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Silver – Eight Years Later

BACKGROUND:

  1. Over the long term, nominal prices for stocks, commodities, crude oil, gold and silver rise. The primary driver is currency unit devaluation. That new Ford truck which cost $2,500 fifty years ago now costs $50,000. The dollar of 1913 is now a mini-dollar in purchasing power.
  2. Besides the exponential trend for higher prices based on devaluation of the currency, prices fluctuate based on confidence, news, and investor preferences.
  3. Hedge funds and bank interventions also distort prices.
  4. Central banks want continual devaluation, modest inflation, and low gold and silver prices. They do NOT want gold prices spiking higher as in 1979, 1980 and 2011 because those erratic gold prices demonstrate central bank failure to manage the slow devaluation of the currency.
  5. In broad terms, gold and silver often move down or remain flat as stock markets rise, and vice versa.

Review:

  • Silver, gold and the S&P 500 Index rise exponentially, mostly within trend channels.
  • The sum of silver & S&P shows their exponential rise, which results from the dollar’s exponential loss of purchasing power.
  • Until financial systems reset, expect this 48-year trend to continue. Gold, silver, and the S&P will rise and fall but, on average, their prices will increase along with consumer prices and dollar devaluation.

The Big Question: Where are the markets now and what can we expect?

  • Silver and gold fell or remained flat for eight years.
  • The stock market has risen for over ten years, a long time for stocks.
  • Supposedly everything is great, but…
  • James Sinclair, among others, thinks the party will soon be over. He suggests mid-2019.

SO WHAT?

What does the silver to S&P 500 ratio show?

Could silver prices rise by a factor of ten during the next five—ten years? Yes! Will overall debt rise? Will congress persist with economically ignorant and corrupt policies? Will the Federal Reserve monetize debt via QE to infinity? Will gravity finally overwhelm stock market levitation effects from QE and derivative purchases? And the list goes on…

HOW HIGH?

  • The five-decade graph of silver shows it could rise to $58 by the end of 2022 and remain within its long-term channel. This is not a prediction, but it suggests higher prices are possible… and inevitable. Silver often overshoots trend lines and might spike far higher than $58.
  • Will silver reach $100 by the end of next decade? Will congress continue deficit spending? Will the national debt rise nearly 9% per year as it has for many decades? Will those newly “printed” currency units from massive debt creation boost prices for silver and gold? Will the mini-dollar morph into a micro-dollar?

SILVER VERSUS GOLD?

Read:

Gary Christenson: Trade the Gold to Silver Ratio

David Schectman: Central Banks are Buying Gold

Listen:

Andy Schectman: Silver is an Investment Opportunity of a Generation

GoldCore: Silver Bullion Set to Soar to $50

CONCLUSIONS:

  • The dollar devalues and stocks, gold and silver rise exponentially in nominal prices.
  • Prices for silver and gold are inexpensive in 2019 compared to the S&P 500 Index. That will change.
  • Prices for silver are inexpensive compared to gold. That will change.
  • Timing is unclear, but 2019 appears to be a transition year for many markets.
  • Central banks, the banking cartel and governments prefer rising stocks and bonds, lower interest rates, and weak metals prices. That will change as central banks lose control of debt creation, inflation and the economy.

Miles Franklin (1-800-822-8080) will recycle debt-based fiat dollars and convert them to silver and gold. China and Russia purchased large quantities of gold because they prefer gold to devaluing dollars. Central banks are buying gold. Follow what they do, not what they say.

The Deviant Investor

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