Very few people understand the tremendous hidden value in every silver coin in the world. Unfortunately, most precious metals investors do not realize the critical factor in acquiring and holding the physical silver investment. The majority of gold and silver analysts provide forecasts for precious metals based on the negative symptoms taking place in the economy and market (debt, derivatives, fiat money, etc), and not the fundamental factor… ENERGY.
In my newest video, Tremendous Hidden Value In Every Silver Coin, I explain in detail why physical silver investment is superior to the $15.4 trillion of U.S. M2 Money Supply.
The overwhelming majority of precious metals and financial analysts do not understand why Silver is Money and a store of value. It all has to do with the “Energy Equivalent Value” in silver (and gold) versus Fiat money and the M2 Money Supply.
Since the 2008 Financial Crisis, the U.S. M2 Money Supply has more than doubled to $15.4 trillion versus on $45 billion for all the Global Above-Ground Silver Stocks. Silver is an excellent store of value because it performs as a BANK of ENERGY EQUIVALENT VALUE:
Fiat money does not hold this same trait because the intrinsic value of a Federal Reserve Note is its production cost: 13 cents. Silver is currently priced at $18 due to the $15-$16 cost per ounce to produce the metal. While some in the precious metals community may not agree with my “Cost of Production” analysis on the value of silver, the facts speak for themselves. Sure, the silver price may rise above its production cost due to more demand, but rarely will the silver price fall below its production cost for an extended period of time.
Regardless, the hidden value of silver is explained more in detail in the video, which I highly recommend watching. The chart below shows the Energy Equivalent Value of all Global Silver Stocks versus the M2 Money Supply:
Again, to understand the dynamics of Silver as a store of value versus the $15.4 trillion of U.S. Money Supply, please watch the video above.
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Time to buy another monster box. Before it’s too late!
I have been hearing about Silver going higher for many years now. It will take a lot to go back to it’s highs of near $50 a ounce. It just never seems to move much but it is real money & a insurance policy if the “Fiat dollar” goes bust !
I have been listening to the silver to the moon narrative for 35 years. It did rocket that one time in 2011 and the smart people sold but now you are right back to your 16-18 dollars an ounce.
Silver will rally once again, but in later 2020s. The most important fact is that you could have multiplied your capital if you invested in the gaining assets. Silver afficionados have frozen their assets instead.
Great video Steve, thanks for all your efforts. I just had a quick question if I could. One of your figures states that a gallon of gas is equivalent to 500 man hours of labor.
Where does this assumption come from? The reason is, I share these thoughts on forums and there’s a lot of opposition to the ideas of peak energy/peak oil and I like to have my assumptions backed with some facts or theories.
Thanks!
SkeptiSchism.
I look at this way to keep it simple. I would sure hate to have to push my car 24 miles because I didn’t have a gallon of gas. I ran the 1998 Virginia Beach Shamrock marathon (26.3) miles in 3 hours 39 minutes after training fairly diligently. I was never right afterward. I had bilateral total hip replacements about a year later. I stand in awe over the amount of energy in a gallon of gas.
Running marathons simply is not healthy. You get micro tears in your heart tissue as well. The human body was designed for walking and running only in an emergency for short bursts not running long distance.
You’re right. As a retired orthopedic surgeon, I realize that more than half the medical information (research) out there is plain wrong and treatments, medications etc. driven by money and corporations. Sounds just like all the financial BS we hear doesn’t it? My college classmate Mark Sisson of Mark’s Daily Apple was a brutal marathoner and one hell of a tough cookie. We worked out all the time in college, he running cross country and track and me wrestling. Once I read his book, I realized practically everything I learned about training and “sports medicine” was hokey. The only good thing about all that realization is that it has made me more inclined to question conventional wisdom, hence landing here instead of all the other blogs trying to sell you something.
I’m a practicing chiropractor about old enough to retire.
The friends and patients I had that ran more than a few miles more that three times a week (meaning occasional back to back days) developed muscle & weight-bearing joint problems.
Some had CVA’s or cardiovascular events while running.
Very good report. I’m starting to price everything using the ‘Silver Standard’ because I think silver is now about as low priced as it will ever get. A loaf of bread = 2 silver U.S. dimes currently, I expect a lot more bread in the future for the same amount of silver. If everyone in the world owned an equal share of silver, it would be what, a quarter of an ounce?
I tried to calculate the same thing for gold. If I’m correct, the gold in Fort Knox represents about 0.8 Ounce per US citizen. The global total gold would also be less than one ounce per person (about 7.7 Billion people).
