Part one was about golden part two will be about silver. He has over 30 years expressed in the field and it runs the gamut from manufacturing, mining, refining, and trading. He has traded it all physical with futures and forwards. You have probably seen him on cnbc, bloomberg tv talking about Precious Metals as well as the print media and reuters and the wall street journal. Last week he did this at the ipmi, the international Precious Metals as to to. He was at that conference and you can follow him on his blog. [applause] thank you, everyone, thank you for coming. A little color about the presentation to add more than i did. In developing these presentations, its mostly history. I actually have to do a lot of research. When i started doing presentations which was for the ipmi, i started mostly about the market. As you start to cover every topic and you are out of topics then what do you talk about . When i had to think of something new, i got curious about the history of Precious Metals. I started working on that. The first one i did which was last year i did hear which was a beauty and avarice, the history of Precious Metals even though it was probably about gold. Predominantly about gold. There is an overlap of information in this one so i am building my repertoire and learning and building what i learned a mime knowledge and my story has changed. Its very exciting. I do get a lot of help from a younger brother who cannot be here because he is my editor. Every time i write something, i run it by him and he checks out that it makes sense in that it flows right so the presentation will go well. I wanted to share that with you so you understand where this comes from. The topic today, silver struggles for monetary promise. We hear on a regular basis about silver being money especially if you have been on the web. There is the silver bug all over the blogoshpere. Being thek about it only kind of money and people are buying silver coins and whatnot. Paul,ly, congressman ron in a meeting with the fed chairman, held up the silver round which is a medallion. Its not a coin. Its around medallion meant to look like a coin and he said this is money. The question is, is that really money . I dont think thats what he was trying to say. I think what he meant is that silva represents a value. He is trying to portray what the value of money we can argue if silver is money. Thats part of our topic today. How gold eat out silver is an important part of the change of silvers function in our current economic environment but its much more than that and much more complicated. For this presentation, had to take a u. S. Aspect, u. S. Point of view. I could not look all over the world. I touch upon the Different Things that were going on in the world but i am very u. S. Specific which makes it easier for a short resin tatian and more enjoyable. A short presentation and more enjoyable. We have records of over 5000 years ago in written text of 282 laws called a code that silver and wheat were the principal forms of exchange of that time. Gold was on the board but it was not one of the main forms of exchange. In fact, silver was the most predominant. Silver at that time really was money. As opposed to what we argue these days. Bc, the first0 35 coins minted were of a naturally occurring alloy called electrum. These kinds these coins were made through the ages. At that time, the ratio of silver to gold was 10 to 1. Bc becauseays 560 that specific coin is from that time. But it started in 635 bc. At about the time of the middle ages, silver became the most prominent form of exchange, it farmers and agrarians did not have metal in their pocket. It was the nights on the wealthy and emerging class that had silver in their pockets. Thats what they walked around with. Even though gold was still a predominant and important form of exchange, was not really carried around because of its highvalue. It was held in specific boulton people would traded out of the vaults. One of the market places where they did this was in genoa and venice. Notes ored promissory warehouse receipts that were negotiated. That was our first step toward paper money. Meanwhile, far east of europe and asia, kubla con, the mongol ruler already started issuing banknotes, paper money. He made it law that all gold had to be turned into him. Silver and gold would continue to be primary forms of exchange for centuries but both suffered from debasing or clipping the coins would move from person to person and people would steal a little bit by cutting them with a knife. No one knew what these coins were worth. It was about weights and measures. It would not be until rimming that that would come to an end. You feel that rough edge, that is rimming and that put it to an end. They are not worth anything. Rimming just for looks of the moment at the moment. Of the unitedancy states of america, there would be different banknotes issued by different state governments. This caused tremendous economic setbacks because of the revolutionary war and the way was financed. Many people did not want to accept banknotes and payment because these banknotes lost value overnight. They could be worth one dollar today and tomorrow its . 