Child's play
At their core, kids games are fun. They provide learning mechanisms for socializing, working together as teams, learning about elements of chance, leadership, and (though it's not always framed this way) for learning how to increase your stature and/or wealth at the expense of another.
Ever see a Monopoly game with kids *not* end in fights and tears?
In the classic game of Rock-Paper-Scissors (some evidence suggests it has it origins thousands of years in the past) two or more people make a fist and count 1-2-3, then cast a shape with their hand on the third toss that signifies they are now a "rock" (fist), "paper" (open hand) or "scissors" (forked index and middle finger).
The rules are both simple and surprisingly fair: scissors can cut paper so wins the toss against paper. But scissors can be crushed by rock so scissors lose if the other party makes a rock. Rock in turn can be beaten by paper since paper can cover the rock. People are trying to outwit each other but the results have a fair degree of chance built into the logic. Successive rounds eventually determine the winner and everyone is happy.
Paper Beats Rock
Gold and silver are relatively rare in the earth's crust. These metals like others are expensive to extract from the ground and refine into pure form. They exist in such small quantities scattered throughout vast quantities of rock that are not always easy to get to, may exist in countries or locales that have poor infrastructure or oversight, and require one hell of a lot of capital to set up, with astute management needed at every phase for project success.
Let's compare production rates of silver with equivalent production rates of fiat currency by the Federal Reserve over the past few decades:
The above graph plots the creation of fiat money by the Federal Reserve (M2) against the total world production of silver over time. This shows that despite all the advances in deposit detection, mining and capital formation available to support new mining ventures, the world has only managed to double the production of silver bullion since 1980. Over that same time frame the creation of fiat money supply in the United States has risen by 6.5 times. Fiat money has grown three times as fast as mine production.
Our ability to print new paper money far exceeds our ability to mine silver.
Or in our kids game paper (printing) beats rock (mining).
This isn't a good investment proposition for paper.
Here's a pop-quiz. Or things to ask yourself in the mirror.
Ask yourself whether the following statements are true from (1) your own experience, (2) based upon conversations with other people, and (3) reflections of your own actions (not opinions).
Rock (value) beats Paper (value)
Fear Factor. People fear purchasing bullion when it is high in dollar price, when it is low in dollar price, and when prices rise or fall. This means they have completely shut themselves out of the market.
At their core, kids games are fun. They provide learning mechanisms for socializing, working together as teams, learning about elements of chance, leadership, and (though it's not always framed this way) for learning how to increase your stature and/or wealth at the expense of another.
Ever see a Monopoly game with kids *not* end in fights and tears?
In the classic game of Rock-Paper-Scissors (some evidence suggests it has it origins thousands of years in the past) two or more people make a fist and count 1-2-3, then cast a shape with their hand on the third toss that signifies they are now a "rock" (fist), "paper" (open hand) or "scissors" (forked index and middle finger).
The rules are both simple and surprisingly fair: scissors can cut paper so wins the toss against paper. But scissors can be crushed by rock so scissors lose if the other party makes a rock. Rock in turn can be beaten by paper since paper can cover the rock. People are trying to outwit each other but the results have a fair degree of chance built into the logic. Successive rounds eventually determine the winner and everyone is happy.
Paper Beats Rock
Gold and silver are relatively rare in the earth's crust. These metals like others are expensive to extract from the ground and refine into pure form. They exist in such small quantities scattered throughout vast quantities of rock that are not always easy to get to, may exist in countries or locales that have poor infrastructure or oversight, and require one hell of a lot of capital to set up, with astute management needed at every phase for project success.
Let's compare production rates of silver with equivalent production rates of fiat currency by the Federal Reserve over the past few decades:
The above graph plots the creation of fiat money by the Federal Reserve (M2) against the total world production of silver over time. This shows that despite all the advances in deposit detection, mining and capital formation available to support new mining ventures, the world has only managed to double the production of silver bullion since 1980. Over that same time frame the creation of fiat money supply in the United States has risen by 6.5 times. Fiat money has grown three times as fast as mine production.
Our ability to print new paper money far exceeds our ability to mine silver.
Or in our kids game paper (printing) beats rock (mining).
This isn't a good investment proposition for paper.
Pop-Quiz (unscored)
Here's a pop-quiz. Or things to ask yourself in the mirror.
Ask yourself whether the following statements are true from (1) your own experience, (2) based upon conversations with other people, and (3) reflections of your own actions (not opinions).
- Almost nobody you know owns physical silver or gold.
- Almost everyone you know works to acquire paper dollars.
- People talk about the rise and fall of silver and gold prices in paper dollars.
- People do not talk about the rise and fall of the dollar price, in gold or silver ounces.
- I am not worried about cost of living becoming more expensive.
- Cost of living will be the same or lower tomorrow than it is today.
- The value of the dollar never changes, it is gold to me.
Rock (value) beats Paper (value)
Fear Factor. People fear purchasing bullion when it is high in dollar price, when it is low in dollar price, and when prices rise or fall. This means they have completely shut themselves out of the market.
I am not going to say people should put all their money chips on physicals. I don't because I don't know the future. If I did know the future I would double-down on that one strategy.
I do know that silver is much more rare in dollar terms that it was 10 years ago, and based upon the rate of new bailout money being printed by the Central banks (currency wars), there is going to be more fiat floating in the system later than there is today.
But we won't be able to ramp up mine production to match the rate of fiat production.
Not by a mile.
I do know that silver is much more rare in dollar terms that it was 10 years ago, and based upon the rate of new bailout money being printed by the Central banks (currency wars), there is going to be more fiat floating in the system later than there is today.
But we won't be able to ramp up mine production to match the rate of fiat production.
Not by a mile.
No comments:
Post a Comment