Gold. GOLD!!!!! Gooooollllllllllddddddd!!!!!!!!

[tokeprep]

Well, for starters, you just did. Because guess what? It is stupid to save anything beyond a very small amount of cash for emergencies. This was not the kind of advice given by financial advisors 50 years ago. Because in a world where your money wasn't constantly losing value (which was the assumption back then) saving makes a lot sense as part of a diverse portfolio.

The idea that the rate of return on an asset has to beat the inflation rate to be meaningful has been around for far longer than 50 years. No one 50 years ago was telling you to stuff cash under your mattress or to keep your money locked up in a checking account.

Your money has been "constantly losing value" for far, far longer than 50 years now, so that wasn't "the assumption back then" anyway. Inflation didn't suddenly start its existence in the 1950s or 1960s.

Edit: If you mean "saving" in the sense of bank deposits, I meant saving in the broader sense of "investing." Putting your money in the bank today, with the rates not beating inflation, is stupid. Investing your money in assets that are beating inflation is not stupid.

 

[NoDrama]

Data is understandably difficult to find when it comes to 1792. I based my $140 an ounce off of a historical chart, but the source of it doesn't seem to exist anymore, so I couldn't examine the data underlying it.

Since wages from 1792 seem impossible to find, I've attempted to use GDP. Nominal GDP in 1792 was something like $270 million, with per capita GDP equal to something like $70. This is equivalent to about 55 ounces of silver, since someone with $70 would have the equivalent of 55 ounces of silver (apparently there isn't actually an ounce in the coin, so I corrected it). A person in 1792 could presumably live comfortably for a year off of that 55 ounces of silver. (Caveat: In my searching, I found that the monthly wage of a Union soldier was $13/month during the Civil War, so this assumption about 1792 seems reasonable.)

That 55 ounces of silver in 2013 would be worth about $1,300. GDP in 2012 was $15.7 trillion, with per capita GDP equal to something like $50,000. This equals about 2000 ounces of silver at a price of $24.10. If you go with $35 an ounce, it's 1400 ounces.

See: http://www.apsanet.org/imgtest/usinginflation-adjusteddollars-sahr.pdf; http://oregonstate.edu/cla/polisci/faculty-research/sahr/sumprice.pdf; http://users.nber.org/~rosenbla/econ110/lecture/gdp-history.pdf

I'm sure we can scuffle over some of these precise numbers, but it seems that 55 ounces of silver bought a living in 1792; now it would take far, far more. This means the value of silver has declined over history, since you would need a lot more silver to get the same food, lodging, etc. that you would have had in 1792.

Lots of data out there to show that the average wage for a person working around the 1800 period was $1 per day.

Or about 185 ounces of silver per year.

Silver sure is undervalued aint it?

http://theoldstonefort.org/Exhibits/vMONEY/DOLLAR-A-DAY_files/WAGE DATA.pdf
http://www.ushistory.org/presidentshouse/history/household.htm
http://supreme.justia.com/cases/federal/us/2/170/
http://www.coinfacts.com/mint_history/mint_history_1792/mint_history_1792.htm

The director of the mint at that time made $2000 per annum. or about 1400 ounces of silver.
They were actually being paid in silver too, not pieces of paper.

The value of silver hasn't declined, the market is undervaluing it, hence why its such a great investment.



FYI A silver "Reserve" is silver that is in the ground and hasn't been found yet. It is a guesstimate by the USGS of how much silver yet lies in the ground.

Total world SUPPLY of refined silver is just barely over 1 billion ounces from all sources including scrap each year. Demand has been higher than supply for over 20 years.

 

[NoDrama]

The idea that the rate of return on an asset has to beat the inflation rate to be meaningful has been around for far longer than 50 years. No one 50 years ago was telling you to stuff cash under your mattress or to keep your money locked up in a checking account.

Your money has been "constantly losing value" for far, far longer than 50 years now, so that wasn't "the assumption back then" anyway. Inflation didn't suddenly start its existence in the 1950s or 1960s.

Edit: If you mean "saving" in the sense of bank deposits, I meant saving in the broader sense of "investing." Putting your money in the bank today, with the rates not beating inflation, is stupid. Investing your money in assets that are beating inflation is not stupid.

90% of all the inflation came after August 4, 1971.

