Gold + Silver [Taken from other forum]
Everyone on the forum seems to believe that Gold and Silver will go to the moon (and maybe back). And, then as an aside, they speak of gold and silver backing the economy. There is little attempt, if any, to tie the two statements together.
If they are not going to be tied togther then why would they/will they go sky high.
If gold is not going to be used to back the currency then why should it be inflated to such extremes?
I can understand silver going much, much higher because of possible manufacturing shortages, etc.
Would someone please explain?
I had faith silver would balloon in value anyway, regardless of whether it becomes a backing for any currency. This is due to reading Theodore Butler's archives and other supporting evidence that silver is drastically undervalued at the moment.
In the case of silver there is evidence in the COT that there is price manipulation going on to keep silver down. Butler speculates that the Chinese are holding the price down. Somewhere I just read a theory, perhaps Butler's, that the Chinese have a vast amount of silver and are using it to control the silver market. They can sell silver short and keep the price down. They have so much silver they can cover the short selling -- they're not naked shorts.
Also historically the gold/silver ratio is around 15 to 1. Now it's around 53 to 1 and dropping. In the crust of the earth there are 19 units of silver for every 1 unit of gold. Silver is being used up in industrial applications, gold is either stored or made into jewelry for the most part. There are huge aboveground hoards of gold, the aboveground hoard of silver has supposedly been eaten away until there is very little left.
Butler's argument is that silver's price is artificially held down, the vast hoard of refined silver has been used up, so it's only a matter of time before the price explodes in value when free market forces finally win out. Industrial users of silver are often only using a trace amount of silver -- say inside computer chips -- so they are insensitive to the price of silver. They'll pay whatever it costs since their profit comes from the finished product. So there will be a period before mining can be ramped up to handle silver demand where silver will shoot up in price.
Jason + Shelby love silver. I believe their hope is that usury/debt based economics will fail and in the aftermath a new currency will be created that is backed by gold and/or silver. The reasoning is the world will collectively wake up to the excesses of fiat based money, and will only tolerate a new currency that is not subject to the whims of corrupt governments run by politicians seeking only to buy their re-election.
If a new currency is to be created, backed by PM's, it certainly won't be the USA doing it. I think there is ample evidence the USA's gold has been sold off. Ditto for the silver hoard. I think Europe has also gotten rid of it's PM's. Perhaps China does have huge amounts of gold and silver and will issue a new international currency based on either/both. China has historically mistrusted paper money, and prefers actual bullion. They accepted only bullion for tea back in the 1800's. Then the British managed to get China addicted to opium. Opium was made in India, shipped over to China, and sold to the Chinese in exchange for silver bullion. The Chinese government tried to stop the trade, but it was hopeless. China lost vast amounts of silver. I think the Chinese love silver and gold and they remember lean times.
Gold is also manipulated. The USA has a strong motivation to demonize gold. In the 1970's the USA completed its default on the gold-backed dollar. Since then the dollar has been an IOU Nothing, whose value consists of the collective faith of anyone holding dollars. You can't redeem the dollar for anything real like some fixed amount of silver or gold. The USA has engaged in a concerted effort to dupe people into believing gold is a relic of the past and a worthless yellow metal. They've also been instrumental in manipulating the gold price. I believe the Fed's open market operations are used to sell gold shorts. Also the Fed has managed to get the government to loan out most, or all, of the gold stored at Fort Knox. GATA put in a full page ad in the Wall Street Journal a couple weeks ago asking for an independent audit of all the gold held by the US government.
Gold and silver are havens against inflation. When governments go crazy printing their fiat currencies, some people seek safety with precious metals. This activity has only just started -- only a tiny percentage of people are actually buying gold + silver. Meanwhile governments are racing each other to pour fiat currencies into the global economy to keep the party going.
There is a tipping point where people just stop believing in the dollar. Once that happens the crash will occur very quickly. Everything will go to the moon, priced in dollars, not just gold and silver. But because gold and silver are so good as a store of wealth, I suspect more money will be parked in them. Also investors looking to capitalize on "the next big thing" will see the rising price of both and will buy into it. Google's strugging, people want returns, why not turn to precious metals? It's an ongoing process.
I'm trying to convey that even without a government choosing to back a currency with gold or silver, both are set to continue going up in value for the forseeable future.
Honestly I would be surprised if any government today were to create a currency backed by a PM. I wonder if some private cartel might do it though, in competition with global fiat currencies. I would think a trustworthy currency would win out in the marketplace. We don't have a free market under the US empire regime. The US empire does whatever it has to to keep the dollar as the world's reserve currency. With the US out of the picture, who knows? Maybe a solid currency backed by PM's could be introduced.
India would certainly support a currency backed by gold, their people have a lot of the stuff. I think China would like silver, I think they've still got a lot. Americans seem to love their dollars and probably won't support any PM backed currency voluntarily. Only after the US economy collapses would people be forced to accept such a replacement. If you don't accept it you stay poor. If you accept it, you can eke out a livelihood.
-Dave
