Silver and the Train Wreck

The U.S. National Debt is a “train-wreck.” The official debt is nearly $20 trillion and the unfunded liabilities are $100 – $200 trillion, depending on who is counting.

  1. It can never be repaid. Implications are dire.
  2. Official debt doubles about every 8 years. Does $80 trillion of official debt in the early 2030s sound viable?
  3. Per Krugman there is no problem. Consider the source.
  4. Denial is not a winning strategy, but it does prolong the period before the crash.
  5. The losers in the crash will probably not be the financial or political elite. That leaves the rest of us.

This graph shows the US official national debt – log scale in $millions – for a century. There is ample reason to believe this 100 year trend will continue and possibly accelerate.

However you might say, “But the population increased several times in the last century.” The graph below shows the official debt per person – the population adjusted national debt.

Debt increased exponentially in both nominal dollars and adjusted for population.

You might say, “Yes, but central bank created inflation has increased the total debt.” The graph below shows the population adjusted debt priced in real money – silver. (Gold graph has a similar form but is not shown.)

As the graph shows, population adjusted national debt has exponentially increased even when measured in silver. Note that this graph used a 10 year moving average to smooth the price data.

WHAT ABOUT SILVER, GOLD, AND CRUDE OIL?

 

The graph below shows smoothed (10 year moving average) silver and crude prices. Gold price patterns are similar to silver prices and are not shown. Note that silver and crude prices increased erratically but exponentially.

Silver prices are currently low based on their 20 year “megaphone” pattern. Expect much higher prices.

CONSIDER:

 

  • Debt has increased exponentially for over 100 years. Debt will continue to increase.
  • The US economy is not robust. A recession/crash is coming which will reduce tax revenues while increasing borrowing and spending because politicians will “stimulate” the economy with projects, “helicopter money,” a guaranteed income, more “giveaways,” and probably many more.
  • War cycles (Edelson and Armstrong) indicate increasing warfare in the next five years. Wars are currently expensive and the new ones will be worse. More spending, more debt …
  • Baby boomers are retiring. Their Social Security and Medicare benefits are costly and accelerating rapidly. More debt and more spending…

The list goes on, but the prognosis is more debt, more spending, higher prices for what we need, and an acceleration of debt creation into the crash or reset. What happens after a crash or reset is less clear.

Silver and gold prices erratically increase along with debt. Given that silver prices are near the low end of their 20 year “megaphone” pattern, expect much higher silver prices. Further, the cost of production is increasing rapidly and the ore quality is declining. Expect prices to increase based on limited supply.

Given the precariousness of the central bankers’ fiat currency Ponzi Schemes and the coming realizations about the intrinsic value of paper investments and debt instruments, silver and gold prices should move much higher in the next five years due to heavy demand.

ALTERNATE CONSIDERATION:

 

From Paul Krugman, PhD and Nobel Prize Winning Economist:

“… there’s a reasonable argument to be made that part of what ails the world economy right now is that governments aren’t deep enough in debt.”

He might be right, 33,000 “missing” emails might concern yoga pants and weddings, the military buildup in the middle-east is merely for show, massive debt helps the average person, you can keep your doctor, Obamacare will save you money, he did not have sexual relations with that woman, hope and change have been a resounding success, Santa’s elves are making really cool toys for Christmas, a single F-35 helmet that costs $400,000 is a bargain, and herds of Easter Bunnies are bringing “nest eggs” for everyone who earns less than $100k per year. Yes, he might be right…

But if the above ideas don’t fit your basic beliefs, silver and gold should be far more successful than investments in unpayable debt, paper currencies, and levitated stock and bond markets.

 

Gary Christenson

The Deviant Investor

17 thoughts on “Silver and the Train Wreck

  1. People such as Gary have a great depth of knowledge, do much extensive research on a continuing basis, and share their findings with us.

    I suggest that the rest of us use this information to formulate action plans.

