Silver: Good As Gold
Douglas V. Gnazzo
November 14, 2005
"For all nations
have drunk the wine of her impure passion,
and the kings of the earth have committed fornication with her,
and
the merchants of the earth have grown rich with the wealth of
her wantonness."
Introduction
Silver, the mysterious white
metal. No one seems quite sure what to make of it. Is it a commodity?
Is it an industrial metal? Is it a monetary metal?
Is silver undervalued, or overvalued,
in comparison to its supply and demand? Is silver in a bull market,
or a bear market rally? Will silver perform as well as gold,
or will gold outperform?
Questions, questions - so many
questions, yet perhaps the most important question hasn't yet
been asked.
Bimetallism
Recently an article on bimetallism
made the following statement:
"We do learn that the
U.S. operated until then under the bimetallic standard established
by the Constitution in 1789." [1]
The Constitution [2]
and the Coinage Act of 1792 [3] both set a silver
standard, not a bimetallic standard. The silver standard has
never been changed by a constitutional amendment, and therefore
still stands as law.
The Dollar
The dollar was defined as a
specific weight and fineness of silver: 371.25 grains of pure
silver.
Furthermore, the dollar was
stated to be the unit of account of the United States, according
to the above definition as a specific weight of silver, commonly
referred to as the silver dollar, i.e. 371.25 grains of pure
silver. [4]
The proportional value of gold
to silver in all coins, which by law is current as money within
the United States, was fixed at fifteen to one, according to
quantity in weight, of pure gold or pure silver. [5]
The standard of our monetary
system is silver, and the circulating currency is stated to be
silver and gold coin. [6]
Reasons
The previously mentioned article
on bimetallism also states the following:
"In the above paragraph
we see the statement: 'because silver, the undervalued currency
under the bimetallic standard established by the Constitution
in 1789, had been driven out of the U.S. by the mid-1850s and
the Coinage Act of 1873 ("the Crime of '73") had demonetized
the standard silver coin.' Although it is suggested that silver
left the U.S. because it was undervalued, we are not here told
why 'silver had been driven out of the U.S.' " [7]
We have previously covered
the exact reasons as to both why and how silver was driven out
of the U.S. in Honest Money, Part II: Silver Standard with a
Bimetallic Coinage System:
"According to statute,
the United States was on the silver standard. However, as we
have seen, Congress also decreed that gold coins were to be minted
and circulated along side of silver coins, and fixed the statutory
valuation of silver to gold at 15 to 1.
In other words, Congress had
"fixed" the exchange rate between the two metals. Thus,
the United States was on a silver standard, but it was also on
a bimetallic system of coinage, that included gold to be circulated
at a "fixed" exchange rate to the silver standard.
Such a system can present problems,
however, as the free market exchange rate between gold and silver
can diverge from the statutory or legally fixed exchange rate
- necessitating the adjustment of the other metals legal value
up or down to conform to the statutory fixed rate of exchange.
In other words, Congress was
trying to make two different types of metal coinage equal in
purchasing power. This was not a good idea and would have been
better left undone.
This also raises the very interesting
question as to whether or not this "fixing" was an
accidental mistake, by very learned men, well acquainted with
this exact monetary issue, as the discussions of such are in
the Congressional records.
Past historical monetary writings
address the issue in detail. Perhaps such was not a mistake,
but was very much intended and planned, although unknown by most
but a select few. We will trust the reader with making such determinations,
as the following discussions occasion." [8]
The reader is directed to Honest
Money for a more detailed explanation then can be given here,
as footnoted and linked below. Because of the grave importance
of the subject, we will offer another quote from the paper to
show the reasons as to how and why silver was manipulated, much
as it still is today:
"This also goes to the
point that the legal intrinsic value of the dollar is the physical
amount of silver or gold as measured against the "standard,"
which in the case of the U.S. dollar is a specific weight of
silver.
However, the economic value
or purchasing power of the medium of exchange is not "intrinsic,"
as it is not based on an objective determination or standard,
but on the subjective valuations of the market participants.
Some refer to this as the subjective theory of value or the theory
of declining marginal utility.
It is this difference between
the fixed legal tender values of the precious metals, versus
the fluctuating marketplace values, which seals the fate of a
bimetallic system to self-destruction.
On one side of the ledger are
the fixed legal tender values that do not change, and then on
the other side of the ledger are the marketplace values, where
the metals are allowed to float in value to one another.
