Gold, silver are thriving because the money system is under "serious stress"
"We're all of the mind that fiat paper currencies are in a state of distress, if not collapse," says precious-metals expert Ned Naylor-Leyland of Cheviot Asset Management, in an interview with financial commentator Max Keiser (at minute 13:15).
Asked by Keiser to elaborate on the notion that precious metals should perform well during deflation, Naylor-Leyland says (at 15:50 ): "The whole argument about inflation and deflation has gotten a bit skewed. I think the reality is it's a lot more complicated than people make out. Sure, asset collapse phase leads to what people would term a deflationary environment. But I would argue that the average man on the street is not witnessing lower prices in the things that he's buying.
"So I would be a bit cautious about referring to anything as either an inflationary or deflationary environment. For what it's worth, I'm from the camp of anticipating serious stress in the unbacked fiat-paper environment. I do see the potential for hyperinflation. ... I think people's concerns about the true nature of paper money is more where this is leading, as opposed to necessarily what you would describe as an ordinary economic discussion of deflation versus inflation."
Keiser responds (at 16:48): "OK, so deflation and hyperinflation are two sides of the same coin. And what we're seeing here with asset price deflation is killing the global credit market, and there's no velocity of money, there's no multiplicity of money, the money supply is shrinking, and this would normally be bad for precious metals, but it's so severe that what the bullion purchases are now looking for is hyperinflation or a currency collapse, or as you point out, the fiat currencies are collapsing."
At 21:30, Naylor-Leyland notes: "There's no doubt that bullion sales are going up. I can tell you for a fact that in London it's very difficult to get ahold of physical silver. If you can get it, you're getting it in small amounts at enormous premiums. And I just think over time, the lower price-point entry for silver versus gold - as people start to take a view against the 40-year unbacked paper-money system - will lead to people wanting to invest in silver as a store of value as much, if not more, as gold."
