Will money finally realize its potential? I have no idea – but i just bought a load
I did something that I haven’t done for a long time yesterday: I bought some money. A lot.
You know my take on silver: it can have huge potential – almost more than any other metal – but it never keeps its promises.
Will this time be different? I doubt. But it’s cheap, and it’s hard to find anything you can say about it just yet.
My calculation is that the rise is greater than the fall. And so I took the plunge.
Money has so much potential – realizing it’s another matter
The history of money is one of the most fascinating in the investment world. It has all the potential that a monetary metal should have in the inflationary environment https://moneyweek.com/investments/investment-strategy/603840/a-nightmare-1970s-scenario-for-investors-is-edging-closeran that chefs wiser than me compare to the 1970s. In fact, if there was a better-than-money investment in the 1970s. I’d like to know what it was.
It went from less than $ 2 an ounce at the start of the decade to $ 50 in 1980.
It does everything that a monetary metal is supposed to do: the physical money in your possession is not the responsibility of anyone else; it takes you out of the financial system; it acts as an insurance; it is hedged against the depreciation of the currency. Etc. At the same time, it has all the potential of a base metal – and base metals also tend to perform well during inflation.
I could write a book of tens of thousands of words on the many industrial uses of money. It might not be a very good book, but it would be long. From medical equipment to electrical devices, it’s almost harder to find things that don’t contain silver than things that do. Every smartphone contains money; each computer; each jet engine; each solar panel. The best batteries contain silver; it is used in detergents, deodorants, wart treatment, antimicrobial lab coats, 3D printing, plastics, jewelry, wood preservation, water purification – it’s like a game of “pick and shovel” on new technology and the growing middle class of the developing world.
The annual demand for silver is approximately one billion ounces. About 50% come from industry; 20% jewelry; 25% of investment demand; and “other” (mainly silverware and photography) makes the difference.
The supply more or less corresponds to the demand. About 80% comes from mining and 20% from recycling. Just a small surge in investment demand, however, and suddenly there is a shortage.
On a historical basis, silver is probably cheaper than anything else. The gold-to-silver ratio in the earth’s crust is 1:15 – there is 15 times more silver. Therefore, the price ratio between the two should be 15. Indeed, somewhere between 15 and 20 is the historical average – at least, until the 20th century and fiat money.
Until then, you see, we had used money as money. It didn’t matter if you were a farmer in ancient Mesopotamia, a rower in ancient Greece, a soldier in ancient Rome, a bard in medieval Europe or a cowboy in the Wild West, your money was the same: it was money. ‘money.
But today the average is not 15, it is 77. If we were to return to the historical average, and the price of gold remained around $ 1750 per ounce, silver would rise. over $ 115. And here we are today with money at $ 22.
Like I said, he has a lot of potential.
Money is the investing world’s worst kept secret
But as I also say: he never delivers. It’s not like the potential of money is unknown. People have been spreading the word for decades. The potential of money is the investment world’s worst-kept secret.
You feel like you’re beating the system when you buy money and give it two fingers. This only adds to its shine.
And yet, by the time it looks like it starts, it sells out. And we fools who bought into the potential story end up with eggs in our faces. There is no investment more frustrating than money – except maybe your teenage daughter.
But there are three fatalities in life: death, taxes, and the fact that one day the money goes back to $ 50. I am sure ; if only we knew when.
When it hits $ 50, it will scale at the speed of a cryptocurrency you’ve never heard of – so much so that it will be difficult to get on board.
Someday it will go over $ 50 and who knows where it will go. I just wonder how long we have to wait.
The time to buy is when the market is boring. When nobody cares.
Money has been low lately. The pros seem to outweigh the cons, at least from my office’s perspective. It’s done a mini inverted head and shoulders around $ 21 to $ 22. I can’t see it going below $ 20 unless we have some sort of liquidity crunch, a money rush situation – like in March 2020.
In this rotating world, it feels like precious metals have to run. And so I bought the money. My gut tells me we’ll go back to the mid to high $ 20. Maybe I’m wrong and we go back to $ 15. I do not know.
But on a risk-reward basis, I bet this is one of those times when the reward of money outweighs its risk. At least you can’t accuse me of going into the business without my eyes wide open.
But if we really go back to the 1970s, then oil will go over $ 150 and silver over $ 50. $ 22 money looks like $ 50 oil last year: cheap – and risky. There aren’t a lot of assets you can say that about right now.Flight in the Light of Day – How Tax Shaped the Past and Will Change the Future iis now out in paperback at Amazon and all the good bookstores with the audiobook, read by Dominic, on Audible and elsewhere.