The Uneconomic Return of Scrap Precious Metals and Hyperinflation
By Dr. Jeffrey Lewis
Friday, 2 August 2013
One argument against silver’s return to acknowledged monetary status has been that because much of the above ground silver has already been used up by industry, there simply is not enough supply to flow around in the economy, which is a primary requirement of a suitable currency.
Supporting the inadequate flow argument is the fact that all the silver now above ground would have a difficult time returning to market because it costs money to refine, assay, and produce investment grade bars for futures contract delivery or storage. Obviously, higher prices would make recovering silver from scrap sources much more economical, and if the price is right, the economics will be the driver.
Another argument is that in some recent cases of modern hyperinflation, silver did not become the currency of choice. Dollarization was a large factor, but nevertheless, silver was readily received in unofficial gray markets for payment, as well as scrap gold.
The Mechanism from Cash for Gold (and Silver) to Good Delivery Bars