I fell for it…
Back in 2019 I went down the silver “rabbit hole”.
Maybe you’ve been there. Wild tales of price suppression by “big banks”. Triple digit silver, out there on the horizon! Any day now, it’s gonna explode!
So I thought…along with the rest of the silver bugs.
It took my focus away from Bitcoin, probably cost me quite a bit of money. A lesson learned - one that others who listen to doomsday prophets can learn from today.
I hadn't fully educated myself about the societal changes Bitcoin brings about, so I thought it was a good idea to diversify.
"Diversification is protection against ignorance. It makes little sense if you know what you are doing." — Warren Buffett
In the end, I sold all of my silver and put it into Bitcoin, as anyone who is hoarding that stuff today should do today - yes immediately.
Caught silver fever yourself?
Here’s why you should get out, and get Bitcoin.
The (False) Argument From Silver Stackers Today
The main argument coming from silver bugs today is that it is underpriced because of “suppression” from the big banks, the government, and basically everyone else on planet earth.
I’m sure there’s a grain of truth in there somewhere. But in reality, the scoreboard (the price) never lies. Sure, things can be “manipulated” for a time, but they can’t be held back forever if there is real demand. Simply look at the fiat price of Bitcoin if you want confirmation.
When the United States stopped minting silver coins back in the 60s, it was for a reason. They simply did not want to have to pay for a metal which was costing more that the value of money it represented.
They needed to print billions to fund the Vietnam War and fund domestic spending programs. So they eliminated silver in coins, the fiat price of silver quickly doubled in fiat terms, and everyone continued on living life. Sure some wise folks hoarded the old silver coins, and cashed out later on, but the goal had been accomplished by those in charge.
In the end, industrial demand drives the price of silver today. Romantic ideas about silver coming back as a monetary metal were buried long ago, and the price continues to languish in comparison to Bitcoin and gold even today.
Trillions upon trillions have been printed over the last decade, and yet silver rarely strays above $25 an ounce for long, a blinding indicator that nobody with deep pockets is stacking silver for as an inflation hedge or to make “big money”.
Why Silver is Dead as a Monetary Metal
It is interesting, however, to see people cling to the idea of silver as a monetary metal today.
Sure, if we had a nuclear war and were starting from ground zero, silver might be useful to exchange at that point. But we can all admit there will be far bigger issues to deal with in a moment like that - guns, ammo and toilet paper would probably be the most useful currencies if that happens.
But if you’re doubting the idea that silver is dead as money, here are a few historical moments which sealed the fate of the poor man’s gold, all from a century ago.
- The Coinage Act of 1873: The Coinage Act of 1873, also known as the "Crime of '73," effectively demonetized silver in the United States. The act transitioned the U.S. from a bimetallic standard to a gold standard, eliminating the minting of silver dollars for circulation. This decision sparked controversy and led to a political uprising known as the "Free Silver Movement." But by the turn of the century, the movement was dead with passage of the Gold Standard Act.
- The Latin Monetary Union (LMU) transition: The Latin Monetary Union, established in 1865, aimed to create a unified currency system among member countries (France, Belgium, Italy, Switzerland, and Greece). Initially, silver and gold coins were both used, but over time, the value of silver declined relative to gold, leading to the de facto demonetization of silver within the union.
- The British Empire's shift to a gold standard: In the 19th century, the British Empire gradually shifted from silver to a gold standard. The Coinage Act of 1816 played a significant role in reducing the use of silver coins in Britain and promoting gold as the primary currency. The adoption of the gold standard influenced other countries and further diminished the role of silver in international trade and finance.
- Silver demonetization in India: In 1893, the British Raj in India passed the Indian Coinage Act, which effectively demonetized silver rupees and introduced a gold exchange standard. Silver lost its status as a legal tender for large transactions, and the rupee became a token coinage with a fixed exchange rate to gold. This move aimed to stabilize the currency and align it with global financial standards at the time.
- Shift to fiat via Central Banks: The gradual transition from metallic standards to fiat currencies in the 20th century diminished the role of both gold and silver as monetary assets. Fiat currencies, backed by the trust and authority of governments (and oil to an extent), replaced the direct link between currency and precious metals. This global shift effectively removed silver and gold from their historical roles as money.
Interestingly, if you take a few hours and review these changes made by those in authority positions, all were basically made to loosen the tie to hard money and allow governments to run up more debt and spend like drunken sailors.
Some things never change.
Society and Technology Only Move Forward, Never Back in Time
The final argument against silver returning as money is simple fact technology and money are constantly moving forward, never back.
Silver is bulky. A thousand ounces of silver weigh more than 60 pounds! That translates to only $30,000 in value currently at $30 an ounce.
Nobody wants to transact with that in our modern times. People want frictionless transactions, thus debit and credit cards are wildly popular. Not many people want to carry around physical money to do business.
Silver (and gold) were the best money at the time. Today, fiat is the best money when transacting, but falls far short when it comes to storing value - you are holding a melting ice cube if you have excess fiat.
Bitcoin does both - stores value and transacts across the world with the added benefit of no middleman.
While we are in the embryonic stage for payments, it’s only a matter of time.
Technology never looks back longingly at how things were. It only looks forward and has laser-like focus on making things easier for as many people as possible.
Sell your silver, buy Bitcoin