A $500 per ozt Silver Example

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Posted by Cynic | Posted in Awake, Logic | Posted on 02-06-2013

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Dr. Jeff has an interesting question in a recent article:

http://www.silver-coin-investor.com/Silver-Short-Squeeze-Scenario-420.html

When the negligible value of paper currency eventually becomes apparent, what does it matter if silver is $500 per ounce in a world where a loaf of bread costs $100?

Well, it does matter. If you buy silver now before that happens. Here’s why…

Suppose you go out today and buy a $5 Canadian Maple Leave 1 ozt silver coin. That will cost you around $27 (CAD) or so right now. Where I live, the price of a loaf of bread is about $5 (AUD), and generally ranges from about $3 to $7. Forgetting the couple pennies difference in exchange rates, today 1 ozt of silver buys about 5 loaves of bread. This perfectly matches Dr. Jeff’s example above with $500 per ozt silver and $100 per loaf of bread.

And therein lies the answer. By buying silver (or gold) now, you preserve your purchasing power. Today you can buy 5 loaves of bread with 1 ozt, and when the SHTF, your 1 ozt still buys you 5 loaves of bread. Had you kept your $27, it would instead buy you about 1/4 of a loaf of bread.

What would you rather have? 5 loaves of bread or a few slices of bread? I’d rather have a few loaves. But that’s just me. 😉

Dr. Jeff goes on to talk a bit on the topic, but doesn’t hit that point, or if he does, it’s implicit for those that understand wealth preservation, and not at all obvious for anyone that doesn’t. He gets close to the issue here:

Furthermore, an ounce of silver will very likely buy you more food in times of financial trouble than you will then be able to purchase with its current equivalent dollar amount.

Cheers,

Ryan