 

[Dr Kynes]

Well, for starters, you just did. Because guess what? It is stupid to save anything beyond a very small amount of cash for emergencies. This was not the kind of advice given by financial advisors 50 years ago. Because in a world where your money wasn't constantly losing value (which was the assumption back then) saving makes a lot sense as part of a diverse portfolio.

Nuhh Uhhh!!!


rich dad poor dad says owning land is a liability, and only ther mindless collection of paper assets for "cash flow' is worthwhile. everything else is just a loss!

so lets all lease bentleys and yachts, live on credit, overextend ourselves to the limit then declare bankruptcy. then we can be RICH!

 

[Dr Kynes]

Data is understandably difficult to find when it comes to 1792. I based my $140 an ounce off of a historical chart, but the source of it doesn't seem to exist anymore, so I couldn't examine the data underlying it.

Since wages from 1792 seem impossible to find, I've attempted to use GDP. Nominal GDP in 1792 was something like $270 million, with per capita GDP equal to something like $70. This is equivalent to about 55 ounces of silver, since someone with $70 would have the equivalent of 55 ounces of silver (apparently there isn't actually an ounce in the coin, so I corrected it). A person in 1792 could presumably live comfortably for a year off of that 55 ounces of silver. (Caveat: In my searching, I found that the monthly wage of a Union soldier was $13/month during the Civil War, so this assumption about 1792 seems reasonable.)

That 55 ounces of silver in 2013 would be worth about $1,300. GDP in 2012 was $15.7 trillion, with per capita GDP equal to something like $50,000. This equals about 2000 ounces of silver at a price of $24.10. If you go with $35 an ounce, it's 1400 ounces.

See: http://www.apsanet.org/imgtest/usinginflation-adjusteddollars-sahr.pdf; http://oregonstate.edu/cla/polisci/faculty-research/sahr/sumprice.pdf; http://users.nber.org/~rosenbla/econ110/lecture/gdp-history.pdf

I'm sure we can scuffle over some of these precise numbers, but it seems that 55 ounces of silver bought a living in 1792; now it would take far, far more. This means the value of silver has declined over history, since you would need a lot more silver to get the same food, lodging, etc. that you would have had in 1792.

ahem... i went with the british, just for swank.

http://www.napoleon-series.org/research/abstract/military/army/britain/pay/c_britpay1800.html

a british infantry private's monthly pay in 1800 was 30 shillings. one troy pound of silver coined 66 shillings, making one shilling 0.18181818 troy ounce of sterling sliver making the monthly pay a grand total of 5.45 troy ounces of silver per month. in theroy...
(of course then they got charged for boot black, pipeclay for the crossbelt, boot laces, parrafin oil for the musket, chamois for the dogget, and "stoppages" for every conceivable reason, so the paymaster could keep a few coins in his pay box)
in actuality the average british infantryman pulled down about 18 shillings a month.


meanwhile in the americas:

unless you wish to plow through 809 cubic feet of uncategorized, undigitized quatermaster records consisting of individual pay ledgers, spanning 1709-1915 i cannot find any single statement of how much a continental army regular infantryman was paid, much less the pay for irregulars or militia, beyond the unsourced and vague "$6 a month" from those shitty answers dot com and wiki-answers sites.

but the War Department Records Directory at the National Archives is thataway ----->http://www.archives.gov/research/guide-fed-records/groups/093.html bring your reading glasses and your headache powder.

 

[tokeprep]

Lots of data out there to show that the average wage for a person working around the 1800 period was $1 per day.

Or about 185 ounces of silver per year.

Silver sure is undervalued aint it?

http://theoldstonefort.org/Exhibits/vMONEY/DOLLAR-A-DAY_files/WAGE%20DATA.pdf
http://www.ushistory.org/presidentshouse/history/household.htm
http://supreme.justia.com/cases/federal/us/2/170/
http://www.coinfacts.com/mint_history/mint_history_1792/mint_history_1792.htm

I think this is your best source since it contains the most data: http://theoldstonefort.org/Exhibits/vMONEY/DOLLAR-A-DAY_files/WAGE DATA.pdf. But I don't think it suggests "the average wage" was $1 per day. The average wage for educated/skilled/semi-skilled work seems to have been at and above $1 per day, but most workers certainly weren't at that level. Further, this wage data is misleading because most people weren't employed earning wages--they were subsistence farmers. Considering that nominal GDP per capita was about $70 a person, it's not plausible that an average worker earned $1 a day.