This is not how free markets
work. Such are the workings of a two-tiered market - a contrived
and rigged market. There is a juristic set of values, which are
different from the economic or marketplace values. These different
values can be exploited for considerable profit.
Although in the strict technical
and statutory sense, the standard was silver and the system of
coinage was bimetallic, in all practical applications, and according
to the prevailing "populist" views, the system was
a duo metallic system that reciprocally recognized and exchanged
one metal for the other.
As will be shown, however,
the system fluctuated back and forth from one metal to the other,
and with good cause - the purposefully contrived reasons of power
and influence: all in the pursuit of profit and gain." [9]
Fixed Markets
Lastly, we mention Gresham's
Law, which had a role in the manipulation, but of even greater
importance is the inherent flaw in any monetary system that fixes
the exchange rate.
Such fixing does not occur
by happenchance, but for specific reasons - reasons of profit
and gain. From Honest Money we offer one last quote:
"Establishing fixed exchange
rates allows 'Gresham's Law' to enter the picture, whereby an
artificially overvalued money tends to drive an artificially
undervalued money out of circulation.
Free markets and supply and
demand being what they are, inevitably the market values one
metal over the other.
Eventually one metal is driven
out by the other. This process is oft times referred to as demonetization.
But remember, bimetallism under a fixed standard is not necessarily
a completely free system.
Starting slowly in the 1780's,
the market value of silver slid downwards, steadily continuing
down through the 1790's, up until about 1804-1805. This was mainly
in response to the increased supply of silver from Mexico and
the diminishing supplies of gold from Russia.
At the same time, its mint
price remained the same, thereby causing silver to be overvalued
in relation to gold. Gold coins started to flow out of our country
and ceased to circulate, while silver coin flowed in and was
abundant.
Gold coin was melted down and
exported abroad. From 1800 to 1834, only silver coin circulated
as the currency of choice. Gold had been driven out - but by
what force? Might there be an unseen 'guiding hand'?
First gold was driven out of
circulation, and then over time silver became the lackey, until
eventually both metals were driven into exile and buried beneath
a mountain of worthless paper debt and hollow promises to pay
that is our now current system of paper fiat - a mere shade of
its former self. But such events beg the question: a lackey of
whom, or by what power?
Congress would have been better
off to have simply minted gold Eagles without fixing a dollar
value on them, thereby allowing the free market forces of supply
and demand to regulate their exchange rate value. This would
help prevent the 'authorized' control by other than free market
principles or by 'others.'
Because of this flaw in a bimetallic
system of coinage that has one metal as the standard and then
fixes the exchange rate between the two metals, and the resulting
'crying' up or down of the value of one metal in regards to the
other - our monetary history was one where first one metal was
dear and the other shunned, and vice versa, on several different
occasions." [10]
We hope the above is sufficient
to raise the curiosity of both the reader and the author of the
article on bimetallism to further pursue the topic under review.
A more detailed discussion can be found in the Honest Money Series
linked in the endnotes below.
Good As Gold
The purpose of this paper lies
elsewhere, however. We want to examine whether silver is as good
as gold. Towards this end, the above discussion has already contributed
a fair amount of information.
We have seen that the United
States was on a silver standard. One of the reasons that a silver
standard was chosen was because the most accepted, or "currently
common" form of money in the U.S. at that time was the Spanish
Silver Dollar - the famous Pieces of Eight.
Silver's history as a monetary
metal is as old as gold's, and spans the four corners of the
world. In many of the ancient classics, we read of the use of
silver as money. The Histories of Herodotus, the Iliad and the
Odyssey of Homer, the Aeneid of Virgil, the works of Plato, Aristotle,
Pliny, and others, all tell of the use and importance of silver
throughout the world.
The silver shekel has a history
dating back 3000 B.C. to Mesopotamia. In the Bible, we read of
Christ being "sold out" for 30 pieces of silver. Silver,
in its most ancient form, exchanged according to weight, and
weight alone. Small pieces or chunks were exchanged for goods
after being weighed.
Next bent bar units were used
as far back as 750 B.C. Eventually coins were minted with the
stamp of the issuer, usually a King.
Coinage
The Lydians and Croesus are
given credit for minting the first coins, which may or may not
be true, as future discoveries will most likely show a different
origin. China is already said to have minted coins as far back
as 1000 B.C.
