Posted Feb 17, 2013 by Martin Armstrong
Much of the stories on the web about silver and gold tend to reflect the official prices rather than the free market prices. There is ALWAYS a free market even during periods of fixed exchange rates. During Bretton Woods, there was currency trading in Hong Kong where the yen fell to nearly 500 to the dollar despite the “official” exchange rate being 360.
The same problem exists with the precious metals. At our Princeton Conference March 18-19, we will be paying close attention to the metals since there is serious need for a honest authoritative review where there is nobody trying to sell you bullion and coins. The so called Crime of 1873 when the USA demonetized silver, there was an uproar that lasted into the end of the century culminating in the famous speech of William Jennings Bryan that thou shalt not crucify mankind on a cross of gold.
The data used by most people is simply the official standard of silver to gold used by the US government during the 19th century. The Long Depression of the period was created by the flood of silver that was grossly overvalued. For you see, the source of the Crime of 1873 did NOT lie in the USA. Once again you had to look to Europe. If you do not conduct GLOBAL correlations, you will be forever lost in the wanderings of a domestic mind. It was the Franco–Prussian War of 1870 (July 19, 1870 – May 10, 1871) that set the silver crisis in motion. Inflation had soared, but the disparity between gold and silver widened. Germany ceased to coin silver thalers for the people simply devalued them. Once Germany stopped minting silver coins, the price of silver collapsed. The USA was forced to demonetize silver due to the free market. The political pressure to subsidize the silver miners who otherwise would have lost their shirt and pants, led to 26 years of economic decline not much different than Japan. Pictured here is a British Magazine Puck making a joke of how the Americans were drowning in overvalued silver dollars.
Pressure mounted and Congress passed the Bland–Allison Act of 1878 requiring the U.S. Treasury to buy $2 million a month and put it into circulation as silver dollars. Though the bill was vetoed by President Rutherford B. Hayes, the Congress overrode Hayes’ veto on February 28, 1878 to enact the law. This unsound finance drove the silver to gold ratio during this period from 16-to-1 in 1873 to nearly 30-to-1 by 1893. It would soar to over 100-to-1 during the 20th century.
So for all those people touting $150 silver is around the corner, and others promising the collapse of the dollar and $30,000 gold, we will be issuing a very important forecasting report for the metals – (gold, silver, platinum, palladium, copper). This will be included in seat prices for the Princeton World Economic Conference. We will include for the first time a silver-gold ratio chart back to 600BC.