The way I see it, silver has basically two major categories of use. The first and most important use is as a monetary asset. It is only when used as a monetary asset that it could realize its true (or fair) value.

Currently, it is probably as far away (not time wise though) from being used as a monetary asset, as it has ever been. It is for this reason that silver is so undervalued and such a must-buy.

The second is really all other uses that is strictly non-monetary. This is how it is currently (materially) being used. Under this scenario, it is just another asset that rises in price when excessive credit (including money printing) is created.

You could loosely say that it acts like a commodity when used as a non-monetary asset, and of course that it is money when used as a monetary asset.

Now, silver will not just be willingly restored to being a monetary asset, and the masses won’t just go and buy all the silver they can get just for the fun of it.

Instead, what is likely to happen is a collapse of the current debt-based monetary order will bring people back to using silver as money (out of need for financial survival), as well as, stack silver like they stack stocks, bonds and other major investment classes, in order to protect against the fallout from the crisis.

Interest rates play a critical part in identifying when the time for silver being restored to a monetary asset could come (explained here); and over the last couple of years, the bottoming of long-term interest rates has signaled that the time is soon.

Featured above, is a comparison of silver prices and interest rates. During the first part of the silver bull market (especially from 2002 to 2008), silver mostly acted like a commodity. During that same period, interest rates were declining and had not yet bottomed.

However, now it appears that interest rates have bottomed, and this will be one of the reasons why silver will now be set apart from commodities, and will likely outperform.

From a fractal analysis point of view, we are at a period similar to 2003, but given the different interest rate conditions (as well as other changed conditions – more on this another time), silver is likely to rise much faster now.

A breakout from the current triangle could be epic, as shown in a previous article.