Greece is the most well known
ancient artificer of coins. The Attic Silver standard was dominant
throughout the western Mediterranean shores. The Athenian sliver
four-drachma, or double-stater, was the most widely used coin
in the ancient world, gaining prominence in 500 B.C.
In Rome, bronze was the first
metal used in exchange or trade. It was not until after the peace
of Pyrrhus in 279 B.C. that silver was used to any degree. After
the Second Punic War the silver denarius was issued, becoming
the most widely used silver coin for over four centuries.
Constantine issued the gold
solidus between 305-313 A.D., which was minted for over 700 years,
even after Rome fell. The solidus has the longest continues history
of any coin, gold or silver, to date.
The Pound Sterling is well
known throughout the world, dating back to Sir Thomas Gresham
and Queen Elizabeth I, who in 1560 established one troy pound
of sterling silver as the monetary standard. Its history goes
back even further, however, to 1158 when King Henry II issued
the Tealby Silver Penny, which was 1/240th of a pound.
The name of our "dollar"
is related to the historic silver currencies of:
"Tolar in Bohemia, Thaler
or Taler in Germany, Daalder in the Netherlands and Daler in
Sweden, Denmark, and Norway. The name thaler (from Thal,
or nowadays usually Tal, "valley") originally
came from the German Guldengroschen ("great gulden",
being of silver but equal in value to a gold gulden) coins minted
from the silver from a rich mine at Joachimsthal (St. Joachim's
Valley) in Bohemia (then part of the Habsburg Empire)."
[11]
Summary
As can be readily seen, silver
has had just as an illustrious history as gold as a monetary
metal. This then begs the question: Why is it that silver seems
to be ignored, or relegated to second place status behind gold?
The answer may well be hidden
in the reason why gold itself has been "demonetized",
and is still manipulated by the elite power structure via the
comex paper derivatives market. [12]
The elite international bankers are deathly afraid of both silver
and gold. This is the reason they have tried to demonetize both
metals, but they cannot. Silver and gold have been around for
longer then the central bankers, and when the central bankers
are no longer - silver and gold will still be.
Just recently, the following
picture appeared on the 30-day chart of the one-year silver lease
rate:
Chart Courtesy http://www.kitco.com.
Notice the spike up to 4.55%.
That rate was higher than the ten-year Treasury bond was paying
at the time. Gold is incorrectly referred to as the "barbaric"
metal by the establishment. Silver is considered second rate
to gold. Yet, here we see silver lease rates paying more than
the ten-year Treasury bond.
What does this say about silver?
Is this A
Sign of the Times ~ Or A Sign of Things to Come.
Look at the two following charts,
the first is gold, and the second is silver. What do these charts
scream out? Do these two charts look the way that most charts
look? Why not?
The ancients knew it took the
moon 15 times longer than the sun to traverse the heavens. The
ancients new why gold and silver were the alchemical elixirs
of life. The ancients knew why silver is the metal of redemption
in the Bible. The ancients knew the relation of the Son to the
Father.
Is silver as good as gold?
Is gold as good as silver?
Is it honest valuation of either
silver or gold, to price them in paper fiat dollars, and to then
compare those "prices" or ratios to come up with a
"value"?
What kind of value would that
represent? It would just be another fixed price or value; just
another rigged market; just another loss of freedom, and free
market prices.
Any why?
The answer is simple - Cui
Bono? Follow the money.
"And they threw
dust on their heads, as they wept and mourned, crying out,
Alas, alas, for the great city where all who had ships at sea
grew rich by her wealth!
In one hour she has been laid waste."
Footnotes
[1] Bimetallism
Revisited - Bird
[2] Article
I, Section
8, Clause 5
[3] Article
I, Section
10, Clause 1
[4] THE COINAGE ACT
OF 1792
[5] THE COINAGE ACT
OF 1792
[6] Article I,
Section 10
Clause 1
[7] Bimetallism
Revisited - Bird
[8] Honest
Money, Part II: Silver Standard with a Bimetallic Coinage System
[9] Honest
Money, Part II: Silver Standard with a Bimetallic Coinage System:
(paragraph amended from original)
[10] Honest
Money, Part II: Silver Standard with a Bimetallic Coinage System
[11] Wikipedia
- Dollar
[12] Silver
IS Money, The Four Horsemen
Douglas V.
Gnazzo
©2005 Douglas
V. Gnazzo. All rights reserved.
All other views
and comments are invited.
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