Silver: May the 100 Year Force Be With You

What force?  Some of the “forces” in our world that are supportive of higher silver prices are:

  • Debt Increases: Global debt exceeds $200 Trillion and rising rapidly.
  • Warfare: Syria, Turkey, Russia, Ukraine, South China Sea, Chicago and others.  It is a long list.
  • Welfare: Bank bailouts, military contractors, Medicaid, food stamps, dozens of “programs” and so much more.
  • Central bank “money printing:” Bank of Japan, European Central Bank, the Federal Reserve, Bank of England and others are doing what they do best – devaluing their currencies.  The bubbles created in the bond, stock, and currency markets must be fed and supported.

There is little doubt that the world is drowning in debt.  The choices seem to be:

  • Add even more debt. Some Nobel Prize winners like this option.  The default action by nearly every politician and government is to create far more debt every day, until the system breaks.
  • Inflate the currency so the debt becomes insignificant – think Weimar Germany and Zimbabwe. Hyperinflation has never been good for the middle and poor classes.  The financial and political elite take care of themselves.
  • Raise taxes and reduce debt. NOT A CHANCE!  Have you ever met a politician that wanted to spend less money?
  • Default! Unthinkable!  Sorry bond markets, insurance companies, hedge funds, pension funds, savers, we were lying when we promised to repay you …….  Unthinkable!  (Until there are no remaining choices …)

If defaulting on the national debt and raising taxes can’t or won’t happen, governments are left with more of the same – add more debt, pretend it will be repaid, increase consumer prices, and hope the financial system does not crash.  This will lead to ugly consequences such as much higher inflation, a deflationary crash, and/or a hyperinflationary depression.

What does United States history indicate?  Examine the following graphs that cover 100 years on a log scale.

Q-ND

National debt has increased from a few $ billion to about $19 Trillion.  The 100 year history is clear.  Expect debt to increase.

Q-SICL

Over 100 years crude oil prices have averaged about three times the price of silver.  For approximately equal weights graph the price of crude oil plus 3 times the silver price.  The trend toward higher commodity prices over 100 years is clear.  However silver prices have been crushed over the past four years and crude oil has similarly fallen during the past 1.5 years.  The 100 year chart makes the recent nasty short-term price collapse look tiny and unimportant.  Expect higher long-term prices for silver and crude oil as politicians spend and central banks “print” and both silver and crude oil prices eventually return to their long-term uptrend.  If not, the system has crashed and the unpleasantness is beyond belief.

Q-ND ratio

Over 100 years the national debt has increased more rapidly than prices for silver and crude oil – hence the ratio declined.  The important point is how low the ratio is currently, and how much higher those crude oil and silver prices will go if governments and central banks choose to inflate away their debt.  The upper trend channel suggests ratios 7 to 10 times higher.  Silver prices will rise considerably more than the increase in the ratio.

Q-DJ

Over 100 years the Dow (DJIA) has risen somewhat faster than silver and crude oil prices.  The ratio of silver plus crude prices to the DOW is currently at the low end of the range and has been lower only around the year 2000 when the DOW bubbled up and silver and crude were nearly forgotten.  The ratio could easily rise by a factor of 10.

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New Fiction!

“Who Killed Doctor Silver Cartwheel?”

(A mystery story that discusses future silver prices and

silver demonetization)

by Gary Christenson

Available from Amazon: Paperback and Kindle eBook

Also available at www.gechristenson.com

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 CONCLUSIONS:

 

Silver and crude oil prices have been crushed while the DOW has been levitated.  But national debt increases inexorably – like a runaway freight train on full throttle.

Don’t expect debt to decrease, be repaid, or even to slow its rate of growth.  Hence currency in circulation and most prices for what we need will rise.  Look again at the exponential graph of debt.

Crude oil and silver prices are historically low compared to national debt, the DOW, the S&P (not shown) and most paper investments.  Eventually people will realize that “paper” investments can return to their intrinsic value – much lower.  Or relatively speaking, silver and crude oil will be priced much higher in devaluing currencies.

When:  My crystal ball is cloudy, but silver demand is strong and prices are too low for miners to make a profit.  Eventually silver prices will rise – perhaps soon.  Crude oil prices?  Who knows all the political manipulations that influence crude oil prices?