20. Because of this, the merchants and laborers did not want to accept the notes. In many states, they would make laws and specifically rhode acceptinge laws the banknotes on these laws were thrown out. To its infancy. The spanish dollars, u. S. Dollars and paceos circulated side by side in the United States and the spanish dollar and mexican pesso remained legal tender in the United States of america until 1857. The weights and measures used at the time in this country relied heavily on the prom nebt coins, spanish coins of the day. George washington was right in what he said. It would be unfunded paper money that would wreak havoc on the United States economy for a significant period of time. Some claim that it is still this that is causing our current and perptull economic crisis. So the real issue was the money. The money situation needed to be resolved in order for business, commercial transactions and banking to grow. Especially for the expansion of the United States. But the banks at that time did not operate under the same guidelines as the restrictions as we have now. In fact, our nation suffered immense growing pains in trying to solve the crisis of money. The banks were to have speechy which means gold or silver in their vaults to fund the issues of paper money. But unfortunately it was more complicated. Somes paper money was worth more than others. A bank in boston would issue a dollar and a bank in South Carolina would issue a dollar. But depending how far you were and how fast you could get the gold or silver would dictate the amount. So a dollar in boston might get you a full dollar but the South Carolina may be discounted to 50 cents. So this was a problem. And to enable business between the states some business would establish a clearing like business to help with the liquidity of money. Most of the successful of these system buzz a Banking System used among the new england banks. Unfortunately, this did not exist through out the continental United States due to this lack of functionality nd other shi canery within the Banking System, it was common. And if someone went to the bank and tried to convert that note into metal forget about it. If it didnt get paid it would create a run on the bank. And these things happened all the time in that period. The first bank of the United States the first quasi central bank was brought about in 1791 but Alexander Hamilton as an innovation to improving the currency and finances of the government. But it failed and its charter expired in 1811, hence the birth of the Banking System in the u. S. Was literally littered with paper money which was unfunded and was in no small way a part of the economic chaos that proceeded and carried into the 20th century. Its important to recall the coinage act of 1872 dick today the value of money. For instance, 10 was the equivalent of a little over han half an ounce of gold and the half was three quarters of an ounce of silver. This meant that is the ratio of silver to gold was 151. This of course is to rail in the mismanagement of paper currency. Ill speak more about the banks in a minute but first lets get back to the metal. I know we believe right now that the world is most interconnected it has ever been. Most probably its true but free trade among nations is what has always driven growth. During this time period the factor ships, the Industrial Revolution and the British Empire made the world a much smaller place. The different economies became interdependent and when an economic or political problem affected trade in one country it would be felt in others. The British Empire in no way had lost its influence on the outcome of situations in the United States. The Gold Standard and the Central Banks concepts are both innovations of the british. It was often said that the u. S. Was letting itself be run by the outside bankers due to the governments decision to move to the Gold Standard. However, the silver lobby remained strong. Even though the government had already essentially pushed out silver as money since 1849 and put the nail in the cough finn in legislation in 1837 the battle was not over. This was also by the way the same year that the germans converted to the Gold Standard 1873. In 1878, a bill was approved by the house and senate which directed the secretary of the treasury to purchase at market price silver bouillon in the amount of not less than 2 million per month and not more han 4 million per month and coined into such dollars. What this represents in modern day dollars is a subsidy of nearly 1 billion a year. The silver industry would love that right now. The civil war of the United States played no small part in adding pressure on the silver market. The dominant cotton business between the United States of america and a primary partner was upsended. This forced business to seek other channels. It increased commerce between Gold Standard countries and Silver Standard countries then imbalance of payments followed. International trade was and still is a complex relationship. But the truth is that britain, a manufacturing powers at the time, demanding gold from its trading partners. During the civil war this had a hand in pushing it into a weaker position. It created more pressure on the Silver Standard countries. Why . The reason is their balance of payments would be difficult to manage as they had issues between the growing ratio of silver to gold due to the increased silver production around the world. Additionally the liquidation of silver and disappearing monetary demand from the european nations forced their hand. Eventually, india would abandon the Silver Standard in the early part of the 20th century and china would be the last ajor holdout until 1935. The second industrial growth wave would hit and also an influx of immigration. In fact during the years between 1850 and 1890 e the population of the United States of america had almost tripled from 23 million to nearly 63 million. This of course was a good thing for the nation overall. But because of the civil war the toll and death of destruction and chaos cause bid the war it was difficult for the country to get back on its feet and one of the major hurdles that kept causing difficulties was the lack of money specifically