The price of precious metals can fluctuate in the market quite a bit. So you may ask yourself, “Why should I buy silver?” One of the best answers is that inflation is destroying the value of our dollar and the government debt is spiraling out of control. However, the problems could be much worse in the near future. We are printing money and issuing debt like its going out of style. Over time Silver and other precious metals have always held their value. We can not say the same thing about our own U.S. Dollar. But Silver and Gold are experiencing all time highs why should I buy now?

How can Silver protect me from inflation?

There are many good reasons to own silver. As an investment it holds its value very well over time. It’s price rises with inflation so it will perform better than any of the depreciating dollars you are holding on to.

Perhaps the best reason of all to own at least some amount of Physical Silver is for survival. In the event of a national currency crisis and hyperinflation, owning physical Silver could save your life.

During the great depression FDR declared a bank holiday where all the banks across the nation were closed for 3 days. This was done to stop a run on many of banks. Now those people who had all of their assets either on paper or in a savings account were simply out of luck and could not access their money. This is just one reason to always keep an emergency fund ready on hand, but what if that bank holiday lasted longer than 3 days? Or what if many of the banks never opened back up at all. In places such as Argentina and Zimbabwe hyperinflation has devalued their currency to the point where people literally needed a wheel barrel full of cash just to buy a loaf of bread.

This scenario seems almost impossible in the United States but some financial analysts warn that its much more possible than we would like to believe.

The United States has recently printed Trillions of dollars. Only a few years ago a ‘trillion’ dollars would seem like a made up number. This is a sure sign (and the cause) of inflation. To protect your livelihood from inflation you should invest in a diverse combination of Gold, Silver, and other precious metals. However silver rises and falls faster than gold.

Historically where gold has doubled in some cases Silver tripled or quadrupled in value. It is always possible for the prices to fall from their current highs. However in the current economic climate I would be more concerned with the dollar crashing instead. No matter what Gold and Silver will never be worth nothing. If their prices did take a dive I would just take the opportunity to buy even more and so would most of the countries across the world.

Why should I buy Silver, and not Gold?

Silver stands above all the rest when it comes to a situation where you would need trade and barter. Gold, while it has a tremendous amount of value in a very small volume, would be very difficult to trade with. Your single gold coin that is worth $1000 would surely be enough to buy anything you will need, but how would anyone make change? With worthless paper dollars or pennies and nickels? Silver coins are much more tradeable and come in more useful denominations.

Silver is also much cheaper than Gold and very easy to find. Before 1965 United States Half-Dollars, Quarters, and Dimes were all made with 90% Silver. Today the majority of coins are cupronickel, because even the copper in the pennies became too expensive in 1982 to continue making them. It would seem as if we have been robbed of the use of real money. Today we are issued worthless paper backed by nothing, and coinage with little to no intrinsic value.

How can I buy Silver?

The easiest way to buy silver is by going to any coin trading store, most cities in the country have them. Ask these pre-1965 circulated coins known as “Junk Silver”. It’s called this because it has no value to collectors and it is kept solely for its silver content. There are also many places to buy precious metals online.

The current price for dimes is about 1$, a quarter is $3 based on silver at 16$. A half-dollar goes for about $6 and silver dollars range anywhere from 12-20$ because of their value to collectors. So remember that “junk silver” will have less of a markup because its been circulated and the collectors are not interested in them. I am not interested in collecting shiny things, I am looking to protect my wealth and well being. So junk-silver will do just fine.

Once you have a good amount of Silver that you could use to barter and trade only then would I start to think about buying Silver Bullion, Rounds, or Gold. Gold is like buying insurance for your savings. Junk Silver is more like an emergency spending fund. Whatever you do, don’t sit around and watch your money slowly be inflated away. Protect yourself by owning physical gold and silver.

What is inflation you may ask? Rather than explain using complicated economic terms and charts I will show you first hand. Allow us to take a time machine back to the year 1960. A used car costs close to $800, a gallon of gas $0.31, a gallon of milk $0.49, and the cost of a new home was a mere $16,000. Reach into anyone’s pocket at that time and you will find something very different than you would today…Real Money. Quarter’s and dime’s were both made of 90% silver. By today’s current silver prices ($16.50 / oz) a single quarter would be worth about $3.00 and a dime would be about $1.20. Now just imagine if you could return to today’s time with a pocket full of 1960′s quarters and dimes.

