedge against future uncertainty, check out both silver and gold.
Filed under Silver bars, precious metal exchange, silver by on Dec 12th, 2010. Comment. 
Throughout history silver has been considered the “po man’s gold”. Ironically, for the last couple hundred years silver has been treated like the proverbial red headed step child. Let’s take a look at what I mean. For the most part gold took center stage as the preferred reserve “currency” metal in the early eighteen hundreds when the United Kingdom and the United States governments decided to make it the standard for currency, whereas, silver was the standard before that time.
Until recently, not since the 1980’s, was silver met with much investor enthusiasm. I suspect it was in part due to the industrial nature of the commodity. Silver has a broad array of unique industrial applications, significantly more than most precious metals. This fact often unfairly placed it in an artificial trough with other industrial metals like copper. However, the unique applications of silver make it even more valuable from an industrial perspective and silver is of a more limited supply than other common metals such as copper.
Silver reached a high of around $50 an ounce more than 25 years ago (albeit via market manipulation by a specific entity) but fell to under $10 an ounce during the last 2 years. Certainly doesn’t make natural sense does it? How could a precious metal (in limited supply) with growing [robust] industrial uses fall in value so significantly? I’m sure I could find a dozen experts to offer 13 infallible explanations as to the fundamental reasons, but silver appears to be turning the corner again. As of this writing the “spot price” for silver is over $27.3 an ounce while the gold spot price is at $1391.40. Historically speaking, the price ratio of gold to silver was about 20 to 1, or 5% of the price of gold. However, during the last decade the price of silver was often divisible by spreads of 40-70 that of gold. For example, if gold was priced at $1,000 an ounce silver was more likely to be at only $14-$25 an ounce. Based upon past natural markets, at a truer 20 to 1 ratio the silver spot price should be closer to $69 an ounce versus the $27 present value. Despite hovering well below its true value, silver has soared in value to nearly 80% during the last year. Most would consider that an outstanding investment or rate of return.
The current economic situation could be destined for more turbulent times that would position silver for continued increase in value. The consequence of the recent $600 billion addition to existing currency supply by the central Federal Reverse Bank [a non-government entity formed in 1913 by ultra wealthy industry barons working covertly with key government officials/politicians at the time to construct its’ framework] will have a considerable effect on all precious metals, particularly silver. The resulting fall in the dollar’s value will place more upward pressure on silver and other precious metals. Despite the tendency of pundits and the general media to illustrate gold as the primary benefactor of inflation, you would be wise to investigate silver as an investment for the future. In this fragile economic state that exists today, if the dollar is removed as the world currency base or the United States economy takes a fall, a 10 oz bar of silver could be worth more than a 100,000 one dollar bills in a wheelbarrow. Actually, the wheelbarrow could be worth more than the 100,000 worthless bills it carries. Let’s hope nothing collapses, but even so, silver continues to look like a premier investment choice. Buying silver can be the Po man’s gold.
Filed under Silver bars, Uncategorized, precious metal exchange, silver by on Nov 10th, 2010. Comment.
Economic Conditions
Economists have suggested that today’s mounting economic problems reflect a dimension that our country has never experienced. However, in confronting these new challenges, our government and the “non-government” Federal Reserve have decided to print hundreds of billions more dollars despite no additional value to support the influx of such greenbacks, so buying silver has become even more attractive. The inevitable and growing inflationary pressure from the mass printing of dollars positions silver as an unprecedented investing opportunity. Not surprisingly silver, gold and other precious metals will continue to climb as we observe the value of the dollar freefall.
Currently, unlike other precious metals, there is a limited supply of silver and it has vast and significant industrial value. Throughout history nations used silver as their basic unit of monetary value. However, during the 1800s the United Kingdom and United States transitioned from silver to gold as the primary currency. Government officials have since removed us from the gold standard, causing inflation to continuously erode American purchasing power (i.e. the value of the dollar).
Silver Applications
Silver’s many unique industrial applications make it an even more attractive investment choice than gold. Among metals, pure silver has the highest thermal conductivity and one of the highest optical reflectivity characteristics. For this reason it serves extraordinary value in photographic applications. Silver also has the lowest contact resistance of any metal. Silver is used to make solder and brazing alloys and for bactericidal properties and water purification. To a degree, the industrial value of silver can affect or delay its’ upward pricing because most industrial metals are based upon the economic health and demand. In the end, however, silver will ultimately return to once again be the “poor mans” gold.
Ideal Investment Buying Opportunity
The spot price of silver has been climbing for months over inflationary concerns, so don’t wait until the price of silver becomes out of reach. In comparison to gold, silver bullion offers considerably more upward potential, and is far more affordable for the average investor. If you’re seeking a sound investment for the future, you should think seriously about buying silver.
Filed under Silver bars, precious metal exchange, silver by on Nov 5th, 2010. Comment.
Definition of the “Spot Price” for Precious metals
What is a spot price? In simplistic terms the spot price is the market price of a commodity. The spot price reflects market expectations of future price movements for a security or non-perishable commodity (e.g., silver, or gold). The spot price is the amount quoted for immediate settlement on a commodity, a security or a currency. Spot settlement is normally one or two business days from the actual trade date.
