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Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

 
Best of William Histed
March 2, 2009
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SILVER'S PRICE DOES NOT REFLECT MORE

THAN 125 YEARS OF INFLATION OF THE DOLLAR

I'll let a more analytical mind as Thedore Butler's try to catch the culprits manipulating the silver market, especially at the COMEX. And I won't try to ride the coat tails of Izzy Freidman who sees silver someday selling for more than gold for several reasons.

I've done my own research, referring to several historic bench marks and they bring me to the same conclusion as the aforementioned gentlemen about silver being way, way undervalued.

The first thing I tried to do was try to find an unbiased indicator of what a 1878 dollar would buy today. I picked that year because that was the first year of the Morgan silver dollars being minted under authority of the U.S. Congress. You read that right, Congress authorized the silver dollars at that time. There was no printing company called The Federal Reserve Bank at that time.

So I took the year 1878. A found several impartial websites which found analysis that it would take $232 in 2007 to buy what $1 would in 1878. That is a 232 fold increase! So, in theory, that $1 silver dollar in 1878 should be worth $232 today if it only kept up with the U.S. inflation rate. Going to 1900, I read somewhere, and this would be very easy to verify, that U.S. government figures admit the 1900 dollar is today worth something like a penny and a fraction. So there's a roughly 100 fold increase. Simple math...a 1900 silver dollar should be worth about $100. The silver dollar at about 3/4ths of an ounce of silver.. again, should make silver today worth about $135 an ounce based on year 1900 prices. There again, beliefs by those such as Mr. Butler and Mr. Freidman that silver should be in the hundreds is not that unbelievable just allowing for the huge destruction in value of the 1900 U.S. dollar. This would be pretty difficult for someone to dispute. But back to the 1878 dollar.

Further, government estimates at that time indicated there was $1.07 worth of silver--- ---in the 1878 Morgan silver dollar. This was also at a time of the great western silver boom--and the cost of the silver in the silver dollar was still $1.07. Remember, a Morgan silver dollar has only about 3/4ths of an ounce of silver---so silver then was valued by the government at what, about $1.35 an ounce or so. Again, taking that by 232 times the cost of living went up, you see an ounce of silver by should be around $300 today. So do seemingly wild claims by Mr. Butler or Mr. Freidman seem so ridiculous all of a sudden?

They talk about manipulations being very likely at the Comex, about the world supply having seriously been spent down by industrial uses and other uses over the decades. And that may be very true, I don't know.

I am just saying that as an historical money----going back literally thousands of years, silver has a lot of catching up to do just to stay even with the tremendous expansion in the paper money supply and credit expansion in the last century or more. Something is holding it down.

I'll take another bench mark. My father grew up in the Great Depression. One of his hard memories was that many men out of work would take a job---any job---even hard manual labor, for $1.00 a day. This was in the early 1930s.

How many men---or women---would work for $1.00 a day today? You probably couldn't get someone to work for ten minutes for a dollar today. What would be more like it... $100 a day? $80 a day---that's $10 an hour. So even at $80 a day, that silver dollar of the 1930s should be worth $80 at the least. And since the silver dollar has only about 3/4ths of an ounce of silver, it should then be worth over $100 an ounce just from the 1930s.

Here's what I call the soda pop/silver ratio. You can apply this exercise to sweet rolls, candy bars, gasoline and about anything else. This comparison only goes back to the 1960s and early 1970s.

I was a boy at this time. I remember going into most any restaurant and getting a cola for 5 cents, later going up to 10 cents. I was in a chain restaurant the other day---nothing fancy---and a root beer was $2.99!! By the way, I drank tap water instead-- it was probably better for me. $2.99, with tax where I live---state and county, plus a 15 percent tip, would have that soft drink at over $3.50.

Even at the fast food places today, soft drinks are pushing nearly $2.00 with tax and at a hamburger place the other day I saw the "large" soft drink at $2.19 plus tax.

So what I am saying is, I have witnessed soft drinks in 40 years go up 40 times or more in price. Has silver gone up 40 times since the late 1960s or early 1970s.

In my hometown as late as 1973 you could still get an ice cream cone for 5 cents. Again, prices are up 40 times or more for that!!

I remember nickle candy bars from the early 1970s. Where I live, they are pushing $1.00, and in vending machines are $1.25. Again, a more than 20 TIMES hike, and more than that since the candy bars were actually larger back then in some cases.

You see where I am going. I can look up old magazine and newspaper ads and prove to you that you could buy a very nice car for $2,200 or so in the 1960s. I remember a Buick priced for around that. It would be hard to find a similar make car told for 10-15 times that, and with less metal and more cheaper plastics.

Any way I look at it, silver is far, far under even where it should be for just the cost of living increases whether I look at 30 years ago, 80 years ago or 125 years ago.

Something is not right with this picture. Could it be deliberate market manipulation as Mr. Butler and Izzy say? It is something.

Silver has numerous high tech and industrial uses that were not known back in those times I cited.

One final point. It is estimated their might be 1 billion ounces of available silver. Some say that figure is too high. I say, let's asume that estimate is wrong and double it.

Say there are 2 billion ounces of available silver at $14 an ounce, where silver is at while I write this. That's $28 billion as a total silver figure today.

That amount is nothing in paper money these days. That figure---and far higher--are thrown around Washington and other places as nothing. The federal bailouts, stimulous packages and credit creation out of thin air at the Federal Reserve Bank is now around $10 TRILLION. And that's just the creation of that much paper funny money since last autumn. Silver is dirt cheap by any standard I can find.

The war in Iraq alone has cost us about 70 or 80 times the current market value of all of the available silver at 1 billion ounces. And the war in Iraq, according to its proponents and supporters, is just a tiny sliver of what the U.S. government spends in just one year.

I agree with Mr. Butler and Izzy about one thing. Things don't add up when it comes to the pricing of silver. Or put another way, Federal Reserve notes are far over-valued and far over-estimated. I predict their end may come in our lifetimes.