As fiat currencies face an uncertain future due to their unbridled generation by central banking systems, inflation spirals out of control. Inflation is caused by devaluation of these currencies, as they continue to be printed, artificially increasing their amounts on international money markets. The risks of large drops in the value of fiat currencies is a distinct possibility in our current period of economic uncertainty, as countries generate artificial capital to mitigate the effects of slowing growth.
Worldwide debt is rising exponentially, which could ultimately result in hyperinflation. The debt spurred by economic factors like war, unemployment, an aging populace and job outsourcing, all but guarantee that paper money will continue to be printed. The problem is that no one knows how long this can occur without the eventual resulting deflationary drop. Many investors look to precious metals to hedge their bets when the efforts of banking systems are no longer enough to prop up fragile economies in the face of increased unbacked currency generation. Governments possess no other weapon against hyperinflation.
Silver is a precious metal which is uniquely suited to provide protection from extreme currency fluctuations. It’s value as an industrial metal, in addition to being an intrinsically valuable metal for monetary exchange, gives silver an edge, since its technological applications are constantly increasing.
More easily refined and occurring naturally in larger quantities than gold, silver has always retained a lesser value than gold. In times of economic hardship, silver becomes more practical than gold because of its undervalued status, since unlike gold, it is typically not stockpiled and therefore remains at relatively small amounts, above ground. Adding to its appeal is its unusually large, currently uncovered short position on the COMEX exchange, compared to other commodities.
Demand for silver is high as demand has outstripped supply over the last one and a half decades. Only a tiny fraction of mined silver is used to produce bullion. Due to industrial demand, greater negative implications would be realized by a silver shortage.