Stack silver, stack gold, and remember that 100 year trends are not likely to change.  Expect more debt, more currency in circulation, exponential increases in prices, and more spending.  War will accelerate the process.

 

Gary Christenson

The Deviant Investor

gechristenson.com

 

 

 

12 thoughts on “Silver: May the 100 Year Force Be With You

  1. I bought and read your, Who Killed Doctor Silver Cartwheel? An easy read that takes the reader through a basic history of the currency and of silver. The charts towards the end made the case very well for a possible future scenario for silver. The dialogue between the key characters, especially Mr. Mystic and the special equipment available to view the past and possible futures, a little bit of The Twilight Zone, but then Mr. Chandler made that analogy within the book. This was somewhat reminiscent of, The Richest Man in Babylon in the practicality of its message. Thanks again for a quick and easy read with great educational aspects.


  2. What an orgy of unawareness and folly. Pension fund managers have nearly no concept of hard assets lest they’d be buying silver as the SLV is being drained to suppress prices. There’s also the aspect that they want pensioners to be poor and to have little to draw on at retirement. They appear to intentionally be out by design to mismanage pension holdings. The SLV has three of the spookiest managers—State Street, HSBC and JPMC with Black Rock and starting with Barclays, the British connections are off the scale. The Mining Congress Journal, February 1947, page 84 spoke of “Great Britain and her purpose of devaluing silver throughout the world.” The British have been attacking silver since Francis Drake made his first seizure of a Spanish treasure galleon in 1572. All USA participants are junior partners and the FED is often acknowledged as “stepchild of the Bank of England.” Free access research five part series “Britain Against Silver” 324,042 words http://nosilvernationalization.org/100free.html


  3. It should be crystal clear that limit orders backed with half a trillion fiat dollars were ate the ready to absorb any S&P
    dump, and covered any additional interest payments owed
    on bonds.
    The FED is and has always been printing money outside
    of the bonding requirement…trillions are being clicked directly from the FED mouse to put out any fires that natural market forces can create.
    It seems that the dollar will hold the line until the day it dies. There will be no rectification any time soon.
    The Khazars will see the entire planet in flames, and every currency destroyed before there can be any hope of a return of normalcy.


  4. There is no such thing as a Nobel Prize in Economics.

    There is the Swedish Central Bank (Sveriges Riksbank) Prize in Economics in honor of Alfred Nobel.
    It is like the Oscar’s for the best performance in banking profitability schemes.
    By tacking on Nobel’s name, there was/is the hope that the prize will have credibility among the ignorant masses.
    It is a con-job. And except for a few hard-noses such as myself, it seems to be working.

    None the less, I agree that it is far better to hold PMs and not need them than to be needing and not holding.
    And silver was (and will be again) the operative token coinage of choice.
    A US silver quarter would buy a gallon of gasoline in the 60’s and still will.



  5. Most of these fundamental factors cited in the article have existed for the past 4 years – which didn’t prevent the price of silver from going down. Which means that they are totally irrelevant.

    In addition, unlike gold, silver is also an industrial metal – which means that its demand falls and the price goes down when the global economy gets in trouble – which is already happening.

    Stop trying to pick bottoms. Stop pumping and deluding your readers into making wrong investment decisions and losing money. You’ve been wrong for more than 4 years already – and you will continue to be wrong, because you have no clue and you only bet one way (“buy, buy, buy”) all the time.

    Wait for the downtrend to reverse before wasting any of your hard-earned money on precious metals, or you will be sorry. The time to invest in something is when its price starts going up – not when you hope that it is about to stop going down.


    • 1) Thank you for your comments. I know when you are negative and critical that the article is sensible and appropriate.
      2) I hope you are well compensated for your “analysis” and “commentary.”
      3) I haven’t been wrong for 4 years as I have not been writing for that long. I was very concerned about the silver and gold market froth in 2011.
      4) Your arguments are largely invalid. To the extent they are valid and useful they apply to traders. I don’t trade silver or encourage trading silver. I encourage stacking silver and believe that paper assets will decline in purchasing power while real assets will increase in purchasing power. My articles are written for stackers, not traders.
      5) Timing the market is increasingly difficult in a managed paper market. Stackers don’t try to time the market and they don’t listen to you.
      6) Have a good time trading paper….
      The Deviant Investor


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