Dan Denning Interview Transcript

Speaker key:

BS              Boaz Shoshan 

DD            Dan Denning

BS              Hello, and welcome to Our Silver Symposium. In today’s video, you’ll be seeing an interview I conducted with Dan Denning recently. Now, Dan, as some of you Southbank readers may know from a while back, was actually the founder of our business. He used to write some of our newsletters here as well.

                   But he has since moved on, travelling around the world. And this interview was actually conducted when he was in the middle of the United States. But in this interview, we discuss silver, of course, its history, and the manner in which monetary debasement is really causing a lot of social volatility.

                   And the manner in which this can be really quite destabilising in the future, and where silver really plays into that. But I hope you enjoy it. It is quite a broad-ranging interview, but we cover some pretty interesting points, which we don’t really see so much, and we don’t really see covered quite so much by other precious metals experts. So, I hope you enjoy it, and we’ll see you later on.

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                   Dan, thank you so much for joining me today. It is great to speak to you about precious metals, as ever, but I don’t think we’ve ever really gone for silver in particular. Now, Dan, in terms of the way you look at silver rather than something like gold, do you think it’s a better form of money than gold? As, of course, you are, like myself, you are a hard-money person, always going for precious metals. What’s your actual take on silver, relative to gold?

DD              There’re two takes I have on it. One is silver’s always more affordable, so from a cost perspective, it seems appealing in that way. And I think that’s part of the demand story for silver, which makes it so interesting. If you look at it in almost every major currency this year, around the world, it’s up more than gold. I think in the US it’s up 34% year-to-date.

                   Whereas gold is 25%. So, you’re looking at the gold-to-silver ratio traditionally, silver has a lot of catching up to do in price terms. But when you try to figure out what would be the catalyst for that price gain relative to gold, I think part of it is just demand, and part of that is affordability.

                   When people start to question what money is, and whether paper money has value, or they start to learn more about precious metals, silver is always a little bit more affordable than gold for first-time buyers. And I heard one person describe that, in the precious metals bull market, silver will be the tech stocks of the bull market.

                   So, for me, that’s part of the interest in it, as an investment. But I have to say that historically I’m always interested in how gold and silver were used as mediums of exchange, or where they circulated as legal tender.

                   And I think the more you read about that, particularly in the United States, in the 19th century, and then some of the things that happened in the 20th century, I think there’s an argument to be made that silver will be remonetised as a circulating medium of exchange, if there’s this vaunted monetary reset that we’ve talked about in the past.

                   So, to me, there’re several interesting aspects to it right now. But, for me, the affordability aspect for new buyers will drive price higher. And then, the more people learn about money and silver’s role in previous monetary systems, I think the more normalised it will be to talk about silver as money again.

BS              That’s interesting. And there’re all manner of different threads that we could pull on there. For me, looking at silver as a monetary object, I always find it interesting that silver was seen historically as a softer form of money. These days, we’ve got incredibly soft money supplies. It can just be created just from lending. It doesn’t actually need to be tied to physical assets, as it was in, let’s say, the gold standard.

                   But during periods when there were gold standards or bimetallic standards, silver was seen as the softer form of money.

                   It leaned towards the working man, rather than the bankers and the businessmen, because the supply was softer. It was greater in supply. And, as a result, inflation was higher when you had silver circulating as money than if you just had gold, which was much tighter in supply.

                   And so, when you’re talking about monetary exchange, I would generally veer on the side of silver rather than gold, simply because while it is constrained in supply, it is at least plentiful enough. There is never really going to be too much of an issue with a shortage of it.

                   I’m very interested to hear you thinking of silver as it will be seen as a form of money in the future. Because, generally, folks go for gold as something that will be remonetised. And silver is something which has been left behind somewhat, after its demonetisation. You don’t see central banks buying it, and you don’t really hear of it spoken about as a form of money in the same way that gold is.

                   Can you elaborate a bit on why you think silver, its properties match what we might think of in the future when people look for a harder form of money?

