A Study In the Value of Silver

Many people state that Silver is undervalued and will often cite the Silver to Gold Ratio. Other people will say that one ounce once bought you a suit. I will attempt to gain an understanding into the value of Silver by examining historical labor prices versus the price of Silver. Let us start with minimum wage statistics. I will be using values from a table available on Wikipedia which you can review here. The United States didn't start a minimum wage until 1938, so those are the most historical numbers we can start with using this method.

Beginning with 1939, the minimum wage was 30 cents an hour. This means that at minimum, a person could earn 3 Silver Dimes or .217 Troy ounces per hour. Now let's look at the last year that Silver appeared in coinage. In 1964 the minimum wage was $1.00, 10 Silver Dimes, or .723 Troy ounces. This shows that compared to Labor, Silver was hugely undervalued in 1964. Looking at today's minimum wage which is now $8.25 an hour a person can now earn .591 Troy ounces per hour (Based on Silver @ 13.95/Troy Ounce). Please note that we didn't use Silver Dimes in this example as Silver Dimes are no longer being paid out.

This represents a steep drop in the value of Silver over the last 70 years in comparison to labor in 1939. To bring the ratios back in line, the value of Silver would need to roughly double! To further exemplify the point, would you believe today's minimum wage labor to be more skilled or less skilled than the labor in 1939 when America still had its manufacturing? Opinions may be mixed on this question, but due to the manual nature, I would argue that labor in 1939 was more skilled than today's labor.

Depending on your interest, we may expand upon these ideas in future posts. Have a wonderful day, and happy stacking.

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