Sunday, December 5, 2010

Central Banks Buying Silver?

Forecasts of higher silver prices are nothing new. I've been following them closely for a couple of years, and documenting them here for a year now. This one is a bit different though. It goes beyond the "dollar dropping/commodities rising" theme and supplies an entirely new--and potentially huge--source of demand.

SilverStrategies.com freely acknowledges that silver prices may be manipulated.
"If something is important to your livelihood chances are you're going to pay attention to it. Well, we are here to tell you that silver is important to governments, has always been, and is about to get VERY important going forward. Government did not decide that silver is money. People - you and your ancestors - did. So why is it a revelation that governments would be involved in the silver market? Didn't you appoint them to manage the monetary system? We're not saying whether it's good or bad. It just is."

They go on to suggest that ultimately, governments will have no choice but to admit that fiat currencies have failed again, and to seek protection in silver, as they been increasingly in gold.
"Why have central banks from China to Mauritius been buying gold in recent months and years? Not to help your mining shares. You decided that currencies were not doing their job and the central banks concurred. We predict that the same thing will happen in silver. It may not be the central banks doing the buying, - it could be sovereign funds, state owned/controlled companies, government backed agencies/institutions, etc. The flavor of the entity and the form such buying may take will differ from country to country - however, the essence will remain same."

Imagine the price action we'll see in the silver market if this type of move by central banks does occur? Can you say "game changer?" Sure, I knew you could.

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