You've completely ignored the fact that people are willing to part with their gold and silver for "worthless" Federal Reserve Notes. Otherwise, you couldn't buy it. The brokers feed your paranoia, they need easy marks like you to stay in business.
WildCat you need to get out more. You're imposing black/white thinking on the situation. Paper money isn't worthless as long as people are willing to exchange real goods and services for it. But as time goes on, it's worth less and less. That's because the Fed keeps pumping money into the system. It's not a finite amount of dollars in circulation. The amount is always increasing. So prices continue to rise, despite increasing productivity due to technological progress.
When the printing and paper games get out of hand, that's when precious metals come into their own. So people start buying it.
Dealers in PM's make
their money by the transactions. You're not necessarily buying silver that they've hoarded for years and years. Other people who have held silver for some amount of time go to the dealers and sell, for whatever reason. Maybe they like how the price has risen and they want to take profits. Maybe they need the money. So they sell, the dealer gives them cash. Someone else shows up wanting to buy silver. So the dealer sells. They make profit from the spread. In a rising market, they make more profit -- the longer they hold the metal, the more profit. In a falling market, they make less profit -- it's better for them to
not hold metal in a falling market.
But in both markets, their business model is to be the dealer. They make more money by being a silver exchange than if they just held silver. They make money year in, year out, no matter what happens to the silver price. They want to be in business for a long time.
Investors hold silver for other reasons. You simply can't compare dealers with investors. Dealers are not investors. They're dealers.
If you study the silver situation, I think you'll come to the conclusion that the silver price will continue rising. It's the conclusion I came to, anyway. But in that study you'd be exposed to a lot of ugly details about how money works in the US, the Federal Reserve banking system, and just exactly what wealth is. Right now I feel a lot safer holding physical silver than stacks of dollar bills. That's all it boils down to. Silver's an investment. Dollar bills are an investment also. Ideally you try to put your wealth in whatever place will grow the fastest.
WildCat this situation is kind of like those images made of dots, where you look at it and you can't see the image. So you have to kind of cross your eyes, defocus a bit, look at it a different way -- then suddenly the image pops out at you. To really understand this stuff you need to sort of relax your mental barriers or something. I see you asking the same things, or bringing up the same points again and again, like your focus on the gold backed currency conundrum. You're arguing based on ignorance. You need to first understand the whole situation, then you can be taken seriously if you wish to argue against the viewpoint. You'd have to come up with an alternate explanation.
It's not good enough to claim, "99% of economists think X, therefore they must be right." The truth is not subject to the opinion of the majority. The truth is the truth. Sometimes the great majority is wrong -- for a while.
-Dave
