In other words, if silver becomes five times more expensive in dollar terms while cars, homes, food, the stock market, etc., also become five times more expensive, you have simply retained purchasing power, not increased it.
Silver’s true value is not measured in nominal (dollar) terms, but in relation to other assets. If silver rises from $16 per ounce to $80 per ounce, the owner is not necessarily five times wealthier. Partly for this reason, precious metals might be better classified as an alternate currency. In other words, precious metals serve as a store of wealth but are not producers of wealth. Silver and the other metals are better described as an insurance policy than a dividend-producing investment, although there are certainly speculative opportunities in inflationary markets. Precious metal purchases are IRA eligible and exempt from sales tax in some states, such as Texas. Thus the demand for silver continues to rise, and many precious metals companies extol the “investment” opportunities of silver and other precious metals. The electronics manufacturing, industrial, and healthcare industries often incorporate the soft white metal into the design and production of technology components and merchandise. Treasured for thousands of years for ornamental purposes because of its scarcity, aesthetic appeal, and antimicrobial properties, silver has in more recent history become prized as a superior catalytic substance and malleable conductor of thermal and electric energy.
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