The most important point to understand is that silver and gold represent real money that is not someone else’s liability.
Precious metals stand in sharp contrast to the fiat currency system that now dominates global finance. This system of credit and paper money—with nothing to back it—is now heading straight for a financial crisis with the dollar at its epicenter.
The dollar's recent declines have been arrested through active intervention in the currency markets. However, history shows that planned intervention eventually fails. The markets always, and I say always win out in the end.
The present madness or delusion at the Fed that they can create prosperity through massive debt creation is about to be shattered. The trade deficit, the national and state governments' deficits and America’s total outstanding debt dramatically show that this giant mountain of debt is about to reach its upper limits. When consumers no longer have the ability to borrow money or extract equity out of their homes, when the housing bubble begins to deflate, when foreigners no longer buy our paper or even worse—refuse to accept it as payment—the crisis will be upon us.
America’s debt problem is so large now that the only way out is to inflate our way out of it. The appetite for government spending in this country is insatiable. We are running not only large current account balances with the rest of the world, but we are also incurring large budget deficits that could run as high as $400 billion and go still higher. At the same time we are also about to add a major new entitlement at a time we are at war. It is back to guns and butter again, although this time our debt levels are far greater. This means that with government revenues declining and government spending accelerating, the government is now actively printing dollars to finance its deficits. This is what is causing the dollar to depreciate.