Silver – Eight Years Later

Miles Franklin sponsored this article by Gary Christenson. The opinions are his.

Eight years ago, silver reached $48 per ounce. COMEX changed the margin requirements, and others dumped thousands of paper contracts on the COMEX market to smash prices lower. They succeeded, as usual.

Old news! As they say, “Wash, rinse and repeat.”

Gold and silver prices fell hard since their 2011 highs, while central banks levitated the S&P 500 Index, most stocks, and bonds with massive infusions of cheap debt. Central banks also purchased stocks and bonds.

Inexpensive debt, QE, and bond monetization were good for the DOW and S&P 500 stocks. Central banks are reluctant to change policies, but the world may have arrived at another “Peak Debt” moment similar to 2008.

What are prospects for silver and gold in the next several years? What data backs up the prognosis?

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.

President Nixon severed the dollar’s last link to gold in 1971. In 48 years, the S&P 500 Index, gold and silver rose exponentially. Examine their charts based on weekly data.

Because silver often moves opposite to the S&P 500 index, the sum of silver (times 100) and the S&P creates a narrower exponential channel.

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…

Negative interest rates exist for over $10 trillion in sovereign debt. (Crazy!)

Huge student loans defaults. (No happy ending here.)

Retail apocalypse, declining sales and stores closing.

Excessive individual and corporate debt.

Weaker auto and house sales etc.

  • James Sinclair, among others, thinks the party will soon be over. He suggests mid-2019.

SO WHAT?

If the party is over, and if conditions reverse this year, the stock market could fall while gold and silver spike higher.

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

Silver prices are too low compared to the S&P 500 index, as they were 18 years ago before silver rallied from $4 to nearly $50.

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…

Bet on flat to lower S&P 500 Index and much higher silver prices during the next five years.

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?

Examine the weekly silver to gold ratio chart. It shows that silver is undervalued compared to gold. When worries arise about national and corporate insolvency, loss of confidence, a credit crunch, hyper-inflation, or a currency crisis, silver will spike higher.

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.

Encouraging everyone to stack silver…

Gary Christenson

The Deviant Investor

9 thoughts on “Silver – Eight Years Later


  1. Right, wake up to the alternatives to the centrally and privately created world reserve (ex-petro)-dollar; Bartering, silver & gold, self-sufficiency, grow and trade organic food.
    Do as the rest of the world, that is; moving away from using the ex-world reserve currency dollars. Moving away, as fast as possible and as much as possible, from using totally corrupted fiat “money”.
    The bottom 90% incomes will use alternatives when they understand the fiat money / war profiteer system.


  2. I don’t care about silver prices. Evaluating silver (money) vs. paper currency is dumb. Paper currency is not the proper measure. For the past 2000 years, 1/10oz. of silver = one days wages. I have more than
    35 years labor stored away. I’m 78.
    Best to you!


  3. Right it seems kicking the can down the fiat money road and papering all holes over with newly created digital fiat (let there be) currency, can go on forever….. Japan example?
    The question probably should be:’what kind of world do you want to live in, or bet on, or support?’ Instead of what investment will return the most (devaluing) fiat dollars…
    Do you want to live in a world with an accountable exchange system, such as gold and / or silver combined with Bartering? Or do you want to live in a world with centrally and privately created unconstitutional fiat “money”, a system that operates at the cost of literally everybody’s sanity, integrity, health and heart…?


  4. There is an old saying by Confucius:

    “The beginning of wisdom is to call things by their proper name.”

    It is extremely annoying when those who pontificate on the subject matter, still refuse to make the distinction between an actual U.S. Dollar and a mere Federal Reserve Note (Debt Obligation; ie Claim for a Dollar)

    To wit:

    “The dollar of 1913 is now a mini-dollar in purchasing power.”

    Au contraire,
    an actual U.S. Dollar in Statutory Law, is exactly the same today as it was in 1913,
    however those “Dollar” Claims, “Federal Reserve Notes” are not worth the paper that they are printed on. So much for “Fractional Reserve” Banking (ie Counterfeiting)

    Furthermore President Nixon, NEVER “severed the ‘dollar’s’ last link to gold in 1971”

    He simply closed the “gold window” which had allowed the Central Bankster Counterfeiters the ability to convert their Counterfeited Fiat Paper IOUs into Gold at a fixed price, & telling same.
    “We’re ALL Keynesians NOW!”

    Perhaps if you studied a little harder, you would have learned that LBJ and the U.S. Congress had removed from the Law, the restriction on Banksters limiting the amount of Counterfeit IOU Currency which they could issue based upon the amount of Gold Stock they held in reserve back in 1968, before Richard Nixon was elected, and the Banksters made quick use of that, thus compelling Nixon to slam shut the Gold Window on 15 August 1971, otherwise the U.S. Treasury would have been completely depleted of all of its Gold before the end of 1972. and this was on top of the fact that LBJ & Congress removed Silver from U.S. Coins with the Coinage Act of 1965.

    Wake the Hell UP, People!


  5. Thinking silver will begin to rise, and seeing it do just the opposite Month over Month, year over year is frustrating. Even I have begun to think gold and silver are doomed but thinking the dollar will continue to rise with such a huge debt, is lunacy. Silver you can touch and there is just so much of it in the world. Dollars can be touched but the printing of them is limitless. The financial house of cards, controlled by incompetent politicians and Wall Street Bankers, is what is really doomed. It is just a matter of time. Again, as I have said over and over, Silver is being offered as a gift at these prices. Go against the grain. Sell dollars and buy Silver. Nuff Said.


  6. It is easy to believe that since silver prices have been flat to screwed up for the last 8 years to believe that it will stay flat to screwed up forever. Everyones expectations are low now. Or, non-existant. Your claim that 2019 is the year that will be different is the same argument given year after year. I hope you are right. If you are not right, then, ho-hum. Another normal year for silver.



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