    And then act.

    Gary has made a strong case for investing in silver. Similar cases could be made for gold, platinum, palladium, rhodium, etc. They would not differ to great extents, and in any case one is not limited to a single metal as a secure holding in the face of proliferating fiat — as well as a bond market that is crumbling fast, and paper equity markets that are all but certain to follow.

    Why not figure out how much one has to invest in, say, silver (which is a particular bargain now). Divide that amount into three or four tranches. Pick an entry point (now looks good to me) and make your first purchase. Set lower amounts for entry points (25¢? 50¢? $1.00?). If and when that lower price is breached, buy the next lot.

    Averaging down in such a manner usually catches a bottom.

    In 1979-1980, in a very different kind of market, I did this in purchases of deeply-discounted municipal bonds that were selling in some cases at 35¢ on the dollar All eventually paid off at par.

    Falling prices always are scary at the time, but acting in manners that overcome such fears is the way to build wealth.

    Chasing rising prices rarely works nearly as well.

    Those of you who recall $40 silver should ask: was the higher price a greater entry point than today’s bargain levels?

    I have been buying gold and silver on their declines, and will continue to do so.

    Gary is doing the hard work, which I greatly appreciate.

    Robert B. Eckhardt
    11.16.2014



      • As I said, people such as you and Bob Moriarty are doing the research and analytical work. Hard to understand why other people are not taking advantage of the results, and buy. I have been doing so steadily.
        Rarely have caught an exact bottom in my life, but placing orders for something already low in price and fluctuating, even if downward further, is rewarded far more often than not.

        With my thanks,
        Robert B. Eckhardt 11.17.2016


      • Today with silver @$16.75/ounce I took the bat off my shoulder and bought more.
        Probably will add additional increments at successive decreases in the 25¢ to 50¢ range.
        Robert B. Eckhardt
        11.17.2016


  2. You forgot- “I landed under sniper fire” which the statement in itself proves she’s a habitual liar. It is simple, no one ever lives to tell that they were under sniper fire, especially a haggard old slow moving hunched over bag lady! Let’s not forget the final three words of her very last campaign stop, “God bless you” … (huh?!) from an atheist… who sat next to the Pope at a roast… who is all about increasing abortion, you just can’t make this stuff up. As idiotic as the younger generation is becoming (a carefully planned process) they won’t ever “get it” about silver. Oh well, I’ll still stack some more. Yep, just not quite enough debt around the world yet, the solution is just a little more debt! Viola! Why didn’t I think of that? Great stuff Gary! As always.


  3. China and others are planing on expanding solar cells such that it will take all the known silver and all of the ore in the ground and will still come up short. Some thing has to give! $$$?
    Roger


  4. IMO, The U.S. has shifted from a capitalist economy to a communist busted economy.
    IMO, the U.S. citizens would never have allowed the U.S. Government to barrow over 2 trillion from the Social Security Trust Fund.
    IMO, the U.S. Citizens would never have allowed the Federal Government to try to override the Medicare program with Obama Care. There was insufficient doctors in the supply chain to take on such a load. Obama: “no problem”
    “Delete internship’s from the requirement to practice medicine.”

    I could go on, but I have other things demanding my attention.

    Thanks for the message, Gary C.


  5. Lighten up, Gary! The stock market is up. Trump will be the next president. And the Clintons will move to Brazil to avoid extradition. It’s all good!!!


  6. Actually, I’d believe the bit about the Easter bunny before I’d believe Paul Krugman. But thanks, Gary, for this very valuable information, presented in a very understandable way, so that even I can understand it.


  7. Can always count on you for clarity and understanding…….thanks for your
    silver info. I agree, there is “no way” out of the country’s debt, especially the
    growing interest on the $20t….interest will equal or pass the GDP soon. I
    enjoy your website and info. Have been buying silver for nearly 10 years.

    wyn
    ‘simply said’




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