Wednesday, May 12, 2010

Please click this to enlarge, and then consider the implications. Fiat currency always goes to zero given enough time, and here we see just how far things have come with the dollar.

Now, to look at the decline in the value of a dollar in another way, know that up to 1964 silver coins in the US actually contained 90% silver. Thereafter, little or none. In 1964, the cost of a gallon of gas was something like 45 cents.
Now the price of that gallon of gas is about 3 dollars, give or take a few cents either way. However, if you took 45 cents of silver coins from 1964 or before (check behind those seat cushions!), melted them down and ignored the cost of the melt, you would have a small bar of raw silver ...... and that bar would still be worth enough to by a gallon of gas today!
With these two illustrations, I hope you can understand the reason why people buy silver and gold today. It protects the buying power of your money. It's insurance. This exercise should also make you wonder whether the country ought to go back on the gold standard.

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