If I owned a club, and fiat tried to get in, I would say to them worthless currencies, "Bounce!" Then when I walked past the dance floor, after giving the Trinity a smile, I would turn to my friends and wink, "Bounce..."
Every time the dollar rebounds it sends the Trinity flying, why? Precious metals are real monie, and the exchanges are figuring this out. So when their is a flight to safety, or rather, monie, precious metals are inheriting the area that the dollar once occupied by default. Now when people want out of equity and into monie, they are buying gold and silver, even platinum. It is the new hedge against risk.
What is risky about holding physical? Will you tell random people you have it? Will you not lock it up safely? There is no other collateral in the world except it. Any paper contract has to be redeemed, and no business partner is perfect. Even the US government once defaulted. Who is to say that will not happen again?
It so happens that what comes up must come down. The Trinity is no exception. Along the way, people make moves on the Trinity like men make passes on a skirt in Miami. Some are sellers, like team Blythe and Ben. Others buy it up. This causes major volatility. The sellers would not have a chance in the game if it was not for the buyers, and unfortunately, the opposite is not true. This is why so many gold bugs issue warrants on the House of John Pierpont Morgan.
This morning the Trinity popped off before Blythe could get to it. Think someone is trying to say something? It is true that no one wants to drop the proverbial ball, but the first one to do so gets to make a rush for the exit. The waiting game continues with all eyes on the door.
“What is risky about holding physical”...that's something that doesn't seem to get addressed nearly enough when one reads about PM's.
ReplyDeleteSure, confiscation (stupid/impractical) is possible, but if confiscation were coupled with the 'see something,say something' campaign and/or add a “reward” of say $10,000 for people to report to gov't those they know how hold PM's, that would seem to cut down on the impracticality of such. Alternatively, slapping a prohibitive tax (90%, etc.) on any sale of PM's is possible, too.
On the flip-side, what seems intriguing as we live under the possibility of an SDR/bancor future, is to REWARD all holders of PM's. If I were sitting in the IMF, and wanted the smoothest transition to my new currency, I'd want to get as many of the “goldbugs”/gun-holders/patriots on my side as possible, as this group is likely to be my strongest opposition. If the gov't/IMF were to celebrate and reward this crew, then the goldbugs & friends would have a great choice to make. No doubt a lot of those folks would side with the SDR if they were made the New Rich.