If somebody offered to you a 20 dollar bill or a 1-ounce silver coin what would you take?
Contender #1 – 20 dollar US bill
No special announcement and description are needed. The United States twenty-dollar banknote ($20) is a denomination of U.S. currency. The seventh U.S. President (1829–1837), Andrew Jackson, has been featured on the front side of the bill since 1928; the White House is featured on the reverse.
It started its life in 1861 and during the last 158 years had many small changes. But in essence, it’s the same thing, 20 bucks!
US Silver Eagle is a coin 40.6mm in diameter and 2.98mm thick. It is made of pure silver, 999 purity, which really means it is real McCoy, not an alloy comprising of other metals. It sports just breathtaking design of walking Liberty on one side and eagle with spread wings on the reverse.
For strange and misleading reason, it says 1 dollar on the reverse side. That was an original value but a long time ago. But also says more important figure and that is 1 oz fine silver. Troy ounce that is, 31.10 grams in weight.
Before we go to discuss actual values we can’t just skip the matter of aesthetics. I know, money is just money to most of the people but to many its form either confirms its value or a lack of it, that is.
There is nothing much to be said about the 20 dollar bill. It is quite un-remarkable piece of paper. Printed in millions at the will of FED “print-a-crap” bank.
Yes, it is made of special paper to prevent counterfeiting. Also, there is a special ink, UV image or stripe all to prevent “inventive” PhotoShop enthusiasts and good photocopiers to copy it.
Still, it costs only 10.5 cents to produce single bill making denomination 200 times more valuable. Or so we are being told.
1 ounce silver Eagle is an entirely different story. It is struck (minted) using just gorgeous design. In small space of 1.598-inch artist achieved a true artwork and undeniable recognition of what it is and what it represents. That design adds each coin a numismatic value fully appreciated by the people who collect coins.
20 dollars banknote
Not that anyone is intentionally doing it but if 20 dollar bill is cut, shredded or painted on it will lose its value. Plain and simple. In case it is dropped into acid, water for the longer time it will dissolve into nothing. It’s a goner in any of those events.
Burned? You bet. Paper money makes really good kindling and will burn in seconds in spectacular flame leaving behind … absolutely nothing. You just lost 20 bucks forever.
The silver dollar coin is a real survivor! A completely different story from 20 dollar experience. It can’t be easily shred, cut or defaced by paint. Even if it was cut or ground into the small pieces each of the pieces would always retain its intrinsic value. If a little chunk is for example 1/10 of the ounce it will worth 10% of the initial value no sweat.
Then there is a fire and water. Fire does absolutely nothing to the silver coin. Even if fire is of great intensity and coin is melted metal would go nowhere. It can’t disappear and it would retain its original weight with no losses in value. It sure would lose form and lose a numismatic value but always retain a value based on purity and weight.
Water also can do nothing to it. Even today, 400 – 500 years after ancient ships went down with a cargo of precious metals people find silver and gold coins on the seafloor and bring it back. Saltwater creates a dark patina on the surface of the silver but good rub brings back old luster.
Don’t believe me? There is a Marine Museum in the Key West, Florida displaying many pieces of silver and gold recovered from Spanish ships sunk around Key West. Both silver and gold look just amazing not losing any value whatsoever, actually gaining value since those are artifacts from known shipwrecks.
Clear winner: silver coin.
What would you take?
So we come to the initial question. Provided that you can’t simply buy 1 oz. silver coin with 20 dollars what would you take?
Most of the people would go for 20 dollars bill. It has known value and can be spent in seconds anywhere.
1-ounce silver coin has the current value of about $18.00 – $18.50 so picking up 20 dollar bill instead is warranted. Since regular merchants would not take a silver coin it would have been sold first and proceedings converted into paper money in order to buy something.
But you noticed that the current value is written in bold letters. The whole storyline is right there in those 3 words.
Currently, 20 dollars has a specific value, but in time that value evaporates into thin air!
Value of the 20 dollar bill and 1 oz. silver coin compared
Here is an ugly truth:
Every paper money denomination absolutely positively loses its face value in time!
That happens due to inflation and manipulations by the Government. Everybody knows that same amount of money worth less in a few months or full-year than before. Every Government in the world is printing too much money and they can do it at will.
Governments have grown out of control into huge monsters that devour cash at an alarming rate. Governments are not run with efficiency in mind.
Anyway, a single word for it is inflation. Definition of inflation is the loss of value. 20 dollars before and of today are two different things. Difference between “then” and “now” could be a matter of years, months and in case of hyperinflation hours.
For the purpose of this article, we’ll assume that 20 dollar bill and 1-ounce silver coin have the same value (at this moment). Let’s compare the buying power of each and see how they fared in 100 years or less for everyday items. We will examine what you could buy with each at specific times.
