4 replies to this topic

[Cirrus]

During the Roman dominance of civilization, +/- 300 years or so around the birth of Christ, a day's wages for a common laborer were one Denarius. A Denarius was a silver coin approximately the size of our dime. Obviously, this would be a fraction of an ounce of silver. For the sake of argument let's say a Denarius was 1/20th of an ounce of silver which is likely overestimating the silver content of a Denarius. That would mean a common laborer earned at most 1/20th of an ounce of silver per day.

Today, I would say a common, unskilled laborer can earn about about $50 a day which is likely on the lower side of reality. Now we equate these earnings in terms of an ounce of silver which is a fraction over $7 right now. That would mean that a common laborer today earns at least 7 ounces of silver per day today.

Ok, now this part is open for debate as this is definitely somewhat of an apples to oranges comparison and I freely admit that. But it's hard to overlook the fact that a laborer's wages in today's FIAT currency system are more that 140 times a historical norm. I wil admit that modern technology and methods have made the discovery, mining and production of silver substantially more efficient and cheaper (in real terms) than it's been throughout history. However, at the same time the population of the world is many times greater than it was around the birth of Christ. Also, you can argue that the quantity of silver that exists on earth is finite and most of the larger deposits have been discovered and mined. I think the true monetary value of gold and silver will take a long time to be fully recognized once again. I don't know when the move will start or when it will end. I just believe that the precious metals are subsantially undervalued from a historical standpoint.

Chart of Silver/Gold Over the Last 600 Years

[calmcookie]

Interesting ... thanks.

[rono]

Great stuff Cirrus, What I've paid attention to over the years and particularly since the bull rally in the late 70's, is the ratio of gold to silver. Right now it's about 1:65 whereas, as your chart highlights, for much of history, it's been in the 1:15-20 range. And remember back in the bull run that gold topped out around 800 while silver topped around 50 =====> 1:16. Now what this means to me as an investor is (and also as a speculator) is that to the degree we have a continued bull market in pm's, silver is the place where you can make more $. Hey, if gold goes back to 800, it's a double. However, if silver goes back to 50 it's seven fold. To this end, I've always overweighted the silver miners and when doing funds, made sure it was a true diversified pm fund and not a gold fund. Hell, I even overweight silver in my bullion stash. ;-) best, rono

[Cirrus]

rono, I couldn't agree more about silver. I think silver is where the value is.

[SilentOne]

Cirrus, What a week to be cruising to Norway!! Heading back today over the North Sea from Norway. Great week, great week. And silver finally moved this week. We are very long this metal, physically and in miners like CDE, WTZ EDR.V and some HL and assorted juniors. Other positions in BGO, GSS, GFI, HMY, KGC, NG and PDG and junior golds looking very smart too. cheers, john