I heard that expression growing up but did not understand it until a few years ago when I became interested in precious metals and read an article which explained "two bits." I knew two bits was a quarter but did not know why.

Back when silver was used as money a silver ounce round was too valuable for many transactions so the round was cut into eight equal pieces to facilitate lesser transactions. Hence the expression "pieces of eight." Each of the pieces was called a bit so two bits was a quarter. My education on the subject was now complete (or as complete as I care about).

Since a friend of mine is a barber and I was thinking of calling him, the title expression/jingle came to mind and then I thought further about it. And now to your question...

I don't think it will make too much difference in"real" price as apart from temporary fluctuations gold has always bought about the same amount of goods and services down through time. We've all heard that one ounce of gold down through time would purchase a good quality hand tailored suit. By that standard gold is under-priced at the current time.

I suspect the same would be true going forward with most commodities. I see one exception, namely that life's necessities can become so scarce that no amount of money (paper or metal) would cause one to part with them.

Back to the shave and a haircut. A haircut (generic_ not a costly hairdo) runs about $5 and the shave would probably be equivalent. I haven't been able to get in touch with my barber friend to confirm the price of a shave. That's $10 bucks and that's in Florida where wages are dirt cheap. I'm certain the national average would be higher. So $10 bucks for two bits. Sounds like silver is mighty cheap to me. It should be more like $40/oz. based on that analogy.

Since both metals are currently under-priced I expect that gold and silver will both do a little better than just maintaining our purchasing power as paper burns. However much better they do, that will be magnified even more in the mining stocks.

But either way both metals shine in a monetary crisis whether inflationary or deflationary as the Dow/Gold ratio goes to very near parity in either case.

P.