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Silver versus Debt, Delusions and Devaluation

Gary Christenson
|
April 16, 2019 - 11:34am
Part One: THE ECONOMY – AND DEBT, DELUSIONS AND DEVALUATION
  • Global retail sales are weak. “Redbook Retail Index confirms Commerce Department December Retail Collapse.”
  • Falling Imports into the U.S.
  • Industrial Production dives lower
  • Housing sales are weak.
  • Auto (U.S. and China) sales are down and auto loan defaults are rising.
  • Tariff war with China. Does a tariff war benefit anyone?
  • From Charles Hugh Smith: “Credit Exhaustion Is global.”

“Qualified buyers don’t want to borrow more.”

“Lenders are faced with a lose-lose choice: either stop lending to unqualified borrowers and speculators, and lose the loan-origination fees, or issue the loans and take the immense losses when the punters and gamblers default.”

  • Student loan defaults hit an all-time high.
  • Paul Krugman sees “An unavoidable Global Recession.”
  • The Baltic Dry Index fell to its lowest level in three years.

The Fed backpedaled on interest rate hikes and balance sheet reductions. QE, a short-term emergency burst of monetization, now looks like a permanent fixture in the Fed’s bag of tools that devalues the dollar and transfers wealth to the financial and political elite.

Increasing debt, delusional thinking and devaluation – no surprises here.

ACCORDING TO SOME, THE ANSWER TO OUR ECONOMIC PROBLEMS, EXCESS DEBT AND INSUFFICIENT GOVERNMENT SPENDING… is MMT. (Like central banking, it’s nonsense, but popular.)

MMT = Modern Monetary Theory, or as Zerohedge calls it, Magic Money Tree economics.

From Banyonhill.com

“MMT basically creates money out of thin air. If that’s possible, governments can pay for everything.”

“We just pay for things by printing money. Then we make debt go away.”

Easy! If it looks too good to be true… watch out for unintended consequences like hyper-inflation.

Previous experiments with MMT failed, but MMT advocates claim this time will be different. I doubt it.

Economic uncertainty is rising.

Part Two: SILVER IS AN ALTERNATIVE TO DEBT, DELUSIONS, AND DEVALUATION.

Long-term: Silver has been real money for several thousand years. Many countries used silver for commerce. However, central banks replaced silver with debt-based paper. That helped banks and politicians, but hurt savers, the middle class, investors and global economies.

Medium-term: Silver costs about ten times more than when President Nixon severed the last hint of gold backing to the dollar. Silver prices bubbled higher thereafter—by a factor of 36 – in the decade following the Nixon devaluation. Silver prices have now returned to 1971 levels compared to total debt, currency in circulation, and the S&P 500 Index.

The above graphs show silver is inexpensive compared to the official national debt, the S&P 500 Index, and the price of gold.

Short-term: Silver prices bottomed in December 2015 and have risen since then. The past decade’s lows occurred about a year apart each December. See below:

Every seventh low since 1994 has been a major low.

Silver sells for about $15 in April 2019. Prices were $15 in 2008 and in 1979. Silver is inexpensive compared to other markets and its own history.

Read: “David Morgan Explains Low Silver Price.”

Read: “Will The Next Silver Rally Exceed 2011 Highs?”

Read: “Trade the Gold to Silver Ratio.”

The seven-year major low cycle for silver prices occurred in December 2015. This seven-year cycle suggests another major low in late 2022—early 2023. Will it occur? Wait and see. But there is ample time for silver prices to double or triple—correct their under-valuation – between early 2019 and 2022.

CONCLUSIONS:

  • The U.S. and global economies are weakening. That weakness is visible in retail sales, housing, autos, industrial production, trade and real estate.
  • Debt is too high and has reached, as it did in 2008, exhaustion levels. Perhaps the central banks of the world can “goose” markets higher and sustain a dangerous system, but the consequence will be falling currencies, devaluation, and more debt. There is a limit to how many heroin fixes a body can withstand. There is a limit to how many debt fixes an economy can absorb.
  • Silver prices are too low based on five decades of history and via comparisons to national debt, the S&P 500 Index and gold. Expect silver prices to rise far higher in coming years as the over-leveraged financial system resets and rebalances.
  • Based on decades of history, we know that debt will increase, and dollar devaluation is inevitable. Governments and central bankers want inflation. Markets will re-balance and reset—eventually.
  • The reset will push silver prices much higher.

I strongly recommend:  “Bear market in gold and silver is over – Craig Hemke.”

Miles Franklin sells silver. Call 1-800-822-8080 and purchase your protection from excessive debt, dollar devaluations, MMT and other delusional economic ideas.

Gary Christenson

The Deviant Investor

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