Something Borrowed, Something New

A bug’s life is the life for me. Such was the anthem at the Phoenix Silver Summit in late February, where gold and silver bugs reveled in a fiesta of bullish numbers.

Confronting a perfect storm of dour economic news, Roger Weigand, Ted Butler, and their newsletter-writing next of kin predicted a golden forecast for metal heads, best summarized by David Morgan’s one-liner of choice: Every dark cloud has a silver lining.

Yet while attendees soaked up heavy droplets of high-level economics, I spent the bulk of my cameo promoting a basic mathematical device . . . fractions. Fractional silver, that is.

Why fractions? Because savvy silver bugs recognize that fractional coins will someday fetch the same price as their one ounce counterparts, and when that happens, the American sheeple and other investment virgins will send demand for smaller denominations soaring. It is only a matter of time.

Call it farsighted or hindsighted, there is finally a mint producing quarter ounce fine silver rounds at an economically justifiable price. Fittingly, the coin is molded in the form of the world’s oldest coin – the Lydian Lion. Originally made of electrum (an alloy of silver and gold), the Lydian Lion became a popular token of trade in Lydia, Asia Minor, around the year 600 BC.

In homage to this patriarchal coin, the Lydian Mint is now producing fractional gold and silver coins with the Lydian Lion imprint for mass distribution, with 1/10 ounce and 1/4 ounce gold coins coming this April as a complement to the quarter ounce silver round. Designed and produced by a college professor, the Lydian Lion does what college professors do: it teaches.

It teaches History. The coin helped establish gold and silver as a universal and preeminent form of currency.

It teaches Economics. The coin offers a direct challenge to a fiat-based economy and emphasizes the need for moving to a “real money” standard of exchange.

It teaches Social Studies & Psychology. Investors buy in bulk, but fractional coins make sense for the populus, especially when emotion is a driver for investment or when necessity demands it.

The same principle that has driven the premiums for bags of junk silver will logically apply to their .999 fine silver competition. Of course, the term “junk silver” is an oxymoron; it’s like using the expression “honest politician.” Silver ain’t junk, no matter the form, and politicians ain’t honest, no matter the rhetoric. Nevertheless, the advantage of owning a pure .999 fractional coin rather than a 40% or 90% silver alloy is pretty obvious: Higher value, smaller coin.

Those who study the silver market wholeheartedly agree. Writes David Morgan: “This coin is long overdue. It anticipates a dramatic increase in the price of silver as myself and other have predicted over the ensuing years.”

Despite the added minting costs, the premium for one ounce of these fractional coins is still less than the premium of a one ounce Silver Eagle. If silver hits $100/ounce in the coming years (or dare I say, $10,000/ounce, as some have opined) a fractional silver piece will be a versatile – and necessary – complement to any physical position.

It may be true that nothing is new under the sun, but we live in an age where borrowing from the past has become a novel idea.

‘Til next time, that’s my Saab Story.

Tarek Saab is the President of GoldandSilverNow and a former finalist on NBC’s “The Apprentice” with Donald Trump. He is an international speaker, syndicated author, and avid investor, and he was named Kipling’s “Who’s Who Among Executives and Business Professionals for 2008.”