Silver Purchasing the Age of Sentiment and Fiat Currencies What is a fiat
Some silver investors should be wondering why hold on to their metal at this time? Possibly the most compelling answer is inflation, since a boost in the cash stock will ultimately lead to higher prices. What is a fiat currency
Central banks all over the world must keep printing or electronically generating money to meet the hundreds of trillions of dollars in unfunded liabilities, promises and obligations. Another good point is the uncontrollable deficit spending that trumps any revenue collected from taxes.
You'll be able to take into account the interest that should be paid on the ever-increasing sovereign debt burden, which has resulted in the greatest debt-to-GDP ratios seen in peacetime history.
The Race to Debase on the path to Financial Repression
Central banks are presently confronted with a progressively desperate need to improve exports as a growth engine, yet still time decreasing the purchasing energy their national currency to be able to burn off sovereign debt.
This rather dubious way of debt reduction is usually called financial repression, specially when discussing debt liquidation practices in emerging market financial systems. Nevertheless, the term seems increasingly applicable towards the post-2008 economic crisis credit card debt reduction practices of several developed countries.
Central banks engaged in this race to debase their respective fiat currencies have widely telegraphed their policy objectives well into the future. Some central bankers, like the Fed's Bernanke, have resolutely stated that they're never concerned with inflation.
Why Buy Silver Now?
Notwithstanding a far more than ten year bull market, gold and silver - especially silver - remain one of the most under-owned they've got have you been nowadays. Furthermore, despite their intrinsic value, industrial uses, scarcity and delightful nature, they remain largely abhorred and ridiculed as a possible investment by the mainstream financial press.
Basically, silver is affordable and it is priced well below its historical inflation adjusted high. Relatively active price management has led to a synthetic perception of sufficient physical supply, when it is really paper silver that's being supplied, not the metal itself.
Although very efficient in terms of adjusting market sentiment, paper silver price manipulation is ultimately a futile exercise, and also the physical metal's supply will ultimately determine the retail price.
Silver's Demand and supply Status
Two powerful sources of demand are simultaneously competing with the other person to get a dwindling real supply of physical silver. First of all, most of the silver created in the world has been utilized in industrial processes, which need a much higher cost to recoup the silver from that source.
Silver is also a strategic commodity, with not many above ground stock piles remaining and new uses being discovered every single day. Additionally, silver is mined primarily as a byproduct of precious metals - which makes it exceedingly hard to predict new supply starting the market.
Because of this, the silver users that are responsible for many demand employ just-in-time delivery to keep up their inventory. This makes them quite at risk of market panics that can quickly send silver prices sharply higher.
Basically, silver and gold and silver remain - since they have been - a safe harbor inside a world where the laws of supply and demand are already violated and subverted to the point where they've got now remained broken for decades.
Physical silver has an smart way for folks to add a universal monetary element of a disaster kit - and that's why silver investors are buying it since they can.