Are people losing faith in governments and paper money of all kinds?
''For the first eight months of this year, silver and gold moved up together. And then right after the Federal Reserve's meeting at Jackson Hole in late August, when it was announced that, in effect, that QE2 [quantitative easing, part two] was coming, silver took off like an absolute rocket. Gold kept moving up, and it got the headlines. But silver was moving up more than four times as fast. That tells me that the little man who can't afford to buy a gold bar is saying: 'What I am seeing out there is all bad news.'
If you are a European, you see a currency that isn't backed by any government, any tax system or any army. It's a faith-based initiative. Everything that you have is denominated in euros, and now you've got all these countries, in the southern tier of Europe and as far away as the Irish Sea, that are in deep, deep trouble and that have to be bailed out. So what is the value of the euro going to be? Well, these people are buying coins.
It used to be that you would move out of what you thought was a weak currency into a strong currency, and the dollar was something that people moved into when they were worried about their own currency. Well, the dollar is not a great store of value anymore, so you have a choice of moving from one paper money you don't much trust into another. The three biggest currencies in the world, remember, are the dollar, the euro and the yen. The yen is the strongest major currency, but this is the currency of a country whose population [is aging rapidly but isn't being replaced fast enough by younger people.] ''
''As long as the outlook for gold stays strong, the outlook for silver stays strong. The price of gold is already so high that jewelers don't want to buy it, and people are selling their mother's jewelry to get cash. But the investment demand is rising around the world because people are losing faith in their governments and paper money of all kinds. They are worried about the trillions in liabilities being accumulated by governments. I don't think that very much of the gold buying is by people who expect to make money. What they are saying is: 'I want to have something that I can count on.' Gold has gone up every year for the past 10 years in what has been the biggest sustained bull market in history, so it is entitled to pause at some point.''