|20 dollars||1 oz. silver coin|
|Face value in 1912||$20.00||$0.46|
|Loaf of bread $0.056||400 loafs||9.2 loafs|
|Steak, pound, $0.20||100 steaks||2.3 steaks|
|Hamburger, $0.15||133 hamburgers||3 hamburgers|
|Gallon of gas, $0.356||56 gallons||1.29 gallons|
|Toothpaste, $0.49||40 tubes||1 tube|
|Box of Kellogs, $0.10||200 boxes||4.6 boxes|
Let’s move in time to examine the same thing in the year 1968. This year is selected because about that time the US stopped producing coins based on silver or silver content:
|20 dollars||1 oz. silver coin|
|Face value in 1960||$20.00||$16.64|
|Loaf of bread $0.46||43 loafs||17.9 loafs|
|Steak, pound, $0.85||23 steaks||9.3 steaks|
|Hamburger, $0.20||100 hamburgers||83 hamburgers|
|Gallon of gas, $0.46||43 gallons||36.17 gallons|
|Toothpaste, Crest, $0.65||30 tubes||33 tubes|
|Box of Kellogs, $0.39||51 boxes||42 boxes|
Today we are in the year 2019:
|20 dollars||1 oz. silver coin|
|Face value in 2019||$20.00||$17.50|
|Loaf of bread $2.60||7.7 loafs||6.7 loafs|
|Steak, pound, $8.55||2.33 steaks||2 steaks|
|Hamburger, $3.80||5.2 hamburgers||4.6 hamburgers|
|Gallon of gas, $2.65||7.54 gallons||6.6 gallons|
|Toothpaste, Crest, $2.97||6.73 tubes||5.9 tubes|
|Box of Kellogs, $2.99||6.68 boxes||5.85 boxes|
So what do we see here?
Plain and simple 20 dollars experienced a dramatic loss in value. 100 years ago, a person could buy 133 hamburgers and today 5.2 only. 25 times less. Or drop from 400 loaves of bread to 7.7. Almost 52 times less!
We could go like this a whole day long. What do you think about the price of the house that was $2,400 100 years ago and today is about $300,000? Pretty dramatic, right?
Inflation (loss in purchasing power) really took a toll on the dollar. In simple terms, the dollar lost more than 98.5% of its initial value from 100 years ago.
Things here are quite different. Much more steady with small variations in purchasing power. Stable purchasing power would be a theme of the day.
With beautiful 1 ounce Silver Dollar in hand, you get a bit less bread than 100 years ago, about the same number of steaks and for everything else it’s easy sailing! You positively get more goodies.
Monkey wrench in silver wheels
Can’t go forward and not to mention one anomaly that is not jumping at you at first glance. That is a relatively small rise in the value of silver. From $0.46 to $17.50 in 100 years.
Well, I’ll tell you what stinks. Silver is heavily manipulated with.
There is a large financial market that is about paper trading silver. Silver is traded back and forth like there is no tomorrow. The keyword here is “paper”. Financial institutions print those paper silver certificates in the same way as central banks print money. The volume of those certificates makes silver drop in value … but there is no silver!
They are just talking about it. There is no possible way that silver could be delivered to all those investors if they demanded it. It is like playing with Monopoly money. Selling smoke and mirrors are the theme of the day.
At the same time production of the physical silver is dropping every year.
The perfect shitstorm is upon us!
The explanation is two-fold and very simple that even me, a simpleton, can understand:
- There is no more silver, it is being depleted and it is increasingly harder to find and mine
- When the price of silver is driven down mines that are already experiencing thin profits close their doors and go out of business
As it is not enough to create a perfect shitstorm think about this; silver is a precious metal that is actually used in the industry. Extensively.
It is something like oil. It gets burned, used up with no recovery. That means when it’s gone it’s really gone. Silver is used in many everyday objects and their end of life is on landfills.
King and Queen of the hill
King of the value hill is a gold. Rest assured that nobody is throwing gold away. All over, mined gold is stored somewhere. It is in possession of banks, individuals, investors, jewelry stores.
The queen of value hill is a silver. There is really nothing else.
At this very moment, gold 1-ounce spot price is $1530.00 and silver is $17.50.
That represents a ratio of 1 to 87. That is ludicrous! It is unnatural and can’t be. Silver is found at a rate of about 10 ounces of silver to 1 ounce of gold. Before it was about 16 to 1. But due to extensive mining now it is 9 or 10 to 1.
Think logically and use a calculator. If an ounce of gold is 1530 dollars silver should be about 10 times less expensive. That is their natural ratio.
That makes silver priced at about 150 dollars an ounce and it is $17.50 only. It means in reality silver should go up 8.57 times to get into “normal” price range.
Why this rant about silver being badly undervalued?
Again apply a street logic and you will get to two conclusions:
- If silver is a dirt-cheap (due to manipulations) that represents a huge investing opportunity. Trust me, those changes are coming.
- Now go back to the charts presented and apply $150 per ounce of silver instead of $17.50. Suddenly the picture of what you can buy with it changes dramatically in favor of silver!
I daresay this prediction: time of silver and gold true value reset is coming. Soon … how soon? … very soon.
It is inevitable as in the morning is a new day.
You are going to love this!
Meet Roman Denarius, 4 century BC
It was struck out of 6.8 grams (about ¼ ounce) of pure silver. It was standard pay of 1 day of labor. 2400 years ago earning coin like that a day kept family fed, clothed and housed.
Romans were anything but fools. Using such money they had about 400 years of no inflation! Sounds like science fiction by today’s standards, right?
And the winner is … a silver coin.
Plain and simple, don’t save paper money! You will lose value over time.
If you run into 20 dollars in old grandma’s chest lucky you! However, go and spend it before it drops in value. You definitely can’t bring 132 of your buddies for hamburger dinner, as your grandpa could a 100 years ago. Rather only 4 of them these days. That’s all you will squeeze out of 20 bucks today.
But if there was a silver coin at the bottom of the chest you are in more luck! If it is denominated to like 1 dollar or something don’t get fooled. It doesn’t matter what it says on the face. Silver and gold have intrinsic value.
Comes hell or high water weight is the only thing what matters. That didn’t change for last 100 years and never will.
But here is a kicker. Don’t spend it at all. Look for more coins like that or go and buy more. Brand doesn’t matter. US Silver Eagle, Canadian Silver Maple Leaf, South African Krugerrand, Austrian Philharmonic, Mexican Libertad, Australian Silver Kangaroo, Cayman Silver Marlin … it’s all good.