RE: RE: RE: sbbFor those who still don't get it, the world's fiat currencies HAVE to collapse because of the amount of debt in the world, held primarily by governments. The world wide bond market is about $100 trillion in size, and the world's GDP of about $60 trillion cannot support it. So far it has been propped up by central bank buying of bonds. And there is a limit to what central banks can do before things rapidly degenerate into a water fall decline.
The bond market can collapse in value in one of three ways - high interest rates (which will trigger massive across the board defaults), defaults by one country at a time (such as Greece is facing), or massive dilution as central banks go overtime in printing and buying all the bonds they can to prevent interest rates from rising or outright defaults from occurring. As the defaults increase, economic activity slows as some people have less wealth while others are fearful of what may be. The greater the defaults, the greater the slow down in economic activity. Slower economic activity results in the need for more government borrowing, or worse yet, massive government layoffs that add to the economic downturn.
So, no matter how you cut it, the world wide bond market needs a huge haircut. Either through default or through dilution or a combination of the two. And given that about 45% of the world wide bond market has been issued by the USA, it now becomes easy to see why some are correct in predicting that the US dollar will collapse in value - as everyone panics to sell off what remains of their US dollar based holdings. In this environment, bullion will do exceptionally well.
In 2008, the world wide bond market was about $73 billion in size. So its grown about 35% in just three years, yet in that same amount of time, the world’s GDP has only grown about 10%. There is no way of avoiding or preventing the need for the world bond market to readjust down in value, along with fiat currencies. This is why bullion is doing well, and will continue to do well. If gold drops to $600 in the future, so what? Everything else will have fallen in value too, and more so. Whatever the case, gold and silver will increase in buying power regardless of how they are valued – and that’s what’s important.