Now you are talking about a complete change in the way governments operate. Governments always deficit spend to fund the promises they made to get themselves into power. They are more concerned with holding power than what is good for the nation. We all know that. A precious metal based currency would mean debts being paid back in precious metals which effectively prevents deficit spending. I doubt any government on the planet will ever go back to precious metals as it stops them doing what they always have which is spend way too much and no-one votes for a party which tells the truth which is you can't have everything. I admit there is no shortage of stackers who are adamant that it will happen but unfortunately I doubt it very much. You fiat will be still be used when the time to sell silver comes along. In fact fiat is just as good as gold if you have a government that understands money and economies and knows the value of a trustworthy currency but unfortunately we always get lawyers who know how to make laws and thats about it.
tolly, All roads lead to Rome Goverments create fiat to achieve their goals as you said. As you are familiar with FOA probably I like his explanations. Floating instead of old fixed gold standard make sense to me. Like Germany with Euro now. Fully backed by gold marked to market. USD as a reserve is gone. My feel is that the fear people experience is because of the possibility that we'll be stuck with the fiat at these critical times. According to Sinclar we are darn close.
The US dollar will eventually be toast but not before the yen and the euro.....the USD is the best looking of the three ugly sisters and contrary to what most stackers think there is still life left in the USD simply because there is so many trillions of dollars out there looking for a home with limited homes to choose from. Economies are collapsing but stock markets and the USD is rising...now why is that.....understand that world bond markets are 10 times the size of the all the world stockmarkets so as money is ripped out of the sovereign bond and muni bond markets and the failing euro and the failing yen, there is precious little that can absorb that kind of money except stocks and the mighty dollar....the gold and silver market is way too small and offers no return, money has to go somewhere for a return...and it will. If you think gold and silver will explode upwards soon I think you will be disappointed....when the yen and euro have been well and truly pummelled, then it will be time for the USD to face the music and then you will see stocks reach all time highs, resource prices to roar higher, gold and silver to soar.....all because the money which fled to the USD now flees to a new home and we are talking incredible sums of money.....oh and expect the Aus dollar at least $1.50 US...... Sounds to good to be true...well it is....high unemployment globally, rising inflation due to money fleeing to tangible assets, rising interest rates because the banks will be forced to raise capital ratios to provide safety margins due to collapsing banks around the world and the high risk factors.....and get any thought of money printing out of your head as the majority would like you to believe because we will be deep in stagflation...ie zero growth with high unemployment and high inflation so any attempt to print cash will be immediately met with a lower value currency and guess what....more inflation due to further abandonment of said currency into the last homes available for all that money, tangible assets, oil, copper, gold....you will see politicians hanging in the street if that was to happen.
My feel is that USD will go last as well. And after that will be no place to "hide". Agree. Bond bubble and the rest as well. No I don't think explosion will be soon but I read opinions that April and May will create a platform (base) for the move. Printing is distorting the picture so much that even a guessing of the timing is impossible. I like your detailed descriptions of the future scenario. But after trust into reserve currency is destroyed, something has to be a reference value during bilateral settlements. And it does not seems to be fiat ever again (yuan or whatever). There is not enough gold for that purpose neither on World level, so it'll have to be re-valued. BTW read some interesting stories about people leaving Washington.
A bottom in May would be nice.....I think if gold can't surpass $1500 then $1100-$1200 is on the cards...I will be watching that $1500 mark and then decide to buy or wait depending what happens. I also think you will find it will actually be a harder decision working out the best time to sell....not buy....at worst we may buy 9 or 10 bucks short of the bottom but what about the top....suddenly faced with 40 or 50 bucks short if we are not careful....