DD              It’s probably a bit of an apocalyptic view, or I would say maybe controversial, when you talk about potential monetary futures, because gold I think is a monetary asset, as a precious metal, that you save in, because you get more bang for your buck.

                   An ounce of gold is just over $1,900 right now. I wouldn’t spend it. I have no intention of spending gold. Actually, there are some interesting ways you can spend gold using digital equivalents, which is something I’ve written about in the Bonner-Denning Letter. 

                   But on a day-to-day basis, I don’t think there’s that much popular interest yet in people spending gold. They save in gold because it’s a way to extract money from the legacy financial system, into a monetary instrument that you can liquify later in a medium of exchange.

                   Whereas I think silver, in addition to having been legal tender at one point in most countries, you could conduct transactions in silver because of the scale. So, an ounce of silver, or a silver dollar, or a half dollar, those were circulating media of exchange in the US at one point, until they were demonetised in the 19th century.

                   And that’s a whole separate issue, by the way, of demonetising silver in order to allow for paper money to flourish. But I’m talking about a world in which legal tender laws no longer have the force they have now. Which is to say, say I wanted to go out today and buy a shotgun, or a generator, or a side of beef from the local farmer, or some produce from the local co-op, and for whatever reason they didn’t want dollars, or they were willing to accept, parallel to US dollars, some form of silver.

                   And that could be either legal tender silver coins, which are minted by the US Mint, or just a particular weight of silver, which, of course, you can buy from bullion dealers, and it’s not particularly difficult to get your hands on.

                   So, I think we live in a world where, for now, there’s a monetary free-for-all, in which people are beginning to realise that being forced to save and spend in money issued by the government, and, of course, you don’t really have much choice about that, is bad for them. For their financial future. For the spending power of their money. And for the value of their savings.

                   And, to me, it looks like silver is a much more likely candidate to be used as, I wouldn’t say a black market, but let’s call it grey market or silver market, if you want, where people choose to do business that way. So, that’s one of the things I’m interested right now.

                   There’s a whole other discussion, which we probably shouldn’t have today, because it’s not something I’m terribly informed on, but one of the big drivers of the silver price and the supply, I think, is its demand as an industrial metal or as a technology metal. So, there’s a component of demand for silver that’s nonmonetary, that’s also I think fairly bullish for the price.

                   But I’m not interested in it as a price speculator. I’m interested in it as a saver and as someone who would expect to maybe be able to conduct transactions in precious metals in the next ten years.

BS              On that note, with the industrial side, of course, we don’t need to dwell specifically on the industrial elements to silver demand. But how do you think that actually ties into silver as a monetary instrument? Do you think that functions where a really significant portion of silver demand is from the industrial level, when you’re aiming to use this as a means of exchange and, really, as a form of money?

                   Because, historically, when people were using silver, its main use was as money. Its purpose was money. It wasn’t being used for things like solar panels and all manner of medical applications that we have today. Previously, when it was used as money, it was money. It was just money.

                   Do you think, in the future, if you’re thinking of a monetary reset, or you’re thinking of the everyman looking for an asset that he can use as a means of exchange, come hell or high water, do you think the influence on the price from an industrial level, do you think that actually functions? Do you think you can have a form of money which is also being hoovered up for industrial applications at the same time?

DD              Yes, I think so. It’s a good question. I don’t know what the current level of industrial demand for silver is, and how much of that is heavy industry, or if its electronics. I know, too, though, that markets are markets.

                   For example, in the last silver price spike, which was partly contributed to by demand for solar panels, if something gets too expensive, you substitute for it, assuming there’s a substitution, that something has the same chemical properties or physical properties. But you can find that other something at a lower price.

                   So, if there was a new whiz-bang thing tomorrow that made solar panels super-efficient and massively cheap, but involved huge quantities of silver, that would be pretty volatile for the silver price, which would undermine the stability of silver as a potential medium of exchange. But I think there would have to be a massive unexpected increase in industrial demand to make silver as money more volatile than paper money. But it’s a legitimate issue.

