Theory versus Reality and Physical versus Betting
isaiah58
Posts: 385 ✭✭✭
Based on many of the recent posts related to Spot prices, it's time for many people that invest in precious metals to be diligent and do more research.
No one here checks corn or soy bean prices on the commodity market to determine if the local produce stand or supermarket has fair prices.
Many investment funds use commodities, especially precious metals, as a hedge or as a disposable asset. When people pull their money out, the first things the investment funds do is sell off pre determined assets. These include commodities. Money is shifted, many times into bonds.
In the current situation, people are cashing out their investments, many of which is in investment funds. They are not better on the future but facing reality of the present.
The commodity market is just paper bets on the potential future value of commodities. Just like buying and selling stock. There is more money in the silver commodity market than there is physical silver available. People can sell silver paper they do not own, called selling short.
The only potential SHTF value of PMs is if governments remain or come back unto being. Then someone could trade their PMs again for fiat government money.
I am impressed though as to how many people, during the current situation, have money to burn on precious metals.
Comments
Maybe they have a longer time horizon than you ?
Yes those of us thinking 20 years out know you need to survive the present .
the people that only think of the present though ? In 20 years they will be eating canned cat food
Many of these people remember 2008 when they either missed the boat or didn't. Down cycles always seem to be followed by up cycles. No reason that shouldn't continue.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Here is a good video I found after starting this thread
They believe they are witnessing a bargain. Time will tell.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey