Throughout time, precious metal coins have been recognized as money. Fiat currency (money backed by nothing) has an average shelf life of 40 years. The United States got away from the gold standard in 1971 under President Richard Nixon.

Is there a difference between currency and money? Yes! Currency is cash; it is a medium of trade. In the course of history there has been many varieties of currency, including sticks, rice and seashells. Currency is convenient and divisible. It is fungible, meaning my dollar is of equal worth to your dollar. Currency may be used to buy an item of value.

Money is exactly what currency is, but is also a store of value. Think of a merchant ship that sunk hundreds of years ago. If the ship had a chest full of coins, it would maintain its value, as gold doesn’t rust and silver can be cleaned. This cannot be said of a stick or paper money (more accurately, electronic digits used today), as it would have evaporated.

Money Printing is a Growing Trend Around the World

Throughout history, anytime a state embarks on currency debasement, it becomes very hard to stop. More and more currency in circulation creates inflation, so that it takes more currency to purchase the same products and services that it did prior to the influx of currency into the economy. The Federal reserve has been drastically increasing the monetary base recently.

Money Leaving the Stock Market

The retail investor (the little guy) has withdrawn more than $214 billion from domestic mutual funds since the beginning of 2010, and following the US debt downgrade, they have removed $44 billion.

Some of that money has moved into US bonds, which is alarming. People are searching for refuge from a faltering currency, and then loan their paper money to the same Gov. who’s weakening that currency. If these investors haven’t moved their cash into bonds, it’s very likely placed in a bank account, acquiring under 1% interest. With real inflation running over five percent, that means they’re locking in a loss of four percent. In other words, they are willingly growing 4% more poor annually.

If you had put your money into the DOW in 2000 and held on, you’d have gained roughly twenty-four percent. Alternatively, if you had acquired silver in 2000 you could have earned 550%; and had you sold close to its all-time peak of $50, it would have earned an easy 1000%.

Silver is Currently Greatly Undervalued to Gold

The historical price ratio between gold and silver is 16:1. That means silver should really be trading near the $100 vicinity, but it closed 2011 at $27.50 an ounce. With gold in the $1550 area, that sets the present price ratio at 56:1. Said differently, this should be a strong buy signal with modest downside risk.

Please visit Silver Liberties for more information about investing in silver.

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