Posted on 01/20/2013 6:30:10 AM PST by blam
Buying Silver At $100 And The Rebirth Of Counterfeiting
Commodities / Gold and Silver 2013
January 19,2013
By: Dr Jeff Lewis
The debate about buying silver rounds, “junk silver” or silver Eagles goes on and on.
Although better prices may be available on silver rounds, investors continue to worry about the “China scare” and rumors of counterfeit silver coins.
Also, the confiscation* of fiat money purchasing power via inflation will happen long before counterfeit makes an impact, so getting more metal for the money makes the most sense at this time.
*(Confiscation of actual metal is separate issue we cover elsewhere).
Silver Eagles Gain Popularity
As a result, more investors seem to leaning towards buying silver Eagles and old, pre 1965, circulated or “junk” silver coins.
While nothing is wrong with silver Eagles, it does take longer and longer to realize the intended return on investment. Furthermore, you do not necessarily get the premium back if and when you decided to trade or sell your coin(s).
Sadly, one of the more bullish reasons for increased investment demand is the growing lack of confidence in the U.S. Dollar, which could actually taint the image of U.S. Dollar denominated silver Eagles.
When it comes to money and wealth, people tend to figure it out, especially when scarcity becomes an issue.
The Recognition Factor
Fears of counterfeit coins are not completely unfounded, but fakes are not that common.
It is also very difficult and expensive to pull fakes off with 0.999 percent silver, and even harder with old circulated silver coins. Even with gold, it is very rare to discover good fake coins, and both of these metals are rare to begin with.
While it may not be that big a threat in the silver market now, when silver tops $100 per ounce, many investors are concerned that generic rounds may become less accepted due to the higher counterfeit risk.
The Counterfeit Trigger
So, what price could trigger a wave of counterfeit coins? The $100 level will probably not be enough of a tipping point to make sufficient money from counterfeiting to justify the expense and risk.
Although based on the way silver has moved in this bull market, the $100 level could be a test and the market could easily see a deep, 50 percent correction from that point before retesting it.
Maybe double or triple that price would prompt further silver coin counterfeiting, but even then, it is not an easy process. Besides, insufficient time to ramp up production would be a limiting factor, whether the silver is melt, mined or counterfeit.
This scenario is like a big earthquake that could hit at any minute. The situation where you have one commercial trader holding a massive percentage of the net short position in a commodity is so bizarre.
It will probably depend on who shows up on the short side as the market moves higher — even beyond the $50 level. If the large silver shorts eventually cover in a panic, the price could easily overshoot considerably.
At least the debate is not about the silver ETF.
Obviously.
Just because they "can" doesn't mean they "should".
Glad we cleared that up.
By your logic, the Zimbabwean government didn’t counterfeit, either.
I’m sure you know how that worked out.
https://www.google.com/finance?q=NYSEAMEX%3ASAND&sq=sandstorm%20gold&sp=1&ei=DZr9UPiePJi2lgOLRQ
The new SLW ....for gold. Same business model as SLW
1 : made in imitation of something else with intent to deceive : forged
Again - tell me now Zimbabwe’s adventure in non-counterfeiting worked out.
Who claimed it did?
Calling authorized creation of money counterfeiting is silly.
Like I said before, play all the silly word games you want.
Conjuring up “value” out of nothing didn’t end well for Zimbabwe, and it won’t end well for us.
The only word game I see here involves the word counterfeit.
I tell my kids - “it’s ALL counterfeit”.
Once you understand that concept, you know what a mess we’re in and headed for.
You are correct, and the governments own words prove it.
Look at an FRN from the 1950’s, you will see:
This note is legal tender for all debts public and private and is redeemable in LAWFUL MONEY at the United States treasury or any Federal Reserve bank.
See? It doesn’t say “this MONEY is redeemable in LAWFUL MONEY...” that would be pretty stupid, eh?
But it is clear that whatever this “NOTE” is, it is NOT lawful money.
Thing is, so far we are OK. Is it a “note”?
NOTES have two basic qualities. they must say:
what they are worth and
who is it payable to
Now, at some point, the above declaration was changed to:
This note is legal tender for all debts, public and private.
(prior to this time, this declaration had been used on silver and gold certificates, but both the silver and gold certificates also said “payable to the bearer on demand...”)
At that point, it was no longer redeemable in lawful money. Whatever lawful money was, these new “notes” no longer had anything to do with it.
At that time, when the declaration changed. it was counterfeiting. The reason is this. A broad definition of counterfeiting isn’t really about money. Something is “counterfeit” if it is created to LOOK like something else, but it doesn’t have all the qualities of the other more desirable thing.
Now any arguments that something is “authorized by Congress” are silly. The United States Congress could, is it wanted to, tomorrow pass a law authorizing the US Treasury to print Canadian money.
It would be no less counterfeit because it was “authorized”.
No one knows all the pieces of the puzzle.
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