But even if we took your claim at face value and said the average worker was paid the equivalent of 185 ounces of silver per year, that would be worth $4500 today. How does that make your case? It sees to support my conclusion that silver is worth less today, relatively, than it was in 1792. It bought an average living then, according to you, versus a fraction of one now.

The value of silver hasn't declined, the market is undervaluing it, hence why its such a great investment.

The market has been undervaluing silver for more than 100 years? Don't you think that indicates it isn't being undervalued...?

FYI A silver "Reserve" is silver that is in the ground and hasn't been found yet. It is a guesstimate by the USGS of how much silver yet lies in the ground.

Total world SUPPLY of refined silver is just barely over 1 billion ounces from all sources including scrap each year. Demand has been higher than supply for over 20 years.

Thanks. The numbers were going up and down, so I didn't know what to make of that.

Of course, what's amazing looking at these supply numbers is how little of this silver is being used for investment. In 2012, 569 million ounces were used in industry, photography, and for silverware--that was 54% of supply; 186 million ounces went to jewelry--another 17%.

 

[tokeprep]

ahem... i went with the british, just for swank.

http://www.napoleon-series.org/research/abstract/military/army/britain/pay/c_britpay1800.html

a british infantry private's monthly pay in 1800 was 30 shillings. one troy pound of silver coined 66 shillings, making one shilling 0.18181818 troy ounce of sterling sliver making the monthly pay a grand total of 5.45 troy ounces of silver per month. in theroy...
(of course then they got charged for boot black, pipeclay for the crossbelt, boot laces, parrafin oil for the musket, chamois for the dogget, and "stoppages" for every conceivable reason, so the paymaster could keep a few coins in his pay box)
in actuality the average british infantryman pulled down about 18 shillings a month.


meanwhile in the americas:

unless you wish to plow through 809 cubic feet of uncategorized, undigitized quatermaster records consisting of individual pay ledgers, spanning 1709-1915 i cannot find any single statement of how much a continental army regular infantryman was paid, much less the pay for irregulars or militia, beyond the unsourced and vague "$6 a month" from those shitty answers dot com and wiki-answers sites.

but the War Department Records Directory at the National Archives is thataway ----->http://www.archives.gov/research/guide-fed-records/groups/093.html bring your reading glasses and your headache powder.

We've basically calculated the same wage then, haven't we? So you agree that approximately 55 ounces of silver bought a living in 1792, while now the same silver would yield about $1500?

 

[Dr Kynes]

We've basically calculated the same wage then, haven't we? So you agree that approximately 55 ounces of silver bought a living in 1792, while now the same silver would yield about $1500?

no... that would be a gross error.

thats the pay7 for a soldier in the feild, and most of his pay went right back into the government coffers. the wage promised to soldiers wasa considered a draw, the wage for factory workers in the textile mills in england was less than a shilling a month.

and thats pathetic. this was the start of the trend towards "wage slavery" where wage workers made just enough to keep them alive and let them breed, but they were trapped in a caycle of poverty which ensured a steady supply of cheap labour. soldiers wages were an inudcement to erisk your ass for a fat sack of cash, half a pound a month (they never mentioned that they would not be keeping it...) and still the british had to impress convicts into service and offer the first months wages in advance to cats working in mills, for whom actually seeing a whole king's shilling was a thrill.

some recruiters even had to hide the king's shilling in the bottom of a "free" round of beer, and those who accepted the drink also took the king's shilling and were "signed up" before they hit the bottom of the pint.

a shilling (0.181818 troy ounce of silver) was a princely sum to british factory workers, and in america the spanish milled dollar was chopped into eights for most transactions. whole dollars in the 1800's were the kind of price you paid for a gun or a horse, not a loaf of bread or a chicken.

read your sam clemens, and youll discover that a PENNY (~.01 ounce of silver) was the price paid for a sack of apples, or some corn pone or a pouch of tobacco.

even in the early 1900's my grandpappy bough a 2 ounce pouch of tobacco for two bits (25 cents) which now costs 5-8 bucks for the same tobacco.

 

[OGEvilgenius]

The idea that the rate of return on an asset has to beat the inflation rate to be meaningful has been around for far longer than 50 years. No one 50 years ago was telling you to stuff cash under your mattress or to keep your money locked up in a checking account.

