Gold and Silver Default Scenarios

It is because of the enormous differences between gold and silver inventories that a “default event” is likely to be much different between gold and silver. With gold bullion being principally a financial asset in global markets, it is much easier to forestall a true “failure to deliver” from occurring at the official bullion exchanges (i.e. London or New York) through the unofficial default-mechanism of “cash settlements”.

Indeed, the bankers consider this mechanism to be a “perfect solution” for the parameters of having very finite amounts of (extremely leveraged) bullion, while having access to infinite amounts of banker-paper from central bank printing presses.

In reality, as the “cash settlements” continue to get larger and more frequent, at some point one or more large holders in this banker Ponzi-scheme are going to lose their nerve, and insist on real bullion rather than paper bribes. Such an event does not need to result in an official default. It merely needs to “spook the herd”.

As word gets out of some prominent investor refusing any quantity of banker-paper in favor of physical bullion (i.e. real “money”), this will cause the holders of $100’s of billions of dollars of “paper bullion” products to ask themselves a very pointed question: “am I holding ‘bullion’ or am I holding  ‘paper’?”

More importantly will be their response to such a question. The two obvious responses are either to demand delivery or to sell their paper bullion. At that point, it won’t matter which path is taken, since both roads will lead to the obliteration of the bankers’ 100:1-leveraged, paper gold Ponzi-scheme.

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