Hi Long-time lurker first time poster. I first want to say that this forum is one of the single most pleasurable places to read regarding PMs and even other topics. I enjoy my daily read or opinions and facts regarding the market so thanks. I wanted to raise the question which I haven't seen discussed during this recent decrease in spot price for both Gold and Silver and the manipulating strategy that COULD be playing out. I've been seeing a lot of sceptical posts around the interwebs debating that this is a strategy to force people OUT of PMs and back into the arms of the fiat. But quite quickly this is shot down with 'Well, it's not working is it! There's bullion shortages almost world-wide and some of the biggest trading days dealers have seen in history.' And 'Well there is, more new investors than ever with these bargain prices' I had a thought and began to look further into the future on how such a plan to de-PM the population of investors/stackers would work and wondered if this is only stage one of two. I began to think about why many people like Gold and Silver and of course ONE reason is, that the conversion into fiat when required can be done quite quickly and 'at the right' time can produce a profit on top of when it was initially purchase. Which we would all argue is a job well done in playing this 'game'. (I do acknowledge that people stack for different reasons, but undeniable a profit made by any trade back to fiat is good, even if you plan to use it to buy more PMs than before) So let's hypothetically say that with Silvers price at the moment being around the lowest for quite some time, skyrockets! With most people here smart enough to have loaded up in the dip, I presume most people would be quite happy to off-load SOME and even out the investment of their profit/loss statistics. Now let's say the price TRULY skyrockets into unseen prices would it not be tempting to move NEW investors and inexperienced portfolio holders to unload ALL back into the market? Of course it would! A quick flip! They can now afford that car, house, boat etc. And BAM! This (I think) would be the de-PM faze of the population making it too irresistible to resist. It may not catch ALL of us, but those who aren't in it for hedging against inflation and who don't understand/believe the financial environment of our time is up __ creek. But it may just catch enough. I'm not an economic guru and understand the PM market is attached to so much more But just something compelled me to sign-up and share. These times are very suspicious to me, as it seems like 'they' are no longer worried about disguising their ability to manipulate this market. I look forward to others sharing their thoughts on this theory. I apologise if this HAS been discussed in recent days, I may have just missed it. Happy Stacking!
Welcome SilverJay, I like your theory, however skyrocketing PM prices will have to mean the share, cash & bond markets are all going to hell in a handbag. This will result in central banks going Wiemar Germany style with the currency creation. Those who hold metal would be mad to exchange an appreciating asset for depreciating fiat.
I agree, in a sense, and undoubtedly my theory does relies on a lot of people not understanding what our current financial situation in order to run back to fiat (without hesitation) but that type of nativity is definitely out there in droves. When your PM investments are too easy to cash into fiat for a (perceivably) better lifestyle I think enough sheeple will bite? You have to remember alot of PM investment is NOT for the long LONG term. Just in my wide community and group of friends I speak too about such issues, I see a sense of nativity matching the Australian culture of 'she'll be right', most lap up stories of Australia barely buckling in a GFC scenario which is all just misinformation and frankly scares me. I can't tell you the countless stories I watched on mainstream morning shows and general news outlets saying 'we barely got scaved by the last GFC event' yet the next story on the teleprompter is about massive job cuts across all industries. Nobody picking up the relation between the two. I'm just saying that common sense is not so common in this world anymore and that's why I really think this could play out? *shrugs*
I think you need to account for Greed. Sky rocketting PM prices attract speculators and will draw heaps of new people in. The stackers already in the game might get caught up in the greed, holding on to their metal on the hopes it goes higher. Exactly like how the bitcoin bubble has played up last week. As the prices grew, it attracted more and more people and the ones who had decided before "If it reaches $100, I sell!" Were more often than not drawn into holding for longer. That also attracted a lot new players. PMs would be the same I reckon.
"To kill gold you don't manipulate its price, you manipulate its volatility. If gold looks unstable, it is unlikely that a gold standard will ever be accepted." http://goldchat.blogspot.com.au/2009/06/death-of-gold.html Volatility turns off average investors, keeping PMs a niche market.
PAPER PM holders dude... the physical buyers are cleaning up. The vast majority of investors are exposed to PM's through the exchange traded funds ETF's). Some have estimated that for every 1 dollar invested in physical bullion $1000-$10000 is put into the ETF's. They're the pussies that get scared out. They NEED counterparty risk, they need someone to hold their hand and someone to blame when it doesn't go their way! Don't worry about them...it's not real metal.
If anything has brought the issue of 'gold' to the forefront it is the massive drop. Anyone with half a memory will be saying '70's bull again' and 'something is seriously wrong when gold is not a safe haven'. They made a very big mistake if they were trying to solve sovereign, bond and fractional bullion problems and a great job if they were hoping to make money.