                   And the other issue with silver is there’s a ton of above-ground supply. So, at the right price, people would be taking their candelabras and their silver spoons and all the stuff that their grandparents had in the living room, and taking it down. So, instead of cash for gold, which is a big deal here in the States, when people try to raise money, you might get silver for gold.

                   And there’s enough above-ground supply that’s nonmonetary and nonindustrial, that that could have an influence on the price if people wanted to sell it. But, like I said, I’m still mostly interested in it as a monetary issue and not as a collectible issue.

BS              When you’re looking at the attitude towards silver, I find it very interesting that America sees silver somewhat differently, I think, than we in the UK do. And, of course, in America, your sales taxes are different in America than they are in the UK.

                   If you’re buying silver in the UK, generally, unless you can find some tax loopholes, you’re going to be paying 20% on it. Whereas in the States, you don’t have to, especially if you’re buying from certain states that don’t execute the same laws when it comes to the buying and selling of bullion.

                   So, I always thought that perhaps it’s because the taxation is different, that the American silver bullion industry is much larger, and it’s much broader when it comes to the things that you can buy. Do you agree with that, or do you think it’s just a cultural difference in the way that Americans view silver than Brits do?

DD              I think it’s the latter, not the former, because there are some people who invest in silver. And so, the tax treatment of your gains, whether it’s a capital gain or the collectible, is a factor in what price you buy and whether you sell. But if you talk to a lot of people over the age of 50, really, they’ll remember their grandparents having silver dollars or having collections of silver dollars.

                   They can talk about the Morgan dollar and the Peace dollar. They have some familiarity with the difference historically in the design of the coins and the silver content of the coins. The Walking Liberty half dollar doesn’t have an ounce of silver, but it was a 50-cent piece. It was the last time that you could get silver in a US coin.

                   Silver was demonetised in the United States fully in 1965. It started being demonetised back in 1853. And then, the silver content of the dollar was eliminated in 1873.

                   But people are used to treating silver as something precious and treating it as money. That may be a cultural difference. But it also makes people more willing to exchange it for other goods and services, which maybe wouldn’t happen in the UK or other places.

                   You’re already seeing stories, from time to time, of small communities in the United States, and I think a few in Europe, where different mediums of exchange are circulating, as people don’t use or don’t have legal tender that’s issued by the government. And this was quite common in Weimar Germany. It was quite common in the Great Depression as well.

                   Where business still had to be done. People still needed things. They needed to eat. They needed to travel. They needed work done on their house. Or they had skills to offer. But, at that time, with deflation, there was just a shortage of paper money. So, people found other means to do things.

                   It’s hard for people to imagine that we would move to that world, instead of maybe the other direction, where there’s a digital world, and you’re exchanging services using tokens or stablecoins or other medias of exchange. But I think it’s much more likely in the places that I’ve travelled in the last couple of years in the US, that physical money, defined as silver, is used.

                   So, I think culturally it’s more likely here. It might be likely in Europe, though. I don’t really know. I’m just not familiar enough with local customs to know whether that could happen.

BS              One of the main things that I ponder on when it comes to precious metals is simply what silver is going to be viewed as in the future, because at the moment it’s post-demonetisation.

                   It’s not got the same monetary prestige, especially when it comes to the current market movements, that it used to. And not like gold. So, I wonder in the future how silver is going to be perceived, and how that’s going to influence its price behaviour. Because, at the moment, you see a lot of people just see it as a speculative asset, or as high-beta gold, just a volatile asset that will follow gold, but will follow gold more so.

                   And I wonder if it’s going to regain some of its prestige in the future. When you’re thinking of, on a longer-term basis, when it comes to gold and silver, are there any events or any forces, do you think, that are really going to change how investors in general see silver?

DD              Yes, definitely. You made me think of one really important point with regard to US history, of this debate about bimetallism. Once silver was demonetised in 1873, the US was on a gold standard. The chief criticism of the gold standard was that it was deflationary, that it simply didn’t provide enough money for the economy to grow, even though prices were incredibly stable, and it was a golden era of industrial productivity, and the Industrial Revolution.