Spot prices and future price expectations
Depending on the item being bought or sold (traded), spot pricing can indicate market expectations of future price movements in different ways. For a non-perishable commodity such as silver, the spot price reflects market expectations of future price movements. In theory, the difference between spot and forward prices should be equal to the finance charges, plus any earnings due to the holder of the security, according to the cost of carry model. For example, on a share, the difference in price between the spot and forward is usually accounted for almost entirely by any dividends payable in the period minus the interest payable on the purchase price. Any other price would yield an arbitrage opportunity and riskless profit.
In contrast, a perishable commodity does not allow such arbitrage – the cost of storage is effectively higher than the expected future price of the commodity. As a result, spot prices will reflect current supply and demand, not future price movements. Silver or other precios metals spot prices can therefore be quite volatile and move independently from forward prices. According to the unbiased forward hypothesis, the difference between these prices will equal the expected price change of the commodity over the period.
Here’s a simple illustration or example: if you know apples are cheap in July and will be expensive in January, you still can’t buy them in July and take delivery in January, since they will spoil before you can take advantage of January’s high prices. The July price will basically reflect apple supply and demand in July. The forward price for January will reflect the market’s “expectations” of supply and demand in January. Thus, this example serves to illustrate why July apples are effectively a different commodity from January apples. For additional information I would encourage you to visit the “ehow” site with reputable articles and videos on the silver and gold “spot price”.
Filed under Silver bars, precious metal exchange, silver, spot pricing by on Oct 25th, 2010. Comment.
Important Buying Silver Considerations
If you’re considering buying silver as an investment you may want to take a good look at silver bars, they come in manageable sizes to meet a broad range of unique personal needs. Silver bars are available through local vendors, online providers, and bullion dealers. Additionally, some firms or larger dealers offer precious metals through special buying programs that include low cost custodial services (for storage). Regardless of how you choose to buy silver bars, you should know how to select the right quantity and dealer sources, as well as, how to protect and monitor your investment.
Good quality silver bars come stamped with the weight, the name of the mint and the purity or fineness. And although some silver bar deliveries are encased in a plastic sheathing from the manufacturing process, the existence or lack of protective sheathing technically will not enhance or detract from the investment or trading value (it is more of a psychological factor). Investment quality silver is always .999 fine (i.e., a minimum 99.9% pure silver). Bar sizes can vary from small 1 ounce wafers, 10 oz bars, 100 oz bars, to large 1000 ounce silver bricks. You should become familiar with the various size characteristics and also how the prevailing market price is established before you buy silver bars. Your purchase (cost) will be based on the current “spot” price of silver plus the dealer add-on. The spot price can be found online or you can call a local coin or bullion dealer. Understand that all dealers will add a premium to earn a modest profit and cover their costs.
If you prefer to invest in silver without taking physical possession, you might consider establishing an IRA precious metals account for buying silver bullion. IRAs ( you can call now to buy gold or silver bars from The U.S. Gold Bureau and use an Individual Retirement Account as a tax shelter to safeguard your savings from potential devaluation of the American dollar. There are certain restrictions on what types of precious metals can be included in a qualified IRA account and how they can be held (i.e., in storage vs. taking physical possession) and the U.S. Gold Bureau also offers a free investment kit for getting started. To decide if this would be a better way for you to invest in silver bars, refer to IRS Publication 500 or discuss with your financial advisor.
Plan on appropriate SECURITY measures if you decide to take physical possession. Precious metals represent significant value in a convenient and easily portable form—so not surprisingly, if word gets out that you possess a large quantity of silver you should have appropriate storage and/or security measures in place. Some brokerage and financial firms offer custodial services to store bullion for a nominal service fee. Another option might be to rent a bank safe deposit box. Get a good quality safe and keep the information secret if you choose to personally store your silver coins or bars.
What brand and size of silver bars will fit your situation? Many companies, such as like American Engelhard, Johnson Matthey, Northwest Territorial Mint, and Pan-American Silver offer quality silver bars in varying sizes. After accounting for delivery and dealer add-on costs, smaller bars can be a bit more expensive per ounce but are often better if you prefer to acquire and store small amounts. 100 ounce silver bars and up are better if you are making a large purchase and have appropriate space to properly store and secure your investment, since you will typically realize a price savings. If you opt for the larger bars (1000 ounce bricks @ 68 pounds) they’ll be more difficult to handle and can present more challenge than collecting smaller 1oz coins or 10oz bars if you ever find a need to use the silver for trading or daily transactions.
Seek out a reputable precious metals bullion dealer, preferably but not necessarily with experience. If you plan to take physical possession of small quantity or smaller silver bars, a local coin or bullion dealer may be the ideal option because most will carry the 10oz silver bars and coins in addition to larger and other precious metal bullion. However, there are also many reputable commercial mints or dealers online from which you can buy silver bars directly. This would help to minimize the risk of word getting out in your market that you bought or may have silver in your possession.
Lastly, be sure to keep track of all your silver investment transactions. Maintain complete records of your acquisition and sales of precious metals and when you sell your silver bars, you’ll have what you need to file your tax returns.
Contact your local coin or precious metal dealers to compare prices and take physical possession of silver coins and/or bars.
Filed under Gold Bullion, Silver bars by on Oct 24th, 2010. Comment.
Summation of Gold and Silver relative to dollar currency valuation.
Don’t wait to Start Buying Silver and Gold
Filed under Silver bars, silver by on Oct 21st, 2010. Comment.
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