There is NO gold in Fort Knox.
What planet do you live on?
After I posted, I knew I’d get a response like yours. Let me clarify: The amount of gold THAT WE ARE TOLD that is in Fort Knox (reportedly about 147 million ounces). So, whether it’s there or not, it’s still < 1 oz per person. BTW, when did you do the audit?
How about the reverse conspiracy? If you could print money, why not keep your gold or use your money to essentially print more Gold aka make money and use it to buy more gold?
Not possible, USA used all their gold to suppress the price, the real owners of the world Rotchild own most gold, btw they instructed their puppets to sell their gold (USA, UK, Canada, among the best puppets) and they bought it as cheap as 200-300 USD/oz.
You tin hatters are funny.
Gold has to be stored somewhere. The question may boil down to who actually owns whatever gold is there? Has it been pledged to others? Another way of looking at it if you are cynical as I, if I were an elitist/globalist, I might actually feel my gold was safer in Fort Knox instead of a TX repository, HK, Singapore or even Swiss vault.
No, it is not safe , because FK has just a few guardians guarding chemical and biological weapons much more potent than what USA condemns
What’s interesting was that Abraham bought a field with a cave, trees and farmland for 400 shekels of silver (160 ounces) and now look at the price of land in fiat. Crazy.
Another superb presentation Steve. I’m trying to get my 16 yr old daughter to understand why she should start accumulating silver with her discretionary allowance. I am going to go over your presentation with her this weekend.
This may not sound right, but I am very keen on reading any dissenting opinions on your thesis because your analysis is the most powerful out there and have not seen anyone, including some well-respected analysts who can present a solid counter-argument. All the silver pumpers out there have been “wrong” as far as explaining the horse latitudes silver has been stuck in since 2011. I can afford to “wait” on my silver. What bothers me more is how long will the fiat dollar hold up, all the arguments of it being the reserve currency, backed by the military, the “milkshake” theory, the least dirty shirt theory etc not withstanding.
I don’t really have a dissenting opinion. However, it seems to me that oil=labor is not 100% of the equation. Oil doesn’t burn effectively without the technology and intelligence to use it. For example the human ingenuity required to invent the diesel engine or the availability of good heavy machinery for a project. A modern tractor will yield more labor than a poorly built one, both using the same amount of fuel. How do you factor that in to how much labor one can squeeze from a barrel of oil? In the end, I guess it doesn’t matter since the falling EROI is unrelenting.
I love it when a new Rocco video comes out. I even enjoy the technical analysis part of it for the entertainment value. Does anybody know where to get the best primary source numbers available for exactly how much silver the electric car industry, the drone industry, robotics, PV industry, hyper-sonic missiles, NASA etc.. actually uses? I read 2 pounds of silver for an electric vehicle but I don’t know the accuracy of this number. We apparently are about to build a brand new space force. I understand (from reading this website) that investors are certainly the wild card, however some of these physically demanding technological endeavors have pretty stunning projected growth rates, at least in the short-term. Certainly this will have implications moving forward?
You may want to try the silver institute’s annual silver report.
https://www.silverinstitute.org/wp-content/uploads/2019/04/WSS2019V2.pdf
Thanks, that was really helpful.
Read an article the other day that the energy to produce one Bitcoin is $12000. And the next halving is in May. Any comment?
I would say bitcoin is a NEGATIVE energy account. It USES energy to create one, but does not “exist” and therefore does not STORE energy.
Furthermore bitcoin is a computer program and ANY program can & will be hacked as has been seen many times with bitcoin thefts.
Remember also every bitcoin transaction is recorded within the coin and is NOT anonymous.
Also one good electromagnetic pulse and POOF
bitco8n requires huge amounts of electricity, skilled humans, and computing power just to maintain the blockchain, not even “mining”. Pm’s require a hole in the ground to move into the future.
What is a bitcoin “halving”? I haven’t heard that term before.
Reward per block will become 1/2 of the current reward. Thus, scarcity of Bitcoin will increase as inflow will decrease and energy needed to “mine” new Bitcoins will (should) increase as well.
Like it or not. If it ends up like last 2 times then Bitcoin may hit unimaginable price levels.