                   So, you had noninflationary growth, but silver wasn’t part of that. And the argument from the people who favoured bimetallism, which was both silver and gold as legal tender, and is as mediums of exchange and as ways to save, it was that silver was more liquid. That you could increase the money supply more quickly with silver, because there was more of it.

                   And prior to 1853, if you were a miner in the United States, a silver miner, you could take your bullion to the mint, and have the bullion minted as a coin, as a legal tender coin. So, the public could influence the supply of money as they thought it was necessary.

                   I haven’t really thought that through yet. It’s something I’m writing about on a weekly and monthly basis, but I think that’s one of the appeals of a bimetallic standard. If silver is remonetised in some way, it allows for a little more flexibility in the money supply. But now I went off on a tangent. I forgot the first part of your question. Can you repeat it?

BS              Just in terms of how silver will be perceived in the future. What forces might change our perception of it?

DD              So, in my casual research into it, over the last couple of years, there are periodic points in US monetary history, but also in other countries, where the government will pass US Coinage Acts, where it will redefine money in terms of either its weight as a precious metal. Or, more recently, in removing the precious metals content of money.

                   But the Coinage Acts are almost always related to critical stages in a country’s history, whether it’s because they have a massive budget deficit, they’ve gone to war, or they’re trying to re-establish sound money and sound finances, so they can borrow.

                   So, for example, the demonetisation of silver in the United States in 1873 was I think directly related to Germany’s demonetisation of the silver dollar at the end of the Franco-Prussian War. Germany didn’t exist as a country at that point, but it won the Franco-Prussian War, because the Prussians were the leading force in the German coalition.

                   And on the basis of that, they became a country, and they used a gold standard to establish their creditworthiness as a nation state. So, historically, there’re plenty of examples of countries who need a monetary reset, writing a new law which established a new currency, which is backed by a real asset. And that real asset is always either gold or silver or some combination of both.

                   So, those laws passed by chronically indebted countries who have currencies that are on the brink or in trouble, those become a catalyst for the monetary reset, if indeed it’s government money that we’re going to end up using. We live in an era now where there’s a competitor to government money, and that’s private money, like bitcoin, not regulated, not centralised, and the whole ecosystem of other possible cryptocurrencies.

                   So, I think that part of the discussion is different today than it was 50 years ago. But my point is that the catalyst for these monetary resets is almost always a government who’s heavily indebted, needing to re-establish its creditworthiness. And it does that by repudiating the previous currency, introducing a new currency or a new bond that’s backed by a real asset. So, those are the things that I’m looking for to be part of what drives the remonetisation of silver.

BS              On that note, when you’re looking at gross indebtedness, where we are today when it comes to developed nations, certainly, the level of debt seemed large, and yet it carried on growing and becoming ever larger. And, of course, President Trump in the States, the US indebtedness has continued to blow up.

                   Obama managed to double the national debt, managed to double it, I think only marginally increasing the interest costs, due to the collapse in interest rates. And with Trump in charge, he’s managed to blow out the deficit even further. When you’re looking at that, and we look at the case of Japan, for example, where public debt doesn’t seem to have caused any tipping point when it comes to creating social unrest or requiring a monetary reset.

                   Japan may be just the enigma or the anomaly. When you’re looking at the developed world, here in the UK, Rishi Sunak is very content with blowing out our own deficit over here. Are there any points at which you think this is going to become a really big problem? Because, at the moment, it’s very politically popular to think that debt is not a problem at all. And nothing could be worse than austerity. What could actually throw a spanner in the works for that worldview?

DD              That’s the $64,000 question, or with inflation maybe the $64 million question. But the answer is I don’t know. But I think people need to remember, or people will realise at some point that government debt can’t increase infinitely. Because the phrase economically, not only does it crowd out other borrowing, so that other companies and real businesses that create wealth no longer have access to credit, as the government consumes more and more of available savings.

                   But it also consumes real resources. So, we’re in the middle of a pandemic, an artificially induced economic crisis, as a result of the response to that pandemic. And for a short period of time, the government can pay everyone’s wages. It can intervene in private affairs and suspend mortgage payments or commercial leases. It can provide loans that don’t have to be repaid to small businesses.

