The American Open Currency Standard

Ever wonder what your personal savings would look like if you picked up an ounce of silver each month for the past ten years?

It’s not hard to figure out, and I spend enough time telling people it’s a good idea, so I decided to do the math and find out how saving in silver compares to other forms of stashing away cash.

I went all the way back to October of 2001 and looked up the average market price of silver each month. Then, I factored in a premium on top of the market price for physical silver ($3.75 per ounce). Sure, premiums were probably a lot less back then, but I want to give silver an challenge.

As it turns out, saving in silver is a pretty good idea. Here’s what I found:

After 120 months of buying a minted ounce of .999 fine silver each month, obviously enough, you would now own 120 ounces of silver. What is less obvious, however, is the total acquisition cost: purchasing a single ounce, each month with minting premiums, would have cost you a total of $1968.

120 ounces of silver, based on September 2011′s average closing price, has a melt value (spot + 0) of more than $4500. That’s a 130% return on investment over a ten-year period, approximately 13% per year.

What I find most intriguing about this result is that conventional math calculates inflation at an average rate of 10% per year, significantly greater than the government’s CPI of 3.9%. If you want to know what’s really happening with inflation, a simple and accurate barometer is the price of silver.

When you compare silver savings to the riskiness of the stock market, the laughable rates on savings accounts, and the dullness of cash under the mattress, it’s easy to become enthused by the safety of silver.

The only downside most people consider is the classic “well, I should have started saving ten years ago; it’s too late now.” To address this concern, it may be wise to consider the following:

With the same math applied to saving silver starting ten years earlier (October 1991 to September 2011), the numbers work out like this: you would now own a total 240 ounces, which would have cost you $2699, and would have a melt value of more than $9000. So, it would have been a good idea to start ten years ago, and even better to have started 20!
Are we heading for a decade of stability or volatility? Will the next 10 years bring upon us inflation or deflation? If you’re one of the many who follow mainstream media, you probably think that now is a great time to get in to the stock market and purchase other paper assets; the economy is recovering and things will get better real soon. If you’re actually paying attention, however, you probably are concerned that deficit spending, printing too much money and excess taxation lead to one result: hyperinflation. If you’re right, every day is another great chance to get started.

Recently, I had the privilege of helping launch MembersMint.com, an online retail precious metals store that offers a simple way to save in silver: just pick one of their clubs, either proof or brilliant uncirculated, the number of ounces you want to collect each month, and you can put your savings strategy on auto-pilot. Know a few friends that want to start saving? Joining a club entitles you to participate in their multi-tier affiliate program, earning you a small but worthwhile commission that can be spent as a store credit.

For those of you looking for a reputable precious metals affiliate program, you’ll want to investigate MembersMint.com. I personally know the founder, Arthur Johnson, and oversaw the development of the business plan, ensuring it was worthy of bearing the mark of excellence: AOCS Approved. If you’d like to learn more, MembersMint.com is holding a pre-launch conference call tomorrow evening, with special benefits for those that join a club before the official launch on the 18th of this month. I’ll be a guest on the call, and I invite you to join me.