The next time you find yourself contemplating, worrying, or wondering with
anxiety whether it’s too simple to be true; it is not simple - it’s
exceedingly complicated.
Not because the fundamentals are all that hard to understand. And not
because in principle it is sound personal action in any time period.
But it is complicated because we’ve spent so many years off the rails of
sound economic principles that we don’t recognize them when we see
them.
And the inertia to change is very intense on an unspoken level. Each step
we take to make it right--to do what is wise-- is met with a startling
resistance. Almost an unconscious, collective river moving against
progress.
We are obsessed with what appears around us as success — its all
superficial. We know it, but it’s difficult to resist feelings surrounding
it.
The following are a few questions that I fielded from a subscriber. They
struck me as questions from a sophisticated outsider, a new investor who also
happens to be a financial professional.
Once you’ve been at this for a while it’s hard not to focus on the
sentiment. And it’s easy to forget that there will be a new wave of
investment demand and a natural re-kindling of the buy low, sell high
strategy - even though I don’t frame silver as a typical ‘trade’ or
‘investment’. I conceptualize it as a ‘life option’ first.
Before we get to a few of the questions, I felt I needed to ask a few
myself…
From where does your interest in silver arise?
What was the series of logic that led you to this point?
What have you come to except about the current financial environment that
brought you to this point and these questions?
Why silver among all the other potential assets available to you?
1. The reader’s first question was actually a statement.
“While I have a strong interest in accumulating silver bullion in
some form (upcoming currency crises, 3-5 years off.)”
My response was: Where did you come up with that timeline? How can anyone
know when? All of the conditions that could trigger the end game exist. The
risk brought about by debt overhang, margin leverage, and sheer money/credit
creation that has yet to be unleashed truly makes it a matter of time. But no
one has a microscope strong enough to find the snowflake that will ultimately
trigger the end.
2. The next question is a common a frustrating dilemma that I think, in
part, comes from the stark and lonely reality that comes from exiting
(symbolically or literally) the mainstream system.
"I just can’t envision HOW some of that silver will be effectively
used in the future."
How is any store of value or wealth used currently if you held any
financial instrument, asset, artwork, or artifact? How have they been used in
the past?
3. Another statement that often comes from the resistance to imagining
that ‘it could happen here’:
"Since the modern era has never been in a severe currency crisis
(that some are predicting), there’s little experience in such an environment.
Are you referring to
isolated currency events? Like Zimbabwe or Argentina or, more recently, Iran?
Or are you referring to a dollar crisis? Are you referring to a collapse of a
world reserve currency or hyperinflation?
While it is true that we don't have the modern experience of a collapse in
a world reserve currency, we have well documented narratives surrounding
events in Argentina and Zimbabwe.
Silver and gold were used in black (or semi-regulated grey) markets in
addition to barter. Bottom line, silver could be used or spent like any
valuable commodity or asset through channels that range from formal to
informal or emergency.
It could be used a collateral, for trade, or to sell in exchange whatever
currency remains or evolves from the crisis.
4. Another statement - more of a presumption and an unfortunate
misconception about dealers.
"Dealers currently selling precious metals certainly gain immediately
by transaction costs."
Do you mean they profit from selling precious metals? Why else would they
do it? Dealers are not all created equal. And not all have your interests at
heart. But local dealers in particular are the gatekeepers. And for the
investment grade options - i.e. bullion - there is very little in terms of
profit.
5. Here is the next question:
"How do I convince myself that “investors” can indeed maintain or
grow the value of their investment when it comes time to “spending” some of
it later?"
Not sure what you really mean by “Investors”. Are you referring to
“others” or clients?
Here is where the issues become personal. Everyone is different. While
some amount of silver as a strict emergency hedge could be rationalized for
all investors, beyond that it depends on the individual.
Convincing yourself of ‘growth’ should be easy enough. You have access to
all the fundamentals.
The trading data for the most important exchange in the world by volume
and recognition proves that current price has nothing to do with physical
market reality. It’s right out there in the open for all to see.
The hardest will be to hold it through the ongoing volatility and to
remain focused on the gaping disconnect between the physical fundamentals and
the current (fiat) price as determined by paper derivatives.
Silver is a gift. A brief moment of opportunity.
At some point it will be valued like gold is now, out of reach for most of
us - but always recognized for what it is and always had been.
It does require a paradigm shift. We are accustomed to spending dollars
and valuing everything against the dollar - as the reference point.
As you know from basic math and history, the dollar, like all fiat
currencies before it (reserve or no), rests on a very fragile foundation. To
live through this transition will not be easy. Gradually, but then all at
once, we will be shaken from the stability and what many of us take for
granted.
Is it possible that silver could return to its equilibrium price without a
concurrent collapse in the world financial system or hyperinflation? Perhaps.
But no one can say for sure.
6. Finally, another comment.
“I can certainly imagine some unethical people trying to acquire others’
precious metal by theft, etc. And so the lowest of profiles for those
in physical possession would be required.”
The irony reality--no need to imagine--is that unethical people have been
stealing the wealth from the masses (including you and me) right out in the
open for generations.
http://www.silver-coin-investor.com/
