Friday, July 8, 2011

Silver is Money

Throughout history it has been considered that silver is money.

This despite the fact that well over 80 percent of all silver dug out of the ground is for industrial use. The industrial and photographic use is only in recent times, over the last century but prior to that for several thousands of years silver was regarded as money or a form of exchange for goods or services rendered.

The attitude to silver has not changed over the years as can be evidenced by the attention and enthusiasm it receives when coined or even traded or exchanged with currency.

Blacks Law Dictionary states that money:

"In usual and ordinary acceptation it means gold, silver, or paper money used as circulating medium of exchange, and does not embrace notes, bonds, evidence of debt, or other personal or real estate. Lane v. Railey."

Noble Laureate Milton Friedman stated in an interview with James U. Blanchard III at the 20th Anniversary New Orleans Investment Conference, in 1993. "The major monetary metal in history is silver, not gold" and "To 250 million persons in 51 countries the word for money is the same as the word for silver and silver literally means money. "can be found in "Silver Profits in the 80’s", by Jerome F. Smith and Barbara Kelly Smith.

Many people may have heard the expression gold is for the rich, silver for the poor. Perhaps this was misquoted from "Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.” Money and Wealth in the New Millennium, by Norm Franz, Whitestonepress.

According to Theodore Butler, a leading US silver Analyst, silver has been hugely short-sold through futures and options contracts. Here banks sell silver they do not have and undertake to buy the silver back at a later date to meet the contract. This is a form of ‘rigging’ and Butler played a big part in bringing two banks to trial over their silver short selling. What happens is when the sellers cannot get the silver to complete the contract they are in trouble with what is called a 'squeeze' resulting in a temporary rocket in the price.

According to Butler there are around one million ounces of silver in what he calls the 'monstrous' short position that runs into billions of ounces.

"Silver has the largest short position that's ever existed in anything," he says.
"As well as short-sold futures contracts, the deficiency arises from forward selling, leasing and the cumulative issuance of unbacked silver bank certificates."

This 1 billion ounces of silver above the ground compares with 5 billion for gold.
"Less than one tenth of 1 per cent of the world's investors were aware that silver was rarer than gold," Butler says.

The biggest use of silver, and logically you'd think the biggest influence therefore, is industrial use, but no. It is the general agreement that silver is money and a commodity that can be manipulated like money, in the minds of short sellers, that dictates the price of silver.

So silver is money after all. And everyone knows it.

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