Fiat Price Of Silver Is Deceptive

...As the dollar price of silver and of the yuan shot up, China was thrown into the jaws of depression and deflation. In the 1932-34 period gross domestic product fell by 26 percent and wholesale prices in the capital city, Nanjing, fell by 20 percent...

Since the Yuan was based on silver, the increase in quantity of silver decreased the relative value of silver (even though silver had a higher dollar price), thus decreased the value of Yuan (since it couldn't be printed/inflated, as it was based on silver), thus causing the value of everything priced in Yuan to decrease, i.e. devaluation and deflation. So the dollar price of silver had increased, but the supply of silver had also increased, thus silver was worth less. Thus it is not the fiat price of silver which determines the future relative value, rather it is the outlook for demand vs. supply of silver.

We can thus see that whom controls the gold & silver mines, thus controls the "other monetary printing press". One of the key commodities for controlling the mines (and everything else) is the control of energy.

Today the supply of silver is meager at best, and thus the value must go up as the monetary demand must increase, because everyone knows the only way to restore supply is to increase the value. And the value is tied to production of other key commodities, e.g. Zinc.. It is key to understand that only precious metals have the qualities that can be used for money, and thus the expectation of higher value leads to monetary demand, which is much longer wave phenomenon than expectation of demand for commodities which is volatile to the point of expectation of economic activity. This is in essence my aversion (more timing risk) to copper relative to silver, or a paradigm shift energy such as uranium relative to low EROEI fossil fuels.

However, there will come a time where the price of silver in trade is much higher, and the supply has been sufficiently stimulated, and thus the value of silver will be decreased. Finding that optimum moment to trade silver for another undervalued asset, is the crux of successful investing.

In essence, silver's monetary supply situation is more manipulative than gold or platinum, because the natural rarity of silver is 15+ times lower, thus the fiat printing press can cause more volatility in the supply of silver (either by stimulating supply via subsidy or stagnate supply via hedging). Thus silver is less monetary than gold or platinum (less stability of value), but this volatility is major advantage in growing wealth by trading into silver when it is under-manipulated, and out when manipulation peaks.

Shelby Moore is sole creator or contributor to numerous commercial software, e.g. Miningpedia.com (2006-), TurboJet, CoolPage (1998-). WordUp [archived] (1986-1989), Corel Painter (1993-95), EOS PhotoModeler, etc..