Monday, May 9, 2011
Observations of the Silver Smack Down
Most of you have very little idea about how this smack down could have even happened, let me break it down. First and foremost there is a physical silver market. This is a natural market that we all understand intrinsically as little children. The free market pricing mechanism reflects supply and demand. If silver is in short supply relative to the amount of money the price of silver rises. The opposite is true also. Our debt based money is a promise to pay. I heard a funny comment over the weekend, the dollar is an IOU nothing, the Euro is a who owes you nothing. In this physical silver market, you essentially trade paper assets for real assets. Real assets do not have any counter party risk and do not rely on a promise to pay to determine the value of that asset. This is why when the generational ponzi scheme break,s all paper assets will become worthless and silver will be king.