                   I was talking to a local businessman here yesterday, who I used to work for when I was a teenager, and he said that one of his kids now runs a business. They were able to get almost $200,000, which they don’t need.

                   It doesn’t have to be repaid. Right now, that feels like it is real money for people. The $1,200 they get a month via check from the government, the stimulus payments or the unemployment payments they receive, that money hasn’t had an influence on prices.

                   That, to me, is a tipping point, where people realise that you can’t really get something for nothing. If you continue to flood the real economy with fake money, it’s going to distort prices, which are going to force people to compete for resources. And by resources, I mean food, I mean fuel, I mean health insurance, education. They’re just the things that normal middle-class families spend money on.

                   At a certain point, this wave of monetary stimulus coming from central banks and governments, is going to distort consumer prices, and not just distort the stock market. And that’s the point at which people will start to realise that you can’t get something for nothing. Previous to this episode in monetary history, gold and silver were there to limit the expansion of government. Not just for political reasons, but for financial reasons.

                   As you’ve seen in Venezuela and in Argentina and Germany, time and time again, there may not be an actual numeric limit to debt-to-GDP ratios, but what you’re slowly doing is you’re impoverishing the value of middle-class savings by destroying them through inflation.

                   And that has so many destructive side effects politically and socially. That’s the real limit to this monetary policy. It may not be numeric or theoretical, but it’s destroying the bonds of civil society. It has every time they’ve tried it, and it’s going to do it here in the United States and anywhere else they try it. Which is why we continue to recommend that people accumulate real money, gold and silver, whenever they can, whatever the price.

BS              It does feel like during these periods through history, when your faith in civil society and the institutions in civil society begins to crumble and begins to evaporate, that people turn to hard assets.

                   They just want something that they can trust. In that context, the phrase in gold we trust, which, of course, there’re the freely documents published every year, which are just an analysis on the gold mining sector. With silver, there’s still that perception. People still, in this country at least, they’re still crazy about silverware. Silverware was still used as a form of owning silver, even in areas where silver bullion and things were prohibited.

                   You still saw people who tried to get around it by just buying lots of silverware and silver trays and things like that. We’re in the Internet mode now. People are going to post this, and they’re going to share this behaviour online. Do you think this is going to become almost a viral thing? Ironically, viral, I guess, with silver’s antiviral properties. But do you think it’s something we’re going to witness as a social trend? There’re going to be people just buying lots of silver?

DD              It very well could be. Last time I was in London was just under a year ago. I went to, I can’t remember what it’s called. It might be just called the Silver Exchange, but it’s a giant underground, city-block-sized area, where it’s just full of silver. And not monetary, but silver plates, silver platters, tea sets, silverware, decorations, sculptures.

                   Do you know what I’m talking about? It’s over by the Bank of England, I think.

BS              I think I’m familiar with it, yes.

DD              It wasn’t that crowded, though. By the way, when I went there, it wasn’t that crowded, and it wasn’t that difficult to get in. But, in some ways, what you’re talking about is when there’s a lot of trust, mutual trust with strangers, then you don’t need to own your money physically and have it on you. You trust it. If you got the bank, it’s going to be there.  

                   You’re going to be able to get it. So, there’s a high level of trust in stable monetary systems. So, people don’t view wealth as a tangible asset. In fact, it’s not at that point. The level of trust enriches everybody, because you can conduct transactions without being worried that you’re going to be defrauded.

                   But, in my view, that’s not the type of era that we live in right now. A good example, for me, is recently a fire came through this part of the world where I live in. It passed a lot closer to my house than I expected. I’m talking less than five miles. About three miles. And it was touch and go. It was never really imminent in the way it could be if it was a hurricane, or a natural disaster, or an earthquake, or something like that.

                   But what it did force me to do was very quickly go through the bag that I had prepared for these types of scenarios, and make sure that everything I wanted to take with me was there. You can put your credit cards, and your bank cards, your photo IDs, your insurance policy, proof of lease, insurance inventory, medicines, eyeglasses, all the things that people talk about putting in that type of go bag or bugout bag.

