The Precious Metal Achilles Heel

Document Sample
The Precious Metal Achilles Heel Powered By Docstoc
					The Precious Metal Achilles’ Heel

In the grand scheme of things, people have traditionally had more faith in silver as a currency
than in paper fiat currencies.

Furthermore, since modern paper currencies are only backed by the creditworthiness of the
authority issuing them, if that authority goes into default on its debt, the currency it issued
could become virtually worthless.

Basically, in order for the fiat money system to keep going, more paper currency must be
printed. Also, 'old money' like silver and gold must be kept at arm’s length, both literally and
figuratively, by the use of propaganda.

Ultimately, a lack of confidence will force this grand paper experiment into default as the
essentially flimsy physical reality underlying fiat currencies is gradually exposed to the public
currently being duped by it.

Silver Shines When Defaults Seem More Likely

A major series of defaults seems increasingly likely, especially given the LIE-bor gate scandal
and the sovereign debt crisis in Europe. Countries around the world are having their debt
ratings downgraded as government spending remains unrestrained by fiscal responsibility.

Another factor is the increasingly public exposure of the silver market’s manipulation over the
last few years. The price of silver has been kept artificially low by futures exchanges allowing
short sellers to control whether or not physical delivery into a futures contract actually occurs.

Rather than actually having to deliver silver into a short futures contract, a government can
simply print more money to pay for its losses should the price of silver futures rise.

Possible Default Scenarios

In the event of a substantial COMEX default, silver’s price would soar mostly because of the
scarcity of the metal relative to the underlying demand for it and the greater confidence that
investors have in it relative to paper assets.

Furthermore, the exchange would probably set limits on position sizes and price fluctuations.
Trading might also be halted or a sellers-only market established.

This sort of default scenario would seriously erode confidence in such one-sided paper futures
markets as a way of setting prices for intrinsically valuable physical commodities like silver.

…to continue reading the rest of the article, click here.