Saturday, March 5, 2011

Price Discovery is Difficult, but Silver is Grossly Undervalued

Very simple. Buy gold and silver.

In 1950, money in circulation (M3) was $135 Billion. In 2012, M3 will be approximately (the government stopped publishing the figure because they don't like pornography) $15 trillion.

That's a ratio of 111.11~ to 1.

In 1950, a dime was a dime, worth roughly what the 90% silver content was worth, 10 cents.

Using our 111.11-1 ratio, we find pre-1965 coins, including dimes, to be grossly undervalued. They are, according to, worth $2.58, nearly 26x their face value.

This is with silver at $35.67 per ounce.

Using our 111.11-1 ratio again, and 2012 M3 at $15 trillion, in 2012, a pre-1965 dime should be worth $11.11, and an ounce of silver should be $153.60.

I don't know that much about gold, but the silver calculations are pure.

Of course, nothing's perfect, but I've been trying to find a reasonable way to calculate the true value of silver, though in this current ponzified regime of constant money printing, manipulation of markets and obfuscation of monetary reality, this is the best formula I've yet to devise.

Silver is grossly undervalued, and most of the people who have been accumulating it are doing so because they know it will almost certainly rise in value in the face of our current debt/finance structure and that the end of the fiat money regime is also near.

Buy silver, as much as you can reasonably afford, quietly, without attracting the attention of too many, and in future years, you'll be happy you read this comment.

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