Inflation and Fiat Money

So what happened between 1960 and today? Long ago our nation decided to stop the practice of backing our dollars with gold, silver, and precious metals, known as the “Gold Standard”. Instead they issued money which was backed only by our governments charming smile and word of honor. This is known as “Fiat Money”, our currency has value because everyone believes in it and is backed by the government. However our country’s love of the printing press over the years had increased the total money in circulation. Therefore continuously decreasing the value of our dollars, and silently taxing away the wealth of its citizens.

Since coins are different from paper money, in that they are made with metals that have real world value, it becomes inevitable that the cost of the materials to make the coin exceeds value of the coin itself. This is the reason that silver coins were replaced with copper coins, and copper coins were replaced with zinc. As recently as 1982 the cost of minting the 90% copper penny became too expensive as a result our new pennies are 97.5% zinc. A pre-1982 penny a worth about 2.5 cents and climbing.

Gresham’s Law

1/4lb Bag Silver Coins $99.00

The reason why you have never seen a silver quarter or dime given to you as change at the store is known as “Gresham’s Law”. Bad Money Drives Out Good. Currently pre-1982 pennies are still circulated regularly, but only at a rate of about 15 per roll (15/50). As soon as a person realizes that when placed side-by-side one penny is worth more than twice the other, they will choose to keep the more valuable one and pass on the worthless one to the next person. As a result higher concentrations of bad money is circulated.

Since the 2008 credit crisis began our government’s spending addiction has gone out of control. Trillions of new dollars has flooded the market, and the value of our dollar is once again in decline. One easy way to judge the value of a dollar is by the price of gold, and this week the price of gold shot up over $1000 per ounce. (4 quarters = 1 ounce) Once again it may become necessary to debase the value of our coins as our current Nickel which has remained unchanged since 1945 has a precious metal value of $0.05 (75% copper 25% nickel) but costs $0.08 to make. With skyrocketing inflation and metal prices our treasury will be forced to issue a new composition for the nickel which will be worth much less than the ones today.

Within a few years time our nickel may go the way of the penny. Where its real value may exceed the face value by 2-3 times. Following Gresham’s Law the old nickels will be systematically pulled from circulation and once they are a trader’s market will emerge. You can even see this principle being applied on websites like eBay and Penny Bullion, where you can purchase bulk copper pennies for roughly 2.5 face value.

Advantages of Nickels over Pennies

While a copper penny is already worth about 2.5 times face value and a modern nickel is only worth 1x face value (Quarters and Dimes are both worth about .15x face value) there are several advantages of collecting nickels. First it is much easier to acquire nickels than it is copper pennies. You may walk into any bank and simply ask for 20 dollars worth of nickels and that is what you will receive. If you were to ask for 20 dollars in pennies you would receive a random mix or both copper pennies and modern zinc pennies. Once you had returned home you would have to sort by hand through hundreds of pennies, and out of your 20 dollars worth of pennies you would only receive about 6 dollars in copper pennies.

The second advantage of nickels over pennies is they are easier to store. Would you rather have 200 dollars in pennies or 200 dollars in nickels filling up your closet. By volume this would be quite a considerable difference. Also while pennies are made of 90% copper, nickels are 75% copper and 25% nickel. So they are also subject to increases in the price of the nickel market. In the future the value of a nickel may far exceed that of the penny.

Allocation of Wealth

The goal is to protect your money against the coming tidal wave of inflation and if possible to make a profit. Therefore if you can afford it your primary assets should be in Gold and Silver. Now if you are poor like me, or you have extra money around then you should consider investing in a small stockpile of nickels. Now that you have this information you should know better than throwing out your pennies and nickels, because they are NOT worthless. I’ll give you a nickel and next year you give me 3 nickels. That’s a deal I’ll take anyday.

Conclusion

The spectre of inflation has been haunting the American people for a long time. In the darkness of night grows ever stronger. Do not be fooled by the slick words of our politicians, the wealth and savings of our country is being looted from within. Many people have been warning of a possible collapse of the dollar in total. In the days to come you must be wise, and use your cunning. Save and scrape every penny, nickel, and silver dollar you can get your hands on. In this way you will come out ahead. You can watch as the population en masse panics as their worthless paper dollars struggle to buy little at all.