Steve’s postings are always great, but I feel like this one is incomplete. It can’t be that silver is a bank of energy value just because it takes energy to create a silver coin. That seems like a necessary but not sufficient condition. It takes energy to create a bitcoin but bitcoin is not a bank of stored energy. It takes energy to build a “bridge to nowhere”, or the ghost cities in China, but neither of them are stores of value. In fact, they are more likely energy sinks as they will have to either be maintained or deconstructed. What makes silver a bank of energy value when other things that require energy to develop are not?
I agree with that but I wanted to hear Steve’s answer. I think the answer is that silver has a variety of uses that won’t go away even in an economic crisis (we will still demand our electronics even if the dollar collapses), so the demand for silver won’t go away. The only way to obtain silver will be by mining it using expensive energy, or from existing stocks, which as an alternative to mining it serves as a bank of stored energy value.
I think that Silver like a pocketknife or a bridge is a storage of energy but is money with only Gold as its competitor.
The below attributes are requirements of money.
Durability, portability, divisibility, uniformity, limited supply, and acceptability.
Gold is “more” money than silverbecause it’s more portable for value, more indestructible, and not as useful for industry as silver. Silver is more undervalued than gold in early 2020, thus likely to see larger percentage gains at some point. When I can trade 30 oz of silver for an oz of gold, I will trade 20% for gold. When I can trade 20 oz of silver for an oz of gold, I will trade another 20% for gold. I like identifiable (Krugerrand, Maple Leaf, AGE, 20F, Sovereign) fractional gold coins best, because they spend for normal things, like 0.1oz for 40 gallons of Diesel. I like 90% silver pre-1965 US dimes best for recovery market shopping.
Many waiting to take advantage of a 60+% decline in the gold/silver ratio.
It is amazing how many people have no idea what the real value silver bring to their daily lives.
I’d like to recommend a bit of colloidal silver collection with what may be coming on the horizon.
One can check out the Peak Prosperity blog. Chris Martenson and Adam Taggart are providing some very worthwhile commentary on the Coronavirus out break.
I think the main reason right now to own silver is because most of the world still regards precious metals as the ultimate store of value. Perhaps it’s hard for us living in the U.S. to understand because of (mostly) stable economic and peaceful times. Would you feel as comfortable living in Asia, South America, Africa or the Middle East? What happened to the gold and silver price when the bombs started to go off in Iraq a few weeks ago? We got a good idea then to where the markets will run during war which presently the human race seems to be aching for. 2008-2011, financial markets were going precious metals until the Central Banks managed to print enough paper to satisfy the right people and prolong the coming credit bust.
Yes in India or China as examples, there is a rush to convert currency into G or S before the government devaluates the currency again.
3 billion Asians are not wrong about gold.
David, I think it helps to think about what are the properties of money? (durability, portability, divisibility, uniformity, limited supply, and a store of value). And of course one of the points in Steve’s article: that is a commodity like a metal in hand means that the energy to get it has already been expended. It’s not a debt note that has to be paid back with someone’s future labor. The examples you rattled off don’t really fulfill all of those qualities.
It is not just a bank of energy, but it is also “precious” or “rare”. This is what gives the metal value.
The physical PM market continues the process of decoupling itself from the spot pricing paper market. Especially silver, as it’s an industrial metal & demand continues to outpace supply.
Junk silver reclamation is down (a vital supply source for industry). Upon learning what is being offered for junk silver, sellers decide to just hold onto their junk silver.
Silver mining operations are inactive as operating costs exceed present spot prices, resulting in only residual silver discoveries from other mining operations. Just try acquiring physical silver bullion anywhere near 10% above spot price & you’ll quickly discover the difference between the paper market & the physical market.
This rubber-band can only be stretched so far before a kinetic exchange correction is required.
You are wrong on so many points I don’t know where to start. I believe silver will crash right along with our economy because silver is used in many manufactured goods, that during a crash people will not buy. There will then be a overabundance of silver not being used which will drop the price when those manufacturers try and get rid of their “futures purchases”. It will eventually end up much lower unlike gold which will rise in price. Much of what you have stated is based upon Silver Sellers marketing BS.
That’s a possibility. But if gold continues to rise in an economic crisis, it will be from a purely monetary basis. Silver is the secondary monetary metal that people turn to when gold becomes expensive. The big spikes in the price of silver we have seen are due to monetary, not industrial demand. Right now the gold/silver ratio is 87, which is pretty high historically, and the monetary demand for silver is very limited. That monetary demand has to increase only a little bit for the price for silver to spike. I also think, whatever the conditions, people are going to demand their smartphones and the government will find a way to get it to them.
