Outrageous Silver Speculation

The silver prices shown at the end of this article are outrageous and unlikely … as unlikely as the following seemed before they happened:

  • Two jets taking down 3 buildings on 9-11.
  • Assassination of a sitting president (JFK) by an organized conspiracy.
  • Gold rallying from $42 to $850 in a little over 8 years.
  • The hyperinflation in Weimar Germany in the early 1920s.
  • Central banks printing Trillions of dollars in “funny money” since 2008 while maintaining near zero interest rates – for which they are applauded.

Given the above unlikely events, consider extreme silver possibilities!

Definitions:

Pareto Principal:  The 80/20 “rule” states, for example, that 20% of the workers do 80% of the work, 80% of the price move in a market bubble occurs in 20% of the time, and so on.  It is a rough guideline.

Phase 1 of a big market move:  The time from the beginning of the rally to a substantial new high, the inevitable correction, and the rally back to that new high.

Phase 2 of a big market move:  The time from when the market exceeds the substantial new high (end of phase 1) to the ultimate bubble high.

Example:  Silver rallied from (approximate prices and dates) $1.50 in August 1971 to $6.24 in May 1974, corrected, and rallied again to $6.24 in October 1978. (Phase 1)

Silver rallied from $6.24 in October 1978 to about $50 in January 1980.  (Phase 2)

In that silver bubble, phase 1 took 86% of the time and represented 10% of the price change.  Phase 2 took 14% of the time and represented 90% of the price change.  This was an extreme bubble.  Others were:  South Sea Bubble, NASDAQ, Japanese Real Estate, and Gold.

Our most recent silver example is the move from November 2001 at $4.01 to April 2011 at about $48.50.  Phase 1 took 93% of the time from November 2001 to Sept. 2010 when silver again reached the March 2008 high near $21.  Phase 2 took 7% of the time but covered only 62% of the price move up from $4.01 to about $48.50.  Silver was overextended but not in a bubble, in my opinion, based on the above percentages.

SUPPOSE:

Silver rallies from the July 2015 low of about $14.30 back to its August 2011 high of $48.50 in late 2016 – 2017 to complete phase 1.  Suppose the ratios from November 2001 are similar to the bubble move in the late 1970s.  Then:

Possibility # 1:

 

Phase 1:  Nov. 2001 at $4.01 to $48.50 in January 2017.

Phase 2:  Jan. 2017 at $48.50 to about $225 in Nov. 2020.

Phase 1:  80% time and 20% price.

Phase 2:  20% time and 80% price.  (The 80/20 principal)

 

Possibility # 2:

 

Phase 1:  Nov. 2001 at $4.01 to $48.50 in Jan. 2017

Phase 2:  Jan. 2017 at $48.50 to about $450 in Nov. 2020.

Phase 1:  80% time and 10% price.

Phase 2:  20% time and 90% price.  (The 80/20 principal in extreme)

 

Two hundred or four hundred dollar silver!  Outrageous!  Yes, of course, when we think in terms of today’s dollars, euros, and yen.  But what if current deflationary forces overwhelm markets and currencies, debts are defaulted, and central banks panic.  Rather than accept crushing deflation, they massively “print” to boost asset prices and thereby create a huge inflation.  Instead of dollars and euros, we soon have mini-dollars and mini-euros.  Commodity and consumer prices are considerably higher and people and funds are DESPERATE to own something that will retain purchasing power.  Gold and silver come to mind!

Sane, intelligent, and connected individuals have suggested similar scenarios.  Jim Rickards has often mentioned gold at $7,000 to $10,000.  Jim Sinclair and Bill Holter have discussed $10,000 (and higher) gold and possibly $50,000 (who knows) in a massively inflationary world.  Silver at $200 to $500 makes little sense in 2015 but it is far more plausible if global central banks paper over multiple trillions in defaults and derivative implosions.

A world where silver costs $200 or $400 per ounce will not be pleasant in terms of food and gasoline prices, but it is certainly possible depending on the “printing” decisions made by central banks and governments.

