Economics Questions

Re: Buy New Silver, Don't Recycle It?

John James — Wed, 06 Jun 2012 09:11:21 GMT

That's an interesting proposal, but what makes him think people would continue to pay a premium for newly minted silver/gold coins when they could get the exact same element — that's basically one of the major things that makes gold and silver good moneys...fungibility — for less?

Re: Buy New Silver, Don't Recycle It?

pairunoyd — Tue, 05 Jun 2012 20:01:16 GMT

One thing Ive considered is that if silver does become a more popular investment or becomes acommonly exchanged money, then the silver he considers recycled would most definitely be gotten by someone. His efforts to influence others to buy new silver would to me seem pretty ineffective when you consider all possible buyers and it would simply leave more of the cheaper stuff for them.

Its almost sort of an ethical question as well. I think a lot of libertarian action presents ethical challenges. How great a cost are you willing to incur for your libertarian beliefs?

Buy New Silver, Don't Recycle It?

pairunoyd — Tue, 05 Jun 2012 19:49:28 GMT

I participate in a forum for silver and gold bugs. Most of us there hope that the world will return to honest money. I just want each individual free to decide what money he uses and accepts and I want to see an end to the money monopoly.

There's a guy at the forum that's always pushing others to buy 'new silver' or silver that would require minting companies, governments and mining companies to replace the silver youve purchased. You see, some people buy 90% junk (junk means it has no or almost no collectible value, at least currently) U.S. coins (pre-1965), junk silver canadian coins, sterling silverware, etc. And some will buy newly minted Silver Ameircan Eagles, Silver Maple Leafs, and various newly minted silver rounds and bars from private companies.

He says that buying the newest coins from governments and the newest rounds from companies will keep silver demand higher when compared to buying old silver thats been in the market for yrs and just keeps changing hands.

His objective, I assume, is short-term to drive the price of silver higher and thus profit, and is long-term to sell the idea of silver as money. I know that it is regularly argued at the forum that the COMEX's vast quantities of 'paper silver' pushes the silver prices down because of this illusionary supply (the paper supposedly isnt fully backed by silver, sort of a fractional reserve). Its also said that the Fed, govt and/or central bankers somehow manipulate gold and silver prices so as maintain their money monopoly, but we won't go there.

Does the argument that we should buy new silver instead of recycled silver make sense, assuming you want to effect a higher price and you want to encourage people to consider an alternative to current monetary policy?

P.S. If you like, you can swap gold for silver in this argument.