Silver – A Brief History of De-monetisation

FYI

clipped from www.dailyreckoning.com.au Silver – A Brief History of De-monetisation clipped from www.dailyreckoning.com.au But throughout history, gold has not been the only monetary metal. Silver has always played a role alongside gold. In fact, up until the beginning of the 20th Century, more people used silver as money than they did gold. You wouldn't know it though, would you? Beginning in the last quarter of the 19th century, the major economic powers, the US and Great Britain, systematically de-monetised silver. That is, they worked to remove silver from the global monetary system. This conclusion is debatable but as you will see the decision to stop using silver as money was not one taken voluntarily by the people. As a consequence, gold/silver ratio has fallen from around 15.5:1 in the early 1700s to 66:1 today. The accompanying chart shows the gold/silver ratio from the early 1970s to today, along with the silver price. If silver is in the process of becoming 're-monetised', at these levels it is exceedingly cheap.

Original content Bob DeMarco, All American Investor

Total Business Inventories, Sales and Ratio (Graph)

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The combined value of distributive trade sales and manufacturers' shipments for May, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $966.1 billion, down 0.1 percent from April 2009 and down 17.8 percent from May 2008.

Manufacturers' and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,368.1 billion, down 1.0 percent from April 2009 and down 8.0 percent from May 2008.

The total business inventories/sales ratio based on seasonally adjusted data at the end of May was 1.42. The May 2008 ratio was 1.27.



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Civilian Employment Population Ratio (Graph)

This is another way to look at employment. The Ratio has fallen to 59.3 percent of the population. Still not as bad as the double whammy recession of 1980-82.

Of course, the population was lower back in 1980.

Interestingly, this was a period when the parents of the baby boomers where retiring.

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Bob DeMarco is a citizen journalist and twenty year Wall Street veteran. Bob has written more than 500 articles with more than 11,000 links to his work on the Internet. Content from All American Investor has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, Blog Critics, and a growing list of newspaper websites. Bob is actively seeking syndication and writing assignments.

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Dividend to Earnings Payout Ratio--Chart

This chart is a little disconcerting. On the other hand it is rapidly approaching the area we saw in 1982--the last major low in the market. File this one under food for thought. Feel free to comment or interpret.


Click on the chart for a better view.

Thanks to the Big Picture.

Are stocks cheap?

I often hear people say the stock market is cheap. Many times this is based on a simple assumption--if prices are a lot lower then they were a few months ago they must be cheap. There was a lot of talk about how cheap financial stocks were back in early September--right before they crashed. One method that can be used to determine if stocks are cheap is the price-earnings ratio (P/E). You can look at the chart below and decide for yourself, are stocks cheap?

If you take a close look you will notice that the market tends to get extremely overvalued at the peak of bull markets and extremely undervalued at the end of bear markets.
Chart Source

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