                   But you’re probably not going to be able to go to the ATM when there’s a forest fire bearing down on your hometown. So, for me, having some money in there, including cash, physical notes, but also some gold and silver, if I couldn’t get to my bank, what would I use? What would people accept, or what would I be able to convert into a medium of exchange, if I had to start my life all over somewhere else?

                   And it reminded me, when you see all these photos of World War Two, especially before Germany invaded France, you saw lots of refugees from Poland, and people fleeing the Wehrmacht and the blitzkrieg. What were they taking with them? They weren’t taking pianos, which they had, as a form of savings. They were taking whatever they could carry, which was usually jewels, gold, and silver.

                   And none of us like to think what it would be like to live in a world where you’re effectively a refugee, but I think, at least in monetary terms, that’s what we’re talking about. You’re a monetary refugee. If your money is locked in the legacy financial system, stocks, and bonds, and fiat money, then it’s effectively captive. And it’d be silly to not consider that there are going to be capital controls in the world, the way there are controls on physical movement right now.

                   I can’t come visit you guys in London easily, and you can’t come visit me in Colorado easily. I think the same thing is going to happen to money. And people’s instinct to preserve the value of their money is to convert it into physical things. And silver is one of the cheapest, most abundant ways to do that quickly.

                   And I think in a genuine panic, or at least in a realisation that there are some bad things going on, that will be one of the big drivers for popular demand for silver. So, we’ll see. It’s not a great scenario, but it’s what happened again and again through history. So, I think if you do it now, you’re just a little bit ahead of the curve, which is where you want to be.

BS              I think it was Russell Napier who said, I think it was last year, that we’re about to witness a bear market in the word and the implementation of the word market. And we’re going to see a bull market in the word control. And, of course, a bull market in control really just means a bull market in gold.

                   Because whenever there is a lack of a market, and it is purely authoritarian in terms of capital controls, things like gold become much more valuable. You don’t have anymore that same trust in everybody executing all of your payments. You don’t have the same trust in your ability to move capital abroad.

                   And, of course, if there’s not authoritarian control, you’re probably going to see an awful lot of inflation, as we can witness in other parts of the world. I wonder what that looks like, when it comes to things like silver, because when we talk about precious metals, here in the UK, there’s one mine effectively that near Edinburgh, that’s not actively churning out gold any more.

                   And there are a few other areas. There’re still people who are panning for gold in the highlands. And, actually, in Northern Ireland, there’re some gold deposits there, and there’re some in Cornwall as well. But, interestingly, most of England is bare of gold.

                   But when it comes to precious metals, we don’t really produce any. When you see gold is being exported from the UK, which it often is, it’s other people’s gold that’s been refined in Switzerland, probably dug out the ground in Australia, or China, or Russia, or Africa. And it’s made its way to our vaults here, and then somebody has decided they want to buy a lot of it.

                   So, over here, in the UK. It is different for you guys in the States, because you do actually have plenty of silver deposits, even if the price may not be feasible yet to pull it out of the ground. I wonder what it looks like for a world, when we’ve got precious metals, when the supply of precious metals is a heavily globalised industry. And relying on supply, you really need to rely on some pretty significant global supply chains.

                   When you’re talking about gold is getting pulled out the ground in Australia, going to Switzerland, and then making its way to the UK, to the Royal Mint or something, that is relying on a lot of different nodes, and a lot of trust also all the way between them.

                   And I wonder if we’re going to see things like capital controls, what that does to the supply chains for precious metals. Do you have any views on that?

DD              No, but just in the way you phrased the question, you’d think it would be pretty disruptive. Already, there are certain countries which prohibit the export of gold. China’s one of them. All of its mine production, as far as we know, whatever that is, is for domestic purposes only. And I’m assuming it goes directly into the government’s reserves.

                   I think South Africa has similar restrictions of the export of gold. You have to get permission to do it. Don’t quote me on that, but I remember last time I was there, I was surprised to learn at least that there’s really one channel for exporting gold from South Africa through the mint.