Thanks for this insight. As much as ABC would always hedge your unallocated and try to deliver. There are reason why they have these clauses in the contracts. The ability to deliver is only as strong as the weakest link in their supply chain. It only takes a default from one of the upstream suppliers. Immediately your unallocated becomes a fiat settlement with an insurance claim to Lloyds for the funds. As always if you don't hold it you don't own it. It matter doesn't how good the books look or how much business they do. This world is already as crazy as it is with the number of derivatives and paper swaps and all the shinanigans that happens behind the scenes. If I were to buy unallocated, I would buy the Perth Mint option. These are the refiners and actually as close to the miners as possible. Since they would source their gold straight from mining companies and mines. I don't know where ABC source from, if you buy unallocated from them and they inturn buy the same from the Perth Mint (at a wholesaler cost). Then this may be as solid as buying from the Perth Mint. But then why would you want another party in the middle. All it would do is introduce more risk into the current system. Anyway, just my 2oz worth. Cheers, Slam
tolly, $1200 could be touched as a final shake-down and $1500 seems very relevant in the current situation. Most people thinks I don't care about selling when it comes to it as long as I've got a solid profit, but when times come it will be much harder. Now you just have to have a capital to buy dips, but selling slightly too late will be extremely costly. Slam, As you said "The ability to deliver" is the worst concern that a client can have. As soon you ask, it is clear you must do something about it. Taking delivery seems to be the best move.
That's the way I look at it too Bimaco...we will one day face a psychological test...when to sell such that we are happy with our profit, we are not too concerned over what me missed or worried that it was too late...
A little perspective: 17 Mar 2008 spot silver was about $21 21 Nov 2008 spot silver was $9+ A 57% drop.
tolly, You know the saying "If you want to learn about yourself - go trade", so at blow-off we'll have a chance to go deep in
It looks like 60% retracement. If you just re-map to today that's around $17. Big question is would you poke a lion below 20. Mathematically it can go to 10 or 5 but can CBs afford that ? Once you pass a breaking point ...........
Interesting read on the current situation. (If posted elsewhere I apologize). http://www.coinweek.com/commentary/...trols-will-likely-be-here-before-you-know-it/
Mate, its actually more than that. I was thinking about it a bit more. It seems to me, if you buy unallocated from say the dealer, the dealer in turn hedges this and buys unallocated with the Perth Mint. Everything looks good on paper. But to me, there are some questions. The dealer itself, is hedging your purchase, however it would be in their name. So in turn they have a liability to you, owing you x number of unallocated. However the Perth Mint has a liability to the dealer as the hedge purchase was in the dealers name. If the dealer goes belly up, you will only be a secured creditor. The Perth Mint purchases are assets which may be sold first to cover for the secured creditors. At the end of the day, I literally do not trust unallocated unless you bought it directly from Perth Mint. Literally the more parties you have the more risk you have. Slam
Slam, You are completely right. Cutting the middleman is always healthy for your business. So far we didn't even consider any third party risks. Going further, confiscation is the last step. Government can confiscate everything even from the Perth Mint. They can knock even on our doors. It doesn't mean they will.
Silver is still just a market...It will cycle up and down.....there will be an end to the upcycle one day and some people are going to be very dissapointed to find that the governments haven't confiscated the gold and silver and that currencies are not gold and silver backed There will be a time to sell and after that there will be plenty of silver available. Be very open minded about what you read. Conspiracies, manipulations etc.....we are not talking about De Beers here.....it is a bit much to believe all this perfectly co-ordinated assault on gold and silver and one day it will all be exposed and gold and silver will reset to phenomenally higher prices and remain there forever. It is not going to happen like that. They will rise like any other market for reasons which will be obvious. As the greatest currency in the world crumbles then gold and silver will benefit from the rush to security. Keep in mind that something else will rise from the ashes and whether it involves gold and silver and to what extent is unknown. There are a lot of other choices available. The problem is we are focused on gold and silver and we are blind to the alternatives. Asset backed trade dollars could be backed by any tradable commodity...rice, wheat, corn, barley....etc. Silver will make a fine investment....for a period.....
Not so sure I would like a "wheat" baked currency. What would happen if we had a mouse plague!! Would the dough rise or fall? Not to mention if people suddenly decided to stop eating pastries for morning tea. The resulting flour mountains rain shadow would definitelly put a damper on the breads value!