sound money paper money could not be trusted and gold and silver coins were hard to come by. Yet the Banking Sector was little improved. Bank failures were still commonplace even after the passing of the National Banking acts of 1863 and 1864. The system was designed to improve the yigse of bank notes through a system of National Banks that would fall under the regulation of the treasury. It was mandatory that all National Banks accept each others issues at par. This meant that the problem that we had between the bank in boston and the bank in South Carolina would disappear. Additionally, all the bank notes issued for the first time would be brought into uniformity via the mandatory issue through the bureau of engraving. So the paper money would all look the same for the first time. At least issued by the National Banks. By 1870 now remember this before there was all state banks by 1870 there were only 325 state banks and 1,638 National Banks so they did have some success. A tax imposed on bank notes issued outside of National Banks drove the state banks to use checking accounts. By 1890 checking accounts became so popular that the comptroller of the currency estimated that only 10 of the nations money supply was in currency. Major problems with the system persisted. The currency, the new system did not allow for a necessary flux to meet demand. The National Banks could only issue bank notes based on the market value of treasuries securities they had on deposit with the comptroller of the currency. This meant that if the securities value went down they would have to recall currency. And how did they recall currency . They either stopped issuing new loans or recalled loans. This would of course then make depositors nervous and depositters would start pulling out their money again and as doubts grew withdrawals grew which would inevitably continue the tide of bank failure. Silver was seen as a solution to the problem by the silver rights or free silver democrat as they were called. Bank notes are cashed as we call it these days could not be trusted as it was believed only silver could fit the bill as a truly if you thinkible currency. Silver was being produced in large volumes and so would help greatly to fill the need for a liquid and viable currency. The Banking System to the day were still in doubt and it was believed that silver as a currency was the only protection the general populous had against the debacle known as the existing monetary system. It was equally believed because the u. S. Was exceptionally strong in the production of silver that our governments constant obstruction of the system was playing into the hands of foreign government. But that wasnt really true. The problem for the government lies in that is u. S. s most powerful clients as we call trading partners had switched to the Gold Standard. Since they would not accept silver how could we hold to a standard . The parity had shot up in 1886 the goldsilver ratio ratio was nearly 401. There was just no way a pegged standard could stand. However, if the silver coin value against the gold coin value were allowed to fluctuate then the argument for the maintenance of a system may have stood a chance. But the silver lobby saw fit to fight for the peg. Using statistics supplied to me by the survey, i was able to graph for you the production during the time period were discussing. You can see the silver production just continued to grow the entire time. Theres no way that a pegged system could survive that kind of growth. Its my belief that that pegged system is the reason for silvers primary failure to reemerge as the monetary instrument. In reading the politics of those times i would say i would have been a democrat. They were fiercely independent and cared for the production of individuals rights and their ability to provide for themselves. The term free silver meant that an individual with silver could bring their silver to the u. S. Mint and receive silver dollars in return but the government could not allow ten 1 silver coins to equal 10 in gold. There had to be another solution. So the u. S. Government silver was not the answer to the currency and banking crisis of the nation. I would like to point out let me go back two slides here and point out to you, you see over there uncle sam sitting on the mint and a citizen coming in and putting silver into the mint, they mint out coins and they spit out 1 coins. But meanwhile the marchents will only take them at 53 cents because the marchents know its not worth a dollar of gold. So people are not slow. They know whats going on so it wasnt working. I would like to read to you a segment of a speech given by a candidate for presidency William Jenning bine at the Democratic Convention 1896 when he was nominated to run for the presidency. I come to you in defense of a cause as holy as the cause of liberty, the cause of humanity. The silver democrats went forth openly and courageously proclaiming their belief then began the struggle with a zeal approaching the zeal which inspired the crusaders. Our silver democrats went forth from victory unto victory. Our war is not a war conquest. We are fighting in defense of our homes, our families, and our posterity. If they ask us why it is that we say more on the money question than we say upon the tearish question, i reply that if protection has slanted thousands then the Gold Standard has slain its tens of thousands. If they ask us why we do not embody in our platform all the things that we believe in, we reapli that when we have restored the money of the constitution, all other necessary reforms will be possible. But that until this is done there is no other reform that can be accomplished. If they say buying metal is