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Thu, 01-24-2008, 03:23 AM
#11
It's a good question. Lawrence explicitly stated he knows how to make profit by buying the weakening currency. The only way I immediately could think of would be to exploit any panic that could be caused among the people when they suddenly learn the value of that particular currency is going to crash. Such a drop would be increased by the fact, like Lawrence mentioned, the value of a (credible and stable) coin can be higher than the actual amount of silver in it. So, in addition to the decrease caused by the lower silver content, that "air" is going to disappear further crumbling it.
So, when people desperately suddenly want to get rid of the currency, he could buy it for less than it's actually going to end up in reality. Furthermore, if it is a very popular currency, other major ones could increase in value when their demand grows. So, if he now "buys" the other major ones, and sells them for more than they are really worth, he could end up with a sizable sum of the weakened one, then just wait for a time until it stabilizes at a reasonable level and then invest it.
However, I'm no currency expert so I don't know if it actually could work like this and strongly enough to realistically make any profits. Somebody wiser could make an educated guess instead of layman speculations.
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