Intrinsic Value and the
Final Battle for Silver
By Dr. Jeffrey Lewis
When looking at
the intrinsic value of hard currencies like silver relative to that of paper
fiat currencies like the U.S. Dollar, some serious questions need to be asked
Here is one series
of questions that can be used to initiate such an analytical process and some
What is the intrinsic value of fiat
currency? The value of the paper they are printed on.
What is the nature of a measuring
stick? To provide a consistent gauge of size or value.
What is backing all fiat
What backs debt? The debtor’s ability
to repay the debt.
What supports the ability to repay?
Why? No growth.
Why is there no growth? Too much debt
creates a higher servicing burden, which crowds out capital formation. No
capital and no savings mean no growth.
solution to this troubling fiat currency situation has been to simply print more
paper currency or generate more electronic currency.
governments, which are enabled by private central banks that benefit from the
interest being charged on this debt, typically wish to stretch out the ruler so
that their debt appears smaller.
is not a commodity. Debt is instead an obligation to repay. As more dollars chase
fewer goods, the end user ultimately suffers from inflation eating away at their
paper currency’s purchasing power.
The Promise to
Pay Versus a Final Payment
Fiat currency is
only a promise to pay. Providing a hard asset like silver is but one form of a
final payment. Silver works as a hard currency because of its intrinsically
Silver is also
relatively easy to use as a currency, which has been proven over the many years
of its use in practice. This fact would have been commonly understood just 100
years ago, and it has been a matter of common knowledge for more than a thousand
In its physical
form, silver was valuable even when it was plentiful. Now it is actually scarce,
even more scarce than gold. This surprising fact has been hidden from the
ultimate value of silver will come from the need of governments to use it as a
final payment in exchange for massively overextended debt levels and the
resulting loss of confidence in their paper currencies, as well as from the
strategic need of silver for industrial purposes.
the ultimate battle for silver may eventually be fought between its industrial
users and the big banks who will be desperately buying silver in a quest for
The big banks
clearly have the advantage both in the paper marketplace and in political
circles given their much larger lobbying capacity. Nevertheless, the end users of
silver may appeal to the strategic, military industrial complex for control over
At that point, the
retail investor may be more aligned with the big banks that have for decades
conspired to make cheap silver possible and accessible via their use of the
paper futures markets.
perspective, it would seem a shame to miss out on the current opportunity to buy
physical silver while its price remains artificially low before the silver wars
begin in earnest.
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