Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19
Tommy Robinson Looks Set to Become New UKIP Leader - 16th Mar 19
Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - 16th Mar 19
Towards the End of a Stocks Bull Market, Short term Timing Becomes Difficult - 16th Mar 19
UKIP Brexit Facebook Groups Reveling in the New Zealand Terror Attacks Blaming Muslim Victims - 16th Mar 19
Gold – US Dollar vs US Dollar Index - 16th Mar 19
Islamophobic Hate Preachers Tommy Robinson and Katie Hopkins have Killed UKIP and Brexit - 16th Mar 19
Countdown to The Precious Metals Gold and Silver Breakout Rally - 15th Mar 19
Shale Oil Splutters: Brent on Track for $70 Target $100 in 2020 - 15th Mar 19
Setting up a Business Just Got Easier - 15th Mar 19
Stock Market Elliott Wave Analysis Trend Forercast - Video - 15th Mar 19
Gold Warning - Here Are the Stunning Implications of Plunging Gold Price - Part 1 - 15th Mar 19
UK Weather SHOCK - Trees Dropping Branches onto Cars in Stormy Winds - Sheffield - 15th Mar 19
Best Time to Trade Forex - 15th Mar 19
Why the Green New Deal Will Send Uranium Price Through the Roof - 14th Mar 19
S&P 500's New Medium-Term High, but Will Stock Market Uptrend Continue? - 14th Mar 19
US Conservatism - 14th Mar 19
Gold in the Age of High-speed Electronic Trading - 14th Mar 19
Britain's Demographic Time Bomb Has Gone Off! - 14th Mar 19
Why Walmart Will Crush Amazon - 14th Mar 19
2019 Economic Predictions - 14th Mar 19
Tax Avoidance Bills Sent to Thousands of Workers - 14th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

The Forgotten History (and Potential Future) of Silver as Money

Commodities / Gold and Silver 2015 Jun 23, 2015 - 05:59 PM GMT

By: MoneyMetals

Commodities

Stefan Gleason writes: In contemporary discussions of sound money, silver tends to get short shrift. Even among staunch sound money advocates, the historic role of silver as money is often marginalized or ignored altogether.

People who equate sound money with gold and tout the advantages of returning to a gold standard should also embrace silver as a complementary – and necessary – partner with gold in re-establishing sound money.


The Founders wrote a bi-metallic gold-silver standard into the United States Constitution. Article 1, Section 10 makes it explicit: "No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts…"

The Coinage Act of 1792 defined a dollar in terms of silver. Specifically, a dollar was to be 371.25 grains (equivalent to about three-fourths of an ounce) of silver, in harmony with the Spanish milled dollar. Thus, the true foundation for U.S. circulating currency was not gold but silver. The dollar value of gold coins was ultimately pegged to silver, and one ounce of gold was therefore valued at about 16 ounces of silver, or $20.

The Federal Reserve Notes in circulation today that are colloquially called "dollars" aren't Constitutional dollars. They are bank notes accorded monopoly "legal tender" status by government fiat.

When Congress authorized the secretive Federal Reserve System in 1913, the Fed was sold to the public merely as a lender of last resort. The Federal Reserve wouldn't function as a central bank and wouldn't replace gold and silver as money – or so its proponents promised.

The Fed didn't eviscerate all sound money precepts immediately. That would have generated too much of a backlash. After all, the American people have always had a sentimental attachment to precious metals and a healthy suspicion of vested banking interests.

In the words of Thomas Jefferson, "I believe that banking institutions are more dangerous to our liberties than standing armies." He also wrote, "The trifling economy of paper, as a cheaper medium, or its convenience for transmission, weighs nothing in opposition to the advantages of the precious metals." You'll notice that Jefferson identified "the precious metals" (plural) – meaning gold and silver – as being superior to paper currencies.

But even before the creation of the Federal Reserve in 1913, certain banking and political interests had worked to undermine silver and re-conceive of the gold-silver standard as monometallic gold standard. In 1873, Congress moved to sideline the silver dollar. That sparked the so-called Free Silver Movement, which stood for allowing the supply of silver coins to be increased in accord with demand.

In 1878, the Free Silver Movement got the silver dollar restored as legal tender. Silver continued to be a hot-button issue of the day.

In 1896, William Jennings Bryan gave his famous "Cross of Gold" speech before the Democratic National Convention. The populist orator advocated free coinage of silver at a ratio to gold of 16:1 (the classic ratio) and a full restoration of the bi-metallic standard.

The words of William Jennings Bryan still strike a chord: "…instead of having a gold standard because England has, we shall restore bimetallism, and then let England have bimetallism because the United States have. If they dare to come out in the open field and defend the gold standard as a good thing, we shall fight them to the uttermost… by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold."

Bryan saw gold at the time as the metal of the elites; silver as the metal of the masses. But he understood that having both metals function freely as money was vital. Where gold and silver compete with each other, internal checks and balances are built into the system. But Bryan couldn't have foreseen that the banking and political elites would acquire the ability to crucify the people upon a digitized cross of Quantitative Easing!

We are, no doubt, living in a completely different era than the ones William Jennings Bryan and Thomas Jefferson lived in.

Credit cards, e-commerce, and smartphone payments are here and here to stay. But that doesn't mean that silver has been rendered irrelevant. To the contrary, there are more ways than ever for silver to reassert itself as the money of the people.

It isn't necessary for actual silver dimes and quarters to be re-introduced into circulation in order for silver to function again as money. Debit cards and smartphone apps linked to accounts backed by silver are in development. Some governments are even considering proposals to link their currencies partially back to silver.

Given silver's low price ratio versus gold (currently only 1:73 versus the classic 1:16), it makes a lot of sense to favor silver as an undervalued monetary asset.

In the battle to resurrect sound money, both silver and gold will play a role. Gold is necessary because it represents a highly concentrated form of wealth. Gold is more practical than silver for hoarding by wealthy individuals, large institutions, and, yes, central banks. (Despite their push for a 100% electronic cashless global economy, central banks still hold the world's largest gold stockpiles. And more central banks today are net buyers of gold than net sellers.)

Silver is necessary because it's the historic, and still most practical, basis for defining a "dollar." A sound dollar (or a unit of an alternative private currency) can be a silver coin, a paper certificate, or a digital credit as long as it's ultimately backed by and redeemable in physical silver.

In an era of runaway government debt levels, zero-to-negative interest rates, and systemic risks in the artificially propped-up banking system, the case for a new monetary order based on a gold-silver standard is as strong as ever.

Utah Senator Reed Smoot in 1930 expressed his view that "something will happen to place silver back in its rightful place beside gold in the commerce of the world." Perhaps that something will be a global loss of confidence in debt-based fiat currencies that are all racing to the bottom.

By Stefan Gleason

MoneyMetals.com

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2015 Stefan Gleason - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules