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The concept of "value."
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Thread: The concept of "value."

  1. #1
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    Default The concept of "value."

    The question "What is the 'true value' of silver?" crops up frequently here and elsewhere.

    My working definition of the word "value" is, essentially, that something is "worth" exactly what you can get someone to give you for it, no more and no less. Its "value" is the value of whatever someone is willing to exchange for it.

    Many folks tend to measure the value of silver in terms of the US dollar. They believe that as the price of silver rises, so does its "value." I think this is poor and sloppy reasoning. Silver has, and has always had its own intrinsic value due to its scarcity, beauty, and so on. These traits render it a desirable, hence "valuable" substance.

    Since the "value" of silver is an intrinsic value it does not (in general) fluctuate, but the currency with which we purchase it does vary. The USD is up and down constantly on a daily basis. No thinking person would (any longer) regard the USD or any other fiat currency as a standard value. Why, then, do so many think that if silver costs $50 USD in a month that it is "more valuable" that it was in an earlier month?

    It is, in fact, the decline of the fiat currency which is manifesting itself. If one looks at the purchasing power of both, it is very likely that the purchasing power of the silver has remained roughly constant, and the purchasing power of the USD has declined.

    It is hard for me to understand folks who think that if silver goes "to da moon" which is their quaint way of putting it, that they will be ablre to make fabulous purchases with a few ounces of their magically "more valuable" silver. This is rather sad, but it is an idea which evidently will persist in the face of all reason and logic.

    I just don't understand it.

  2. #2
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    Quote Originally Posted by Homer View Post
    The question "What is the 'true value' of silver?" crops up frequently here and elsewhere.

    My working definition of the word "value" is, essentially, that something is "worth" exactly what you can get someone to give you for it, no more and no less. Its "value" is the value of whatever someone is willing to exchange for it.

    Many folks tend to measure the value of silver in terms of the US dollar. They believe that as the price of silver rises, so does its "value." I think this is poor and sloppy reasoning. Silver has, and has always had its own intrinsic value due to its scarcity, beauty, and so on. These traits render it a desirable, hence "valuable" substance.

    Since the "value" of silver is an intrinsic value it does not (in general) fluctuate, but the currency with which we purchase it does vary. The USD is up and down constantly on a daily basis. No thinking person would (any longer) regard the USD or any other fiat currency as a standard value. Why, then, do so many think that if silver costs $50 USD in a month that it is "more valuable" that it was in an earlier month?

    It is, in fact, the decline of the fiat currency which is manifesting itself. If one looks at the purchasing power of both, it is very likely that the purchasing power of the silver has remained roughly constant, and the purchasing power of the USD has declined.

    It is hard for me to understand folks who think that if silver goes "to da moon" which is their quaint way of putting it, that they will be ablre to make fabulous purchases with a few ounces of their magically "more valuable" silver. This is rather sad, but it is an idea which evidently will persist in the face of all reason and logic.

    I just don't understand it.
    Most silver investors I know seem to understand that holding silver is a means of preserving what wealth we still have, not making "fabulous purchases with a few ounces." Sounds like a classic straw man argument.

    We tend to fixate on the value of silver in dollars, because we use dollars to purchase silver. Its admittedly not the best measuring stick, but its the best we have. Once the dollar becomes less accepted as a means of exchange, these comparisons will decrease. I don't have a problem with your logic, but you need to understand that most people purchase silver because of its intrinsic value. In other words, you are preaching (or I should say "lecturing") to the choir, sir.
    Last edited by theo68; 13th July 2009 at 21:21.

  3. #3
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    "...something is "worth" exactly what you can get someone to give you for it, no more and no less."

    IMO this is absolutly true with no wiggle room. The value of an item is determined only at trade-out; the value is precisely what is received in exchange for the item, period.

    Always has been and always will be.

    My pre-'82 2-cents.

  4. #4
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    I tend to think in terms that I won't 'sell' silver but will 'spend ' it. By that thinking I would have to say the value is determined by what I can get for it at that particular time. On the other hand , I'm not averse to speculating on the price determined by the market one day with the intent of getting more on another which is a function of only the price of silver and separate from the cost of other items.

    Certainly those who take joy in a price increase as a result of inflationary(monetary excess) pressure or devaluation will have that joy tempered by the relative purchasing power they have left but it's better than having none at all!

  5. #5
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    In addition to the problematic thinking of valuing silver in terms of dollars, I think it is also problematic for people to think of silver (and gold) as a commodity...and particularly if they think they are "buying" them (a commodity).

    We're conditioned to think of commodities a financial loosers, because over time they become liabilities rather then assets. 99.9999999999% of the commodities we "buy" loose value as soon as we buy them, and virtually alway break, wear out, spoil, get consumed & are gone, become outdated, and end up in the trash or in a graveyard in the basement, garage, shed, drawer, closet, or attic.

    We too, virtually always start taking a commodity for granted after a few months and subsequently loose any passion and appreciation we initially had. And as a result, the item quickly looses the value we originally afforded it.

    To personally counter this folks need to NOT think of gold and silver as "commodities", but rather (maybe) permanent "insurance" or "treaure", and never think of "buyng" them, but rather, think they are trading-out paper FRNs to trade-in metal (treasure or insurance).

