If America has it's rating down graded would it even make a difference to the price of silver or will it go up up and away and reach $40 . Can someone explain very simply to me WHAT WOULD HAVE TO HAPPEN TO CAUSE THE PRICE OF SILVER TO BREAK $50 ??? It sh#ts me being so uneducated in these matters but love the Silver devil.
OK I'll have a go... If America has it's rating down graded would cause many assets of intrinsic value to rise. ..why? US is the reserve currency of the world (want to buy crude oil - then convert your currency to to $US to complete the transaction) So the buyer pays in US$ and the seller is holding US$ - if the rating has been down graded, he won't want to hold that US$ long so sells for something more stable. Next guys don't like the risk in hold the US$ so askes for a higher rate - seller accepts so the buyer offloads again,etc,etc,etc....end up with EVERYONE going short US$ (in other words selling or offloading) So what does the idiots book to investing say about protecting you self during times like these? BUY PM's! The above has huge gaps and is very simplistic but very crudely gives a concept model. PM's can't be printed so can't ever get to the same position as the US$ is in currently - thats why it use to be back in Gold - somehow they thought they were smart enough this time to not fall into the trap - guess what? every other attempt before them failed - not one single success story! Started back with the Romans but thats for another post HA! look at that - Ag just spiked 23c from my post
you'd find that US treasuries ie bonds, which have some $14 trillion outstanding, would no longer be a safe place to park your cash. So if you cant invest in government debt in the most powerful economy in the world, where is a safe place to park your money? Really the only option would be "hard" assets like precious metals, commodities and cash assets.
Default or not doesn't matter. USD is no longer a 'safe' currency for investors so the next bond auction will not get bidders and so they'll go to QE3 and that will be the final nail in the USD. From there the currency will devalue at such a rate that any remaining investments will flee to whatever is a way to guarantee value - Apple shares, BHP shares, Metals, Commodities etc. So in US dollar terms gold and silver will go crazy but with 2 dollars US equalling one dollar Australian next year (info from a well placed bank source who told me 12 months ago that the AUD would be 1.10-1.20 by July) - gold may 'only' reach 2500-3000 AUD before financial safety is restored in some way and gold prices subside somewhat (I think back towards the equivalent of today's prices.) The current trend US/western capitalism endgame is still 5-10 years away and my hope is that the nations will repair themselves and spare us all the tribulations that a universal financial collapse would cause. Of course if the US defaults past a certain point, then all bets are off and financial Armageddon will be unlike anything the world has seen and unlike anything we can imagine. Gold and Silver will be so valuable they will be priceless and this is where you start going bush and hoping you can buy your way into a self sufficient community. This scenario is real doomsday material: A frozen world where you have to wait for order to be restored and food lines to form, and where people beg for any totalitarian government that will give them food. Eventually order is restored and if you can pull your gold from a vault you may live better than your fellows if the government allows it. I see a small percentage chance of this scenario, but still a chance, however faint. The only game that matters to Europe is Germany, the only game that matters to Australia and Asia is China. The USD is irrelevant to our futures in that regard and the decline of the empire is unavoidable - but if it dies too quickly it will cause a lot of pain. China now holds the financial power and thankfully they are too smart to cause a dollar meltdown, but soon the world will be in a place to allow the US to devalue officially and that will be their swansong. The prayer to put is that this rogue nation doesn't create a grander version of its 'war on terror' to use its war industry potentials to solve its economic problems. My .00002 grams worth.
My grams worth is that the US will just start another war somewhere how many wars can they fight at once ?
Thanks you, its like my thoughts put into smarter words. I see out Oz/NZ corner of the world as the best bet in a worst case scenario. I would rather rely on China than Europe Also our physical Isolation has led to a stronger history of self reliance. Lets hope we are somewhat insulated from the Shit hitting the fan.
Julie, Another factor to consider is that China is also dependent on US and EU stores such as WalMart etc. They call that "globalisation" better known as "jobs export". When the customers stop buying, simply because they are broke, then the Chinese sales to the US/EU stores will dry up. The factories wil close and the workers will be VERY unhappy. The PRC trade balance will go into reverse, as will Australia's. Then the Chinese workers will burn the Bastille, guilotine the Politburo, and start a new reign of terror. The ripples will flow around the world like a tsunami. The 'Final Solution' will be to go back to the Gold (PM) Standard, and THAT means Gold and Silver 10 times what they are now. OC
see the final summation from the Peter Schiff analysis in the opening post on this link for the impact of a US ratings downgrade http://forums.silverstackers.com/message-171303.html#p171303
If our dollar is worth 2US dollars then when gold is $6000 an oz in the USA it would be only $3000 here that is allowing that the US is still the reserve currency. But what if because of a credit rating downrade of the USD it is no longer the reserve currency and they price gold and oil etc in Swiss francs or RMB or another currency? Then gold may actually never get to the heights we expect it to relative to our dollar because we always assume that gold will always be priced in USD. Why should the USD continue to be the world reserve currency when it is so unstable - and soon to be 'junk' status? It just puts the whole world in turnoil.
it's still insurance against whatever happens, even if we wildly imagine being USD bullionaires and they switch up and change the currency it's priced in, that doesn't mean our stacks suddenly become worthless, we will still retain our wealth whereas a lot of people who left their 1s and 0s in a bank account might not be able to say the same thing.
It wont matter what currency its priced in because faith will be lost in the Fiat system. Gold and silver will go wild and hold its value in purchacing power.
Yes indeed, and since our entire economy at the moment is tied to China by the commodities thread, if they pull back, then we're in serious trouble. From Australia's point of view, the hope is that the Chinese will be able to awaken their masses to consuming the output in their domestic markets and keep the commodities flowing. With the average Chinese saving about 40% of their wages, the powers see a giant market waiting to be exploited. Apparently McDonalds are planning to open a restaurant a day there next year. I don't see an uprisings though unless the world is in total meltdown - a very faint possibility. Tienanmen Square showed the masses what happens if you make too much noise, and the powers there are very practiced at stifling dissent. The inflation that triggered Tienanmen Square taught the Politburo a lot and so they are very sensitive to the inflation issue. Unlike the USA, they have the option of executing corrupt bankers, which keeps the financial sector responsive to government directives. They are also aware that in the end it all comes down to the rice in the worker's bowl and the history of this current batch of Emperors shows that is a primary motivator to any actions of their government. I agree though that the inward turning of China could easily be the trigger for a new world currency (or perhaps 3 or 4 versions of one) , and no matter what gold and silver will be a good thing to own for quite a while yet. ( and p.s. I'd rather not be a gold and silver millionaire when I look at the circumstances that could create that position. Better to be comfortably well fed, housed and warm. than have the money and need to pay guards to keep the starving 'peasants' away from the gate)
I was not saying that gold and silver would lose their value, just that they may not reach the heights people believe if they change the reserve currency. Also a change of reserve curency and a return to a gold standard should stabilise the gold price. If you have not yet read this years report on gold by the Erstebank - (huge) if anyone knows gold it is Stoeferle! http://www.gata.org/files/ErsteGroupGoldReport-07-04-2011.pdf go to page 49 about world reserve currencies ...........
