The silver price could reach top $100/oz as investors continue to lose faith in fiat currencies in the midst of the US government debt downgrade.
I believe we are seeing the end of a pretty painful experiment in fiat currencies, in terms of governments trying to control the value of fiat currencies.
Both the US and countries in the Eurozone have flirted with debt defaults in recent weeks, with politicians so far managing to stave off missing payments on their loans – at the eleventh hour in many cases.
And as long as you continued to have populations that won’t support higher taxes and still want all the same services, governments will be left with little choice but to print money to pay for it.
I see a broken system and I don’t see a solution, short of devaluing that currency significantly.
And, when they do that everything that’s valued in US dollars will climb significantly.
Politicians have a real hard time looking three or four years out, they can’t afford to make tough decisions because then they don’t get re-elected.
The silver price pushed 1.8% higher to $38.90/oz by early Tuesday afternoon trading, while the TSX saw 4% of its value wiped out, after Standard & Poors’ weekend move to downgrade the US government’s debt from the top rating of AAA to AA+ for the first time ever.
Gold vaulted 4% higher to a new record of $1 716.70/oz as investors sought safety.
What would happen to the gold and silver price if the world’s economy were to see a repeat of the 2008 collapse?
Sooner or later investors would realise they have to park their money somewhere, and gold and silver are two of the safest places. It appears to be sooner.
Many investors had favored investing in precious metals-backed exchange-traded funds (ETFs) which I believe is a mistake.
I believe we will see a disconnect between the price of gold and silver and the share prices of the companies that produce them, with the physical products rising by more than the equities.