Don’t believe such prices are impossible unless you also think that presidents can’t be killed, hyperinflation can’t happen here, and other such unlikely events will never occur …

 

Listen:         Craig Hemke on Hyperinflation (go to 30+ minutes)

Jim Sinclair on Crashes and silver

Bill Holter:  Silver Premiums

 

Gary Christenson

The Deviant Investor

11 thoughts on “Outrageous Silver Speculation

  1. And if we had some ham and cheese, we could make a ham-and-cheese sandwich. If we had any bread. Give it up, Mr. Christenson. You’re a nice, well-meaning man who’s deluded themselves into believing in some miracle that, sad to say, is never going to occur. You and Mr. Rosen with his “running flat correction” myth make wonderful examples of people desperately trying to convince themselves and others of something they hope will save them from their own folly. Deus ex machine, in extremis.


  2. Consider if you will that Gods letter to us says it will soon cost a days wages for a loaf of bread. The horseman with the set of scales in the book of revelation from where this info is gleaned is because unjust weights and measures are an abomination to God. Review also revelation 18 which describes a hyperinflationary depression. pay close attention to the final blood moon of sept 28th for what is likely the beginning of the chaos described in chapter 18. $200 silver seems like a slam dunk certainty and probably on the low side.


  3. It’s not so much that silver (and/or gold) is or will gain in value as much as it’s the value of our paper money becoming worth substantially less than it is right now. That hunk of silver or gold is a static piece – it doesn’t change. It is what it is. What changes is and will be the amount of paper money needed to buy it. So next time someone says…”silver’s (and/or gold’s) taking off and going higher” what they really mean to say is that “our paper money is losing value and going lower” so it appears that silver (and gold) is going higher.
    Anyway, when and if it ever gets to those rather lofty prices look for the dollar to devalue either at the same rate or by a greater amount, which if I was a betting man I’d say the majority of PM investors have either forgotten this or never thought about it at all. What? You didn’t really think that ounce of silver would eventually be worth 400+ dollars which are valued at today’s value, did you??


    • Yes, the dollar will devalue. Compare what it bought in 1913, 1971, 2000, and 2008 to today. Compared to 1913 it is already a mini-dollar. By necessity, gold and silver will be priced far higher.
      The Deviant Investor


  4. I think $1000 silver or more is very likely. As soon as the general population wakes up to how fake everything is, money will pour into silver investment and gold.


  5. http://nosilvernationalization.org/84.pdf
    In “Funny Money Gets Funnier” released in June 2008 find a discussion of inflation and unstable currency including historical acknowledgement of such—
    “CONSTANTLY RISING PRICES BROUGHT ON THE MOST TERRIBLE, COMPLICATED AND DIABOLICAL TORTURE A COUNTRY CAN KNOW.”— Richard Van Kuehlmann, former German Foreign Minister, New York Times, March 17, 1933, page 4. At the height of the Weimar crisis of 1923, Germany had 12 paper mills working 24/7 to churn out paper currency. Afterwards, the Belgian National Bank disposed of 125 boxcars full of that economist inspired trash currency. People on the way to stores used wheelbarrows to carry enough currency to pay for goods. The wheelbarrows were targeted for theft, and the currency dumped on sidewalks. All that abuse of Germany by England and America caused them to turn to a military dictator. Hitler need never have come to power nor need the second World War ever happened but the Anglo-American money creators wanted it.



    • To amplify on this excellent comment, one should perhaps draw attention to a statement made by Hjalmar Schacht, the Reichsbank president who actually stopped the German hyperinflation in the 1920’s by issuing a new fiat currency called “Rentenmark” (supposedly backed up not by precious metals but by real estate). In his memoirs, published in the late 1960’s, Schacht attributed the hyperinflation to foreign banks who borrowed Reichsmarks in order to sell them against Dollars and British pounds. The hyperinflation was not the result of the German economy losing trust in the Reichsmark. No, the hyperinflation was the result of relentless selling of the Reichsmark against the Dollar. Schacht argued further that the success of the Rentenmark was essentially the resutl of restricting loans to foreign banks denominated in the new “Rentenmark”.

      Indeed, when discussing hyperinfation, one needs to distinguish the case of weak economies (like the recent Zimbabwe or the case of Hungary after WWII) from the case of competitive economies (like Germany after WW I) where the hyperinflation is frequently imposed upon the country by foreign banks in order to loot that country.

      As Henry Ford once said, if people would really understand the monetary system they are living in, there would be a revolution the next morning. Fortunately, the risk of people fully understanding the monetary system is very low, and for that reason, fiat money is going to stay here for the foreseeable future.


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