With all the economic unrest unfolding, and silver being a historic monetary safe haven...Am bamboozled as to why the price is dropping so severely? Is it the majority bought due to industrial applications fundamentals which are now looking sus?, or the majority are high leveraged paper buyers, bailing with increasing margins predicted?{why are the margins predicted to rise when the price has been flat of late and is now dropping?} Are the masses seeing cash as king, with no regard or knowledge of its inflationary fiat downside ? Or is it all due to the evil manipulators controlling silvers small, thus manipulatable market and laughing all the way to their own bank?
Gees, that's a lot of questions. PMs are selling off to cover losses elsewhere and gain liquidity. Also the markets may well have been pricing in future margin hikes; next week will clarify to what extent this was the case. How did they have advanced knowledge of margin increases? I'll let you guess at that. Also note that industrials like copper have sold off significantly too as have stocks of course. The markets are indicating a protracted downturn over the coming 18 months at least and all signs are anything but inflationary, so cash and cash equivalents are a good place to be. (FYI, there are *several* recent threads with the exact same topic )
One important point - it's the central banks of the world that will determine whether or not we go into inflation. And to go into inflation, they will need to have a good reason to want to print money. Deflation is a pretty good reason. When a few EU banks start collapsing, the governments of the world will have "no choice" but to fire up the printing presses. So everything is going as near as can be expected. Save up your cash for a few days more to see how low the PMs will go and then buy as much as you can sensibly handle.
Thanks blokes...apols for the frothing question overload, had been away from technology over weekend and was written straight after eyeballing the silver price slaughter. One more though...any suggestion on how a separation between paper and physical prices would eventuate and exist?
Would you change your mind RTZ if a major economic power was to back their currency with gold and or Silver? Surely any country that was to go back on a PM standard of some sort would outlaw the paper trading of a commodity that is backing it's currency?
Re some country going back on a gold/pm standard - how would that really work in practice? Look at the Swiss recently - they were (arguably) forced to devalue their currency to compete with other countries that are purposely devaluing their currency as a trade weapon. How would a country on a gold standard handle that situation?
If a country went on the gold standard now, their currency would be slaughtered. It would shoot up in value compared to the other devaluing currencies making their exports extremely uncompetitive. That's a recipe for deflation and was a reason why Switzerland had to devalue their franc. So, I think no one country can go on the standard unilaterally.