                   That particularly countries where they have significant silver and gold reserves, and are major contributors to global mine supply. But that itself is a whole other issue, which if you talk to the mining guys, they’re happy to talk your ear off about how there haven’t been any major discoveries of silver or at least gold deposits in a long time.

                   Now, maybe that might change, if there was the equivalent of shale with gold, where somebody suddenly found a way to take all the flakes of gold in seawater and extract actual metal from them. But in the meantime, countries that have significant mining assets with gold and silver will probably be more protective of them. At the very least, the market would be less liquid, and the supply, I think, would be smaller.

BS              When you talk about being ahead of the curve, and we’re pondering a future where capital is becoming very much restricted, it does seem like these materials that we really do rely on, a lot of other countries behaving and cooperating with each other for, it does feel like, while they may seem abundant now…

                   And even during the Covid lockdowns and everything, you really couldn’t find it when it came to retail bullion providers. You could at an institutional level, and you could at an industry level, but there was a sudden vanishing of silver bullion effectively from the bullion providers in the UK. It does seem like this is something that we’re going to see again in the future, just inevitably.

                   And if we’re wondering about this future where capital has become hugely constrained, and governments are becoming much more protective of their domestic capital base, I just feel like it’s something we’re going to see more in the future. One thing I would like to ask you, in terms of looking at silver and its relationship with gold, what do you think some people overlook about silver?

                   What do you think investors should know? Just something they glance over, something that they don’t quite understand about the nature of silver and what it means as a monetary asset. What’s the untold story about silver, would you say?

DD              I don’t know. I think most of the story is told, but maybe from newbies.

                   The reminder that its super volatile. There’ve been a couple of times, famously, where investors tried to corner the silver market, and the price spiked and then crashed. So, you’ve got to be conscious and careful about building a position, if that’s what your intention is to do.

                   What most people do, as they do in almost all markets, is they buy at the top and sell at the bottom. So, you have to try and be counterintuitive or contrarian about it, as we say, and pay attention to it, buy it, when you’re not thinking about it and no one’s talking about it.

                   The price action always gets everybody’s attention. I’d say that’s what makes silver both interesting and dangerous, is that it really starts to capture the public’s attention, because of the meteoric price rises. And then, the public is the last in before the price collapses. So, it’s susceptible to that.

                   And I disagree with some of my colleagues on this, although I wouldn’t want to go into too much detail here, but there’s been a lot of litigation and penalties levied against both bullion banks and investment banks about spoofing prices in the precious metals markets, and manipulating the price of precious metals.

                   So, I don’t want to go into conspiracy theory territory here, but I will say there’s a contest going on in the world right now, between two different ideas of what capital is and what money is.

                   And the first idea, which precedes directly from John Maynard Keynes, is that capital doesn’t have to be the product of savings, that you can spend money into existence, and that capital and credit are interchangeable.

                   So, it doesn’t require the labour and the thrift and the interest rates. The government can print money, and that’s capital. That’s directly at odds with my view of what money is and what capital is. And I think those are the two competing ideas. You have to be aware that part of what you’re doing when you buy silver and gold is, you’re investing in the idea that money is real and that this other idea, which is now popular, is destructive.

                   But, on the other hand, the people who are putting that idea forward, not only may they be actively trying to suppress the price of precious metals as price signals, to talk about the soundness of the financial system, but in the past, they’ve made the ownership of these metals illegal. They’ve used the law to try to punish people. Not only by demonetising them as legal tender, but making the private ownership of gold illegal.

                   So, those things are possible, again, but people have found ways around that, in terms of either owning silver that’s not coins, like you mentioned earlier, in terms of tea sets and all the other ways you can own it. But I’d say that’s a risk, too. No position, no investment, even if you think that it’s designed to be safe, is risk free. So, I’d look for price volatility. Don’t buy when it’s too expensive. And be aware that it’s not a panacea to the problem of overbearing governments.