Your money has been "constantly losing value" for far, far longer than 50 years now, so that wasn't "the assumption back then" anyway. Inflation didn't suddenly start its existence in the 1950s or 1960s.

Edit: If you mean "saving" in the sense of bank deposits, I meant saving in the broader sense of "investing." Putting your money in the bank today, with the rates not beating inflation, is stupid. Investing your money in assets that are beating inflation is not stupid.

And the idea that investments are RISKY and savings are SAFE has been around for just as long. Hence, the suggestion you put away a small portion of your earnings in savings and nothing else. It's called diversity.

Were you aware that the best thing to be in during the financial collapse in 08 was pure cash?

Anyway, since this system absolutely destroys savers you're correct that this advice is long antiquated. But it certainly was not when I was first learning about finance at an early age and of course was falsely believed by millions and millions of the elderly who are some of the most dependent on welfare you can possibly imagine (because this system destroys those who do not know how to game it, just like it's supposed to).

 

[ChesusRice]

Mutual Funds are generally safe
For example
Vanguard income equity fund. VEIPX look it up

 

[heckler73]

even in the early 1900's my grandpappy bough a 2 ounce pouch of tobacco for two bits (25 cents) which now costs 5-8 bucks for the same tobacco.

$5-8 for 2 Ozs? THAT IS DIRT CHEAP!
I pay $25CDN for 50grams (there's a 21.5ct/g tax, and that's before the 6%PST).
I hope you aren't trying to use that as an argument for punitive "inflation". Because just like gasoline, Americans are getting it easy relative to us poor Canucks.

 

[heckler73]

Were you aware that the best thing to be in during the financial collapse in 08 was pure cash?

Actually, buying PUTS on most DOW components was the BEST thing to be in "during" the GFC's onset.

 

[tokeprep]

no... that would be a gross error.

even in the early 1900's my grandpappy bough a 2 ounce pouch of tobacco for two bits (25 cents) which now costs 5-8 bucks for the same tobacco.

25 cents in 1913 is the equivalent of $5.88 in 2013. I doubt you're paying more in real terms.

 

[tokeprep]

Actually, buying PUTS on most DOW components was the BEST thing to be in "during" the GFC's onset.

I was making huge returns from my shorts. Then I bought some stuff, got nervous, and sold it off (I wanted to spend the money that summer, so I didn't want to wait for things to get better).

I wish I had kept those stocks--I would have made a ten fold return on one of them within 2 years. What a huge buying opportunity that was...

 

[OGEvilgenius]

Actually, buying PUTS on most DOW components was the BEST thing to be in "during" the GFC's onset.

Ok, let me restate, it was the best and most realistic thing to actually be in. Unless you are great at predicting the future, and some of us make better educated guesses than others, it was a safe place to be. And it also meant you were highly liquid and could dive into the deals that emerged during the crash (many of which were extremely obvious).

 

[heckler73]

Ok, let me restate, it was the best and most realistic thing to actually be in. Unless you are great at predicting the future, and some of us make better educated guesses than others, it was a safe place to be. And it also meant you were highly liquid and could dive into the deals that emerged during the crash (many of which were extremely obvious).

Yes... I can agree with you there. For the average person (who probably DOESN'T trade equities) it would've been the better thing to do.
Then again, what else would they do with their money? So it's somewhat of an irrelevant truth, really...

 

[OGEvilgenius]

Yes... I can agree with you there. For the average person (who probably DOESN'T trade equities) it would've been the better thing to do.
Then again, what else would they do with their money? So it's somewhat of an irrelevant truth, really...

Actually the original point was that tokeprep is likely a 21 year old without a clue about what was recommended in the past. He's saying saving money is stupid and never seriously recommended. I'm saying he's stupid and doesn't have a clue what he's talking about.

 

[ChesusRice]

Nothing wrong with saving 6 months salary

 

[Balzac89]

With all the claims being called in and contracts selling and no one buying I bet we see lower gold and silver prices sooner than thought.

 

[ChesusRice]

With all the claims being called in and contracts selling and no one buying I bet we see lower gold and silver prices sooner than thought.

Hence why the futures markets control the price of gold and silver and is going down.
Add into that all the people who got in closer to the top selling and you have more momentum

Gold isnt water, you dont need it to survive and it has crashed before.