Here is a statement, or a financial riddle of sorts. If I had a rand for every time I woke up in the morning, I would be a millionaire. And I am only 40. True or false?
If maths is your superpower, you would soon smell flawed arithmetic. Multiplying my age by 365 days in a year would yield only 14,600 days. At R1 per day, that would be R14,600. Far from a millionaire! So, the statement is false. Right?
Not so quick. There is a way to make the statement true that would allow me to be a millionaire after only 14,600 sleeps with one simple variable. I would insist that each R1 coin earned was from 1965. Since the R1 coin from 1965 was 80% silver, each coin would contain 12 grams of silver valued at R140 today (September 2021). Voila … I am a millionaire!
The above example may seem like magic, but it really isn’t. It’s simple monetary truth revealed by sound money. Quoting Morpheus from the Matrix, “How deep does the rabbit hole go?”
Let me illustrate.
According to research by Statistics SA, in 1961, R1 could buy you:
- Ten loaves of 1 kg white bread (store baked), at 9c each.
- Three 5 kg cotton bags of mielie meal, at 30c each.
- 5 kg of fresh chicken, at 70c/kg.
- Three dozen large eggs, at 34c a dozen.
- 5 kg tomatoes, at 20c/kg then.
- 4 kg apples, at 23c/kg.
- Six pints (570ml) of beer, at 16c each (and 2c refund).
I own a 1966 R1 coin which I carry in my wallet. Let’s assume I sell it for just under R140 (the current value of the silver the old R1 coin from 1966 holds). By selling it, I have effectively released the economic energy that was locked into that R1 coin for over 50 years. What do you notice if you were to go shopping with the R140?
- For that R140, I can STILL buy at least 10 loaves of bread.
- For that R140, I can STILL buy at least 15 kgs of mielie meal.
- For that R140, I can STILL buy at least 1.5 kgs of chicken.
- For that R140, I can STILL buy at least 3 dozen large eggs.
- For that R140, I can STILL buy at least 5 kgs of tomatoes…
Do you now see how deep the rabbit hole goes? A single R1 coin can teach you more about the value of sound money (i.e., silver and gold), saving, investing, and preserving purchasing power than most economic textbooks.
While there may not be any old R1 coins in circulation, any silver modern bullion coins or bars will do the same economic job: they preserve your wealth.
What the catch? Well, there isn’t one. The more silver you own, the more efficiently your purchasing power is protected.