My Silver Bug Story

by Stefan
(Santa Rosa, CA, USA)

Some time when I was about 12 I got a book on coins and money out of the library. What stuck with me is the story of the Byzantine Empire. It seems that the coin of the realm, the byzant, stayed at the same weight for 1000 years! and the empire and culture prospered. Then an emperor debased the coin and got away with it. His successors kept it up, and one hundred years later the empire was a shadow of it's former self.

I was 16 when it was announced that silver would not be in any coins the next year. I panicked and whenever I got paper dollars I went to the bank and traded for nickels. (Silver coins disappeared instantly.) This drove merchants crazy. I had forgotten that it took 100 years for the Byzantine Empire to collapse. I remember being thrilled to go into a bank and trade a piece of paper I knew was only a piece of paper for a Morgan or Peace dollar. But I didn't keep them for long, a candy bar or a comic book was also better than a small piece of paper. I collected coins and still have some of my old collection in a metal sewing attachment box somewhere.
I saved pennies and once when broke I took the collection to a coin shop to sell, but the offer was so poor I kept it. I have only come out ahead on a couple of trades in my life, I just don't have the knack and the timing.
About 1972 I bought a couple rolls of halves at about 3x face (?), but sold them at a loss or break even when I needed cash.
In the 80's I did some silver smithing and managed to sell most of my saved scrap for a huge profit. I didn't sell it all, and when I went in after the crash, the buyer laughed at me. I have talked up gold and silver to friends all my life and only ONCE a girl friend joined me and we went in on 100 rounds about 1992, the price was about $5 per ounce. I had one other friend that bought gold coins now and then, but he also gambled on sports, so his outlook was from a bit of a different angle, more short term. The silver rounds I had to sell to raise cash, but my friend still has hers! Despite the gain, 5x, she is unimpressed. I guess it did take awhile. She has real estate and that is also a good long term store of value.
When silver took off last year, I thought, here it is, my last chance to get silver under $60-80 per ounce. My current dollar cost average is about $xx. I wonder how long it will be until I am able to break even. That spike was caused by speculators, not the safe haven buyers that will eventually drive the price up and keep it there. It is difficult to look at my overall results of being a long time silver bug, and stay positive, especially with my current 'loss'. But then I think of my friend whose house and stocks plummeted 50%. And I think, if only I had been able to keep hold of my previous buys. Having the big picture right does not guarantee success. Patience and the financial ability to hang in there, and luck are all necessary. Add to that the big boys alleged manipulation. The big picture seems to point to higher prices, or at very least a preservation of purchasing power. I pointed out to a friend recently that a silver quarter bought a gallon of gas in 1964, and it still does today, and he said I was just 'cherry picking' dates. I guess there is some truth to that, but he is a 'cash is king' guy, and I am, and will probably always be, a 'silver bug'. All because of that book I read when I was young and impressionable.
The last year I have been on the internet almost daily reading articles by silver and gold bugs and it looks to me like the Byzantine Empire all over again. But with a world wide fiat money and as much if not more corruption than ever. Cicero, 60BC, is the earliest anti-banker speech I have run across. Coins are more difficult to debase than paper and I can't but help think that
fiat money is a corrupt gov/bankers dream. It seems that the move to digital money is next, no paper at all. That will be the ultimate for bankers I guess. Will we be able to stop this and return to sound metal backed money? It seems unlikely, but we have to try. Buying and holding precious metals seems like the only thing we can actually do. China and other countries, and central banks have all been buying gold the last few years. If the Tier 1 asset rule goes into effect, commercial banks will will be buying. This could put some upward pressure on the price of tag along, poor mans gold, silver.
Good luck to us all.
Good luck to us all, Stefan

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Aug 13, 2012
Silver Lining for a Silver Bug
by: Kevin

I can't say I 'enjoyed reading' about some of your mishaps with silver investing because of your missed-fortunes. But, perhaps that is the leason to be learned...that 'investing' with silver is just as risky as any investmen--Maybe less risky than 'investing' in the dollar. But, if we look at silver as 'money' rather than as an 'investment' we would see were silver will truly shine, no matter how dark the skies get when filled with other forms of money.

Aug 12, 2012
Return to Historic Investment Mean
by: Stefan

Hi - I should have added something that is crucial to the gold and silver situation. Many writers refer to the Hunt Bros spike and adjustments for inflation and the historic 1 to 12 (about) gold to silver ratio. I don't see the first as being valid, it seems like a speculative spike, but more on that in a bit. The historic ratio I think, depends on some kind of return to the gold standard, which may well happen. But what has more weight for me is the historic mean of world wide investment in gold and silver. This has been something in the range of 4 to 10% of the world wide investment money until sometime after 1971. We know the significance of that date.
It is currently about 1 - 2%. Given the massive increase in the investment money supply, even an increase from where we are now to 4% would make a huge price rise. And it would not take many million-billionaires and funds to cause this, especially in the small silver market. The Hunt Bros took physical delivery, which will not happen at the start due to ETF and other paper plays. I think we will see the risk money go into the precious metals as a risk play first because despite all evidence that these should be safe haven plays, the high rollers are are just not seeing it that way. And, as noted by many writers, when the paper plays are seen for what they are, we may see the new Hunt Bros again. But whether as risk or safe haven, a return to the historical mean of 4 to 10% of all world wide investment money to gold and silver would be huge.
Good luck to us all, Stefan

Aug 11, 2012
by: Freddy Kruger

... is the one word to keep in mind.... It takes alot of force to place an object in motion (corruption) but once in motion only a little force keeps it in motion. Apply just as little more force than what is needed to maintain the object in motion will cause exceleration.
All senators and representatives are taking more and more re-election money (more and more corruption, legalized bribbery) each cycle.
If natural law holds: unless the corruption is eliminated, the empire will continue to
deteriate at an excelerating pace.

No one knows the future but one can guess that real things that are needed, things that can't be fabricated out of thin air will hold value better than cash, derivatives, etfs ,etc.

Aug 03, 2012
pay day is very near
by: fellow silver bug

Hi Stefan
I am very impressed with your perserverance with silver over the years. It seems as if you have had a bad run of luck over the years. With all the corruption and manipulation going on, we now have the opportunity to buy an ounce of something extremely precious and beautiful that will become very rare for about 30 dollars. Most experts who are almost always right unlike Benanke and co who almost always wrong agree on one thing and that is that pay day for silver bugs is about to happen. In the meantime keep on accumulating. It simply has to happen and it will happen. Silver is rare, beautiful and it will always have value up to eternity. Leave a hidden chest somewhere for your future generations to come. In your reading about the Byzantium empire there was destiny for your future success.

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