Over the last 30 years, the value of silver has generally kept up with inflation, but along the way there were some periods of significant fluctuation.
In January 1993, the price of silver was around $4.20 per ounce. Over the next decade, the price of silver remained relatively stable, but in 2003 it began a rapid ascent, reaching a peak of over $20 per ounce in early 2008. This was followed by a sharp decline during the global financial crisis, but silver prices rebounded and reached new highs in 2011, when they briefly traded above $48 per ounce. Since then, the price of silver has fluctuated widely, but has generally traded in a range of $10 to $30 per ounce.
When adjusted for inflation, the value of silver in 2021 dollars has generally stayed around the same level as it was in the early 1990s. Do you get that? Adjusted for inflation, the dollar is the victim of inflation, but the precious metal is not and it maintains its store of value while the currency’s decline.
It’s worth noting that the value of silver, like all investments, can be affected by a wide range of factors, including global economic conditions, geopolitical events, and changes in supply and demand. Investors who are interested in silver should consider its historical performance in the context of their overall investment strategy and risk tolerance.
The purchasing power of $1 today vs 1923
The purchasing power of $1 today is significantly less than the purchasing power of $1 in 1923, due to inflation over time. In other words, the cost of goods and services has generally increased over the years, making it more expensive to buy the same things.
According to the Bureau of Labor Statistics, the Consumer Price Index (CPI) in 1923 was 17.1, and the CPI for January 2023 (the most recent available at the time of writing) was 278.7. This means that the average price of goods and services in January 2023 was 278.7 times higher than the average price in 1913, which is the base year for the CPI.
Using these figures, we can estimate that the purchasing power of $1 in 1923 is equivalent to approximately $14.85 in 2023 dollars. This means that an item that cost $1 in 1923 would cost about $14.85 today.
It’s important to note that this is just an estimate and the actual purchasing power of $1 would depend on many factors such as the specific item, geographic location, and local economic conditions. Additionally, inflation rates can vary over time and may be affected by various economic and political factors.
Why is this of any relevance?
Here is why, if you had a 1923 silver dollar it would be from the peace dollar series and consist of 90% silver. The silver melt value of a 1923 silver dollar depends on the current spot price of silver and the actual silver content of the coin.
1923 silver dollars, also known as Peace dollars, are composed of 90% silver and 10% copper. The total weight of the coin is 26.73 grams, and the actual silver content is 0.77344 troy ounces (24.057 grams).
The average of $25.00 per ounce silver was the spot price during 2021. Based on these prices and the silver content of a 1923 silver dollar, the silver melt value would be approximately $19.34
Conclusion, when Money was made from precious metals it more than held its value over time, once it switched to a fiat currency it began to lose its value at an alarming pace. Over this 100 year period bullion value surpassed the rate of inflation and it was the last form of sound money.
To summarize $10 in paper money if you held it from 1923 till 2023 would have the buying power in 2023 of about 67 cents. But the same $10 in silver would have the buying power today of $193.40. If this does not show that silver and other precious metals is a good store of value, much better than cash/currency, I don’t know what would.
More recent ratios:
The current value in todays prices of $100 in dollars from 1990 vs the value of $100 in silver purchased in 1990
To calculate the current value of $100 in dollars from 1990, we can use an inflation calculator. According to the US Bureau of Labor Statistics inflation calculator, the equivalent value of $100 in 1990 is $203.15 in 2023 dollars. Thus the value of that $100 today is about $49.00 in purchasing power
As for the value of $100 invested in silver in 1990, we can estimate the value of $100 invested in silver by looking at historical silver prices. In 1990, the average price of silver was around $5.18 per ounce. At that price, $100 would have purchased approximately 19.3 ounces of silver.
As of February 18, 2023, the price of silver is around $23.50 per ounce. Therefore, the current value of 19.3 ounces of silver would be approximately $453.35.
SO $49 if held in cash vs $453.35, which do you wish you would have done?