                   But, for a long time, it’s been the most practical solution for people who don’t have any other options. So, that, to me, I think that’s going to happen again.

                   And as long you build your position safely, you can de-risk getting in at the top. And I don’t think we’re anywhere close to the top right now.

BS              Just to close on that, can you expand a bit? When you’re talking about those two competing ideas, you were very lucid on when it comes to the ideas of Keynes, that money and capital can effectively be created out of nothing, and spent into existence. But when you’re talking about the competing idea, can you expand on your idea when it comes to money being real and what capital is?

DD              I can. I’ve written about it a little bit, and there’re other people who’ve written about it I think more effectively, but I think it’s the idea that money is tied to value, and value is a product of labour, and creation, and what other people are willing to give you for the time and labour you went into creating a service or a good.

                   But, in some way, whether it’s through time or labour, and I’m not talking about a materialist world where money has intrinsic value, but that value is a creation that’s realised in exchange.

                   You can’t just create value by hitting keys on a keyboard. And that gold and silver have always been the most trusted way of exchanging value in a way that people feel like they’re not getting ripped off. So, I think the value of money has to be tied not only to trust, but that trust is related to people being sure that their labour isn’t being devalued, or that they’re somehow being ripped off. Because the medium of exchange itself is a factor in the transaction.

                   I didn’t say that as lucidly as I would like, but it’s that money is a real thing, and its value is tied to both labour and what people value the services and the goods at. And the other system doesn’t recognise that. It’s an arbitrary way of pricing things. George Gilder’s written about this pretty well. When money becomes disconnected from time and labour, then trust is lost over time.

                   And I think that’s where we are now. Although, I realise now I’m going to have to go back and write more about that, to try to be a little more succinct in describing it, but that would be my best effort right now.

BS              I think that’s very good, indeed. I think the time preference of money. And Saifedean Ammous, who’s a big Bitcoiner, has written a lot about this.

                   He’s talking about how in a fiat world, on a fiat standard, how we have effectively a low time preference for things. And we get consumerism out of it, from having a low interest rate. And we’re all about trying to get things a lot quicker under a fiat system, where money is very plentiful, where effectively money is very soft.

                   He’s a big bitcoin guy, so, of course, he’s looking for very high time preference things. And he thinks that, as bitcoin becomes used more and more as a form of money, this will influence culture as well. And people having a high time preference for things is going to change our perception of everything. But, Dan, you have been very generous with your time.

                   In terms of a closing statement or any closing words on silver, please feel free to share them with us.

DD              I honestly don’t have any. I just regularly accumulate it. And when I say regularly, it’s like dollar-cost averaging, where people buy stocks at a certain amount, every month, regardless of the price. I think a certain portion of your liquid net worth should be invested in precious metals as a way of trying to extract the value of your time from a more volatile financial market, because I think the financial market is very dangerous.

                   For the last 20 years, it’s been inflating financial asset prices, which has made people feel incredibly wealthy, but that wealth, I think, is very ephemeral. And what we saw in March is that if you can afford a 50% drawdown in the value of your financial assets, and you have enough time to make that up, then you probably don’t need to worry about anything I’ve said today.

                   But if you can’t afford a 50% drawdown because you don’t have time to make that up, assuming you could make 5% to 7% a year in the equity market, then putting some of your money in physical assets, in precious metals, is a prudent thing to do.

                   And if you haven’t started yet, it’s not too late to start. And silver’s always a little more comfortable place for people to start, because it involves a little bit less capital to begin building your position. So, don’t wait to do it. Start doing it. Do your own research, by all means. But if any of this sounds sensible to your or rings a bell, then it’s not complicated to get started, and there’s no better time than right now.

BS              There you have it, folks. Dan, thank you so much for joining me.

DD              You’re welcome. Thanks, Boaz.

BS              There you have it, folks. That was Dan Denning. Hope you enjoyed that discussion. It was rather pessimistic in nature, of course. We were discussing some of the grimmer realities, and the manner in which monetary debasement may affect us all at some point or other, and one of the reasons why you might want to own silver for all that, too. But I hope you found it informative as well.