As long as the US Dollar remains acceptable, pm’s will not go very high or very fast. As soon as the Dollar will not buy imported fuel or goods, Katy Bar The Door! Dollar denominated debt will collapse and credit will disappear. This is SHTF.
Everyone should begin their precious metal comments with “AS LONG AS THE DOLLAR HOLDS ITS VALUE, Gold and silver will blah blah blah….”
My reply to your post is the same as your first sentence.
Silver went to about $0.25 an ounce at the depths of the Great Depression. It may be different in this upcoming Depression as the authorities are intent on using any fiscal or monetary tools at hand in a crisis which will destroy the dollar, causing a rush to stores of value such as the PMs.
1] $0.25 bought 15-20 times more than it buys now.
2] There were massive stockpiles of silver then, going back to huge discoveries like The Comstock Lode.
3] There were very few industrial & military uses for silver then as compared to now.
These are just three points worth mentioning.
Good points. For perspective, silver only reached a high of about $0.69 in the decade before the worst of the Depression. It certainly fell less than stocks, deflation increased the purchasing power of the dollar, there was no counterparty risk in holding silver, and it doubled in price after about a year from the low. Stockpiles are lower, but I suspect a serious Depression would curtail demand for industrial uses by quite a lot. Don’t get me wrong, you gotta’ own it!
Would you rather have ten 1934 quarters, or 10oz of bullion?
I’ll take 10 ounces for two hundred dollars, bob.
I think there is too much debt and assets in bubbles for Silver to Crash or if so maybe a 20% crash and only for a very short time. When these bubbles start to deflate that wealth will seek other safe havens like Gold and when Gold rises Silver will follow as it does at a faster rate.
Rick Rule mentioned that when Metals peaked in 1980 they represented only 7% of world wealth. Where as of right now they represent only about 1/2 of a single percent.
Rumple, can you please answer why will our economy crash?
It is already crashed. I live and work in a real world. So many businesses are being shuttered. Way more than normal. Best paid public employees are on strike ( teachers, public transport drivers), pretty sure that nurses are next.This is Ontario, Canada, what is supposed to be the most stable local economy around . People can not keep $100 in their pocket by the months end ( for most). Atificialy low interest rates, money printing, qe’s, stock buy backs, highest ever p/e s, dollar buys jack any more and you are lucky to have a job, while most cant retire? What isnt crushing? This is worst than the fall of communism in Eastern Europe in 80’S. At least they didn’t hide the facts and the chips fall where they will.
Hi Goran, Rumple could not answer my question since he is just another stupid troll.
@Steve
Well, and a how do you do to you sir.
https://www.youtube.com/watch?v=VB3_oOxVqdk
Go to 6min 30sec of video to get the gist.
Steve,
I think the production cost of Silver is higher than we are told based off of byproduct credits.
In some of the earlier World Silver Surveys they were reporting a negative cost of production for a portion of Silver. Nowadays that is gone, but I think there may be a couple of bucks of subsidized costs. But a $15 to $16 price may be somewhat accurate, really hard to pin it down.
Steve has done articles and video on this topic. Average price is very slightly over cost of production in big efficient mines. Why? Is the debatablequestion.
thanks, Steve… another insightful perspective of the intrinsic value of PMs.
According my sources a human being can put out 75 watts of power consistently over a period of several hours. I’ve tested this on a bicycle powered generator, and one does have to put some effort into it to maintain 75 watts. It is not easy and is serious work. Probably 60 watts is closer to what one could put out for 8 hours straight, probably less. And that’s someone in reasonable shape.
The electrical equivalent of one gallon of gas is 33,410 watt-hours (look it up).
33,410 watt-hours divided by 75 watts = 445 hours
33,410 watt-hours divided by 60 watts = 557 hours
Take your pick, but I think Steve’s 500 hours of human labor per gallon of gas is a pretty accurate rule of thumb.
As one commenter said, find a car that gets 25 miles/gallon and see how long it takes you to push it 25 miles. Probably somewhere around 500 hours.
Everything is a bank of labor effort. Gold, and occasionally silver, are simply the best and preferred “banks of labor effort” when it comes to use as commodity money.
Cheeseburgers are banks of labor effort as well but they make a lousy medium of exchange.
The only things that CAN defy this definition of “banks of labor effort” are many of the things produced by government: war, welfarism, poverty, and in many cases ROADS! Yep, those potholed roads become less and less a store of labor effort daily!
Steve, I look forward to your every post. Excellent !