Silver Price Declines: I'm Not Concerned

A couple of days ago, the price of silver settled at the lowest price that we've seen in weeks. However, I find this particular decline to be overwhelmingly interesting. That's because the decline was caused by the same thing that has caused the recent gains. Today, I'll do my best to explain what I mean by that as well as why I maintain an overwhelmingly bullish opinion on silver.

Why Silver's Price Declined

First and foremost, let's talk about why we're seeing declines in the price of silver at the moment. The recent gains in the precious metal were caused by poor economic conditions. However, as central banks make it clear that they are ready to take action to get economic movement going in the positive direction, investors are pushing away from safe havens and putting money back into other investments.

The idea here is that the central banks are going to work to fix the broken global economy. As a result, investors are expecting that we will see improvements in the market. So, safe-haven demand for the precious metal is starting to fall for the first time in a while.

Here's Where It Gets Interesting

For me, the recent declines in silver are overwhelmingly interesting because they are caused by faith in the central banks. The declines in silver are a sign that consumers and investors expect the central bank to make moves that will positively affect the economy. Now, think about this... wasn't it the central banks that put the global economy into the position it's in at the moment?

You see, silver has been growing throughout the year. Much of the reason for the gains has been safe haven demand as central banks around the world continue to devalue currencies. By purchasing precious metals, you're making a bet against currency and for growth in safe havens.

When central banks like the ECB and the BOE make adjustments in order to improve economic conditions, the first place they look is interest. Ultimately, the concept is to reduce interest, effectively decreasing currency values. This makes it so that there is more currency to go around, stimulating economic improvement.

Central Banks Are Only Prolonging The Inevitable

At this point, it's clear that the financial system is broken. Fiat currencies are not working. At the end of the day, there's going to need to be some change to the global financial system. In the mean time, central banks around the world are putting a band aid on economic issues by slicing the pie a bit thinner. Nonetheless, you can only slice a pie so many times. At this point, interest rates around the world are in negative territory. That is unthinkable! What's worse is that they are likely to drop further. If this trend continues, currencies won't be worth the paper they are printed on!

The Bottom Line

The bottom line here is that while silver is declining as central banks work to improve the economy, what's really happening is these same banks will likely make conditions worse in the long run. As a result, I'm not worried about declines in silver. I have quite a bit of it and I'm not selling an ounce. As the broken financial system continues to show flaws, the price of the precious metal is likely to continue climbing!

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