  6. #6
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    Default The original pound sterling at today's silver spot would be 193 FRNs

    According to one website...

    The British monetary unit name “pound” is derived from the fact that it originally represented the value of one troy pound of sterling silver.

    Wikipedia contains this snippet which seems to corroborate that bit of history ...

    There is some uncertainty as to the origin of the term "pound sterling". Some sources say it dates back to Anglo-Saxon times, when coins called sterlings were minted from silver; 240 of these sterlings weighed one pound, and large payments came to be made in "pounds of sterlings".[7] Other references, including the Oxford English Dictionary, say a sterling was a silver penny used in England by the Normans, and date the term to around 1300. For more discussion of the etymology of "sterling" see Sterling silver.

    However later on the same page is this dubious statement...

    The pound sterling is the world's oldest currency still in use.

    Because on another Wiki page is this fact....

    The circulating British one pound (£1) coin is minted from a nickel-brass alloy of approximately 70% copper, 24.5% zinc, and 5.5% nickel. The coin weighs 9.50 grams (0.34 oz) and has a diameter of 22.50 millimetres (0.89 in.).

    The coin was introduced on 21 April 1983 to replace the Bank of England one pound note, which ceased to be issued at the end of 1984 and was removed from circulation (though still redeemable at the Bank's offices) on 11 March 1988. One pound notes are still issued in Jersey, Guernsey and the Isle of Man, and by the Royal Bank of Scotland, but the pound coin is much more widely used. It was given the nickname "round pound" on introduction, although this term did not remain in common use.

    As of March 2008 there were an estimated 1,452 million £1 coins in circulation.


    And the $193 is undervalued by historical measure.

    A sterling at 240 to the pound was 1/20 of an ounce.
    A sensible fractional coin size, roughly a half dime.
    "I foresee little future in 'the price of silver', I see a huge future for 'the price in silver'." - heartbone
    "The truth is called hate by those who hate the truth." - K

  7. #7
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    Quote Originally Posted by Homer View Post
    The question "What is the 'true value' of silver?" crops up frequently here and elsewhere.

    My working definition of the word "value" is, essentially, that something is "worth" exactly what you can get someone to give you for it, no more and no less. Its "value" is the value of whatever someone is willing to exchange for it.

    Many folks tend to measure the value of silver in terms of the US dollar. They believe that as the price of silver rises, so does its "value." I think this is poor and sloppy reasoning. Silver has, and has always had its own intrinsic value due to its scarcity, beauty, and so on. These traits render it a desirable, hence "valuable" substance.

    Since the "value" of silver is an intrinsic value it does not (in general) fluctuate, but the currency with which we purchase it does vary. The USD is up and down constantly on a daily basis. No thinking person would (any longer) regard the USD or any other fiat currency as a standard value. Why, then, do so many think that if silver costs $50 USD in a month that it is "more valuable" that it was in an earlier month?

    It is, in fact, the decline of the fiat currency which is manifesting itself. If one looks at the purchasing power of both, it is very likely that the purchasing power of the silver has remained roughly constant, and the purchasing power of the USD has declined.

    It is hard for me to understand folks who think that if silver goes "to da moon" which is their quaint way of putting it, that they will be ablre to make fabulous purchases with a few ounces of their magically "more valuable" silver. This is rather sad, but it is an idea which evidently will persist in the face of all reason and logic.

    I just don't understand it.
    I see it as a little more complex... IMHO the value of both silver, or any other commodity is flexible just like the value of fiat currency is flexible. Both subject to the laws of supply and demand.. however since it is easier to print money than than mine silver fiat currency is , and you can pick your term here, more flexible or volitile. Also silver, and almost any other thing , but especially silver has certain real uses in a utilitarian/ industrial sense.. so it will always be worth something to somebody.. where fiat can go to zero when the issuing nation or empire fades away and to near zero if to much is printed ( although if the size is right , it's use as toiletpaper is seldom in doubt and base metal coins can always be used as scrap metal).

    Silver can run out, or become exceedinly rare, or in short supply relative to demand.. any of which can raise it's intrinsic value realtive to fiat without the fiat becoming worth less relative to every other thing in the world, or just most other things...

    Currently at best guess all the marketable silver in the world can be bought up for 20 billion dollars... if that changed and silver went up 10 fold in value to 200 Billion dollars .. it would barely cause a ripple..if it went up 100 fold to 2 trillion dollars all other things in the world being equal it would change the world about as much as the losses in the real estate market in the US have changed to world ..IF the losses in the real estate market were only 2 Trillion dollars not the 6 Trilion dollars that they are, and if nothing else in any other market had ever changed at all and 2008 and 2009 and all the other losses never happened.... That sounds kinda survivable to me, and thats silver at $1,850.00 an ounce in 2007 dollars.
    Hi Ho Silver ... Away

  8. #8
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    Default fits a discussion of value


  9. #9
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    Quote Originally Posted by silverheartbone View Post
    Better than LAND?
    Better than INFORMATION?

    Come on, silver is pretty good, but not the best ever in the history of humankind!
    Caedite eos.

  10. #10
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    Default


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