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ProShares Ultra Silver Message Board

  • fiveloavesandtwofish fiveloavesandtwofish Apr 24, 2011 1:29 PM Flag

    New Reserve Currency - Implications for AGQ

    So I have been pondering over this question for sometime. What will actually play out if the US Govt defaults on debt obligations and demand for US treasuries drop to zero demand purchases by foreign buyers? For all the grandiouse generalist talk on this topic, the devil is in the details and it would be a tragedy if one were to preserve wealth through much of this uncertain era, but only to lose it at the last mile.

    Let's say if the situation becomes critical and the dollar no longer remains the defacto world reserve currency, how will we then price commodities and PMs? Will we have a months long tumultous transition to a global basket of currencies to price these commodities and PMs or will the US replace it's currency with another backed by gold itself, effective signalling a return to the gold standard?

    How will these scenarios affect the holders of AGQ, SLV, GLD? How will our ETFs be priced then? Will they lose value or gain value if a new US currency backed by gold is issued or if a new global reserve currency based on a basket of global currency becomes reality?

    What will the likely performance of these ETFs be during the transition period and is there a possibility that trading in these ETFs be suspended and locked for that duration?

    I know that the answers can be complex, it would be greatly appreciated if we can stay on topic. Thanks in advance!

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    • That is the same BIG question I have been asking myself for a while now.

      I wish I had an answer.

      Hopefully, if that happens, the news comes in an orderly fashion.

      If not, then I think the U.S. stock market would tank on the news.

      The last time the market went down hard, everything else did too, even PM's.

      A study I made last week showed that Gold will outperform Silver if the market really tanks.

      I think that is only because Silver has risen so quickly compared to Gold.

      Both G&S will outperform Equities.

      PM's will probably be the first to recover because of flight to safety, and I think it would be physical instead of derivatives.

      I am not sure our Financial Markets would be left unscathed, the possibility exists that a fundamental change could take place that would do away with speculation.

      After the initial shock, depending on what replaces the Dollar as reserve, we all get to adjust our lives to "The New World Order" we keep hearing about.

      Then gold and silver ownership becomes illegal.

      This is starting to sound like a Sci-Fi novel...

      Don't get me wrong, I don't want any of this to happen, it's just what I see on the horizon if we keep marching in the direction we are headed.

    • The hugh uncertainty would be a plus for precious metals. The best speculation I have heard is that gold would be part of the basket of the new reserve.

    • Believe me if I knew I wouldn't be here on this Board. THis sort of stuff has no textbook on it. LOL

      • 1 Reply to kalum0
      • yeah its really hard to say what would happen in that sort of situation. I think in the end, silver would be way high, but there would be wild fluctuations of people were being locked into our out of etf trading. That sort scenario would be on a apocolyptic scenario. I am thinking high inflation followed by a depression an an epic stock market crash, all if which would mean silver up, but there would be big down days also

 
AGQ
66.62-3.63(-5.17%)Jul 24 4:00 PMEDT

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