Columnistas invitados/Guest columnists

Let’s look at the definition of what makes a good money. There are basically six characteristics. A good money has to be durable, divisible, convenient, consistent, have use value, and have a limited supply. Using those six key characteristics, gold ranks first, silver second, and copper third. That’s why those three metals have been preferred money throughout history. They were superior to seashells, salt, cows, paper, and other commodities. In today’s world, it makes sense to bring Bitcoin, which also satisfies those six characteristics into the mix.

Silver has always been a monetary metal, and it likely will remain so. A great deal of silver used to be consumed in photography and X-rays, until a generation ago, but it's hardly used there at all anymore. Digital photography has nearly replaced it.

About 850 million ounces of silver are mined every year, and about another 150 million ounces are recycled. The available supply of bullion, therefore, is about a billion ounces versus about 100 million ounces of gold. That's roughly a ten-to-one ratio on the supply side, although most of the silver is "consumed," whereas almost all the gold is added to inventory. Since 2019, silver has been in deficit. Roughly 150 million ounces a year have been taken from various stockpiles. That explains why its price has risen to a new base level in the $30 to $35 range, and has done better than gold, percentage-wise.

And while we're talking about silver’s unique qualities, it’s worth mentioning that gold also has unique metallic properties. It's the most non-reactive of all metals; gold doesn’t oxidize. It’s the most ductile, meaning it can be drawn into the thinnest wire of any metal. It’s the most malleable, meaning it can be beaten into the thinnest sheet of all metals.

Gold is much scarcer than silver. It has an extremely high unit value. And its value relative to silver has increased throughout history. In the days of Ancient Egypt, gold traded at only three times the value of silver. In Rome, at the time of Caesar, the gold aureus was worth about 12 times more than the silver denarius. The US initially fixed the value of gold against silver at 17.5 to 1. Incidentally, fixing the value of any commodities—which fluctuate widely for many reasons—is always a bad idea. As of now, the ratio is about 100 to 1. The increase in gold's value relative to silver is a trend that, with fits and starts, has been in motion for over 3,000 years.

It’s important to have an adequate quantity of money available for use in commerce. This was a problem in the early days of the US, when there was neither enough gold nor enough silver in circulation. Of course, the terms "adequate" and "enough" are rather arbitrary. That’s one reason why money itself should be strictly a function of the free market, not government. If there’s not "enough" gold or silver, more will be mined at a profit. When there’s too much, mining becomes unprofitable and stops. Unlike government money, free market money is self-regulating.

Out of maybe 7 billion ounces of gold that have ever been mined, almost all is stored in vaults, safe deposit boxes, or worn as jewelry. Most is owned by governments and their central banks. It doesn’t circulate in any meaningful way.

Governments—including the US government—used to hold large amounts of silver in storage too. But now none do.

I don't think there's any doubt that we're heading into a massive monetary crisis. The dollar is going to lose value at an accelerating rate because of the US government's profligate spending policies.

Editor’s Note: Doug Casey’s insights on silver point to a deeper crisis already in motion—the collapse of the US dollar. In this eye-opening video, he reveals exactly what’s coming and how to prepare before it’s too late.