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.
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