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Guest
chimpanchu said:So here's the logic...
Imagine if everybody selling their paper gold/silver contracts, the price of gold/silver will go down sharply and will be nowhere near as high as where it is today.
Is that mean the price of gold/silver AFTER the fall IS the real value of gold/silver (because it is without the fake paper component)???
You've got that all arse over tit . When people realise that their "paper" Gold and Silver is worth nothing due to the 1 OZ of "physical" being sold 100 times on paper the price of physical will rise to it's true value.
It's like this, say I have an OZ of Silver and I sell that same OZ to 10 people but only on paper IE I give them a piece of paper that say's they own an OZ of silver but I still hold that 1 OZ Bar of Silver. Say the economy looks shaky or for whatever reason 5 of those ten people want to take possession of their OZ of silver and 5 want to sell their paper silver to someone else who then wants to take possession of their OZ of Silver.
In reality there is only the 1 OZ of silver but in the paper world there is 11 OZ's even if the price on paper fell to half what it was when the paper was sold the one physical OZ is still worth 5 X the paper price.
If you don't hold it you don't own it.