Friday, July 19, 2024

Gold And Silver Prices ? Climbing Higher Every Year

July 3, 2010 by  
Filed under Silver Investment Basics

Another strong month for gold and silver prices, with gold sticking around the nine hundred dollar range and silver piercing fourteen dollars an ounce.

Now more than ever, it’s simply a good idea to hold some gold and silver investments. Gold and silver prices are high right now, and all evidence points to the probability that they have yet to peak.

The gold and silver investors who chose to begin investing in the metals a few years ago, before the recession was made “official” are experiencing quite a nice profit on their investments, but even those who were a little late to catch the gold rush are patting themselves on the back all the same.

Of course, these boosts in gold and silver prices come as no surprise to anyone who knows a little bit about economics. Ever since we were taken off the gold standard, the value of a dollar has been in a constant state of up and down, while the value of gold and silver remains essentially the same in a basic sense.

Of course, the dollar value, the actual gold and silver prices go up and down at the same rate as the dollar, only inverted, so to justify the above statement… there’s only so much precious metal in the world. Therefore, the actual, literal value of an ounce of gold is always going to be an ounce of gold. Just as a loaf of bread is only ever worth as much as a loaf of bread is worth, an ounce of metal is only ever worth an ounce of metal.

The dollar, on the other hand, who knows what it’s really worth? The actual value of a dollar is, well, the paper it’s printed on, and that’s it. The only practical purpose a dollar can ever have is that you could bleach it and use it to take notes on. That sounds crazy, but think about it: A penny contains more than a penny’s worth of copper.

Now… ten years ago, you could buy a hundred page notebook for fifty cents. Now, it’s a couple dollars. At this rate, in ten more years, a notebook will be in the area of eight dollars. If the rate of inflation keeps quadrupling the price of a notebook every ten years, then eventually, it’ll be cheaper to just write on money!

So with that in mind, here’s something to remember about gold and silver prices: They have almost nothing to do with actual gold and silver value.

Gold and silver prices may be a rough approximation of their actual value, but the actual value of an ounce of silver is, again, an ounce of silver.

As such, it would be wrong to look at the gold and silver prices and say “gold is up”. Gold isn’t up, gold never becomes somehow significantly more or less rare than it currently is. So when gold and silver prices go up, their actual value is not going up at all, but rather, the value of a dollar is going down.

In other words, the dollar, initially intended to be nothing more than a certificate used as a placeholder and tied to the value of gold, has become an entity all its own. Since we took it off the gold standard, it simply has not been reliable.

Unfortunately, the dollar is what makes the world go ‘round. You can say “I don’t like cash, since it’s unreliable”, but how are you going to pay bills? We don’t really have a choice but to go along with the same crazy notion that everyone else has to buy into; that paper money actually has any value whatsoever.

It’s almost an existential question of doubt. We hand someone a dollar believing that it’s worth something, and hoping that they believe that it’s worth something, when in fact, we’re all entertaining a fiction and we know in our hearts… it’s just paper.

So… that’s where gold and silver investing comes in. You can rely on the paper dollar to hold some abstract “value” when you buy a bottle of Coca Cola or put some gas in your car, but you can’t rely on that value to be the same ten years from now.

So… silver isn’t worth about fourteen dollars an ounce right now. Silver is worth its weight in silver, and it always will be. That’s how you measure real money.

Learn how to track gold and silver prices with and receive your free “2009 Insider’s Guide To Precious Metal Investing.”

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