Silver Prices…What Next?
Point One: Debt grows exponentially, not because it should, but because our debt-based financial system practically requires it.
Point Two: Silver and gold prices increase along with the exponential growth in debt and currency in circulation.
Point Three: Similar exponential increases are evident in the DOW, S&P500, prices for most commodities, and certainly for health care, college tuition, auto prices etc.
Point Four: Exponential increases cannot continue forever, but they can persist for a long time.
The National Debt:
Current US official national debt is about $19.4 trillion. Unfunded liabilities are five to ten times higher. Do we really believe that the exponential growth of debt, which will probably accelerate in coming years, can reach $160 Trillion in the year 2040 or thereabouts? A prior reset seems likely!
You can see the exponential trend for average silver prices, as I have drawn it. One might argue about the slope of the line but the exponential increases seem obvious and inevitable, particularly after seeing the exponential increases in debt.
The inflationary 1970s, followed the “guns and butter” years of the 1960s and President Nixon’s decision to close the gold window in 1971. Excess spending on war and social programs required extraordinary measures, such as defaulting on the Bretton Woods agreement, severing the link between the dollar and gold, allowing debt to increase practically without limit, and of course, assuring the public everything was either fine or would be peachy in coming years.
Today we have had 15 years of massive spending on war, huge military expenses, an expanded security state, and more social programs.
Extraordinary measures have been implemented, including various QE programs, near-zero interest rates, more wars and many reassurances from politicians and central bankers that everything is either fine or will be peachy in coming years.
Following the craziness of the 1960s and the extraordinary measures of the 1970s, silver and gold spiked while the dollar and US credibility weakened.
But, how high will silver spike as both the dollar and US credibility weaken during the next decade?
Date Silver Exponential Silver High/Low Ratio
Trend Price Daily
Jan. 1980 $2.60 $50.00 19.2
Nov. 2001 $13.00 $4.01 0.3
April 2011 $25.00 $48.50 1.9
Dec. 2015 $35.00 $13.60 0.4
Silver spiked to 19 times above its exponential trend in 1980 during the silver bubble. Silver crashed to 30% of its trend in 2001, and 40% of its trend in late 2015, and the April 2011 high was less than two times its exponential trend.
- April 2011 was not a bubble.
- The next bubble might cause silver prices to jump higher than its exponential trend by 15 – 25 times. Assume the spike occurs about 2019-2021 and the exponential trend is about $45. That means a spike could reach $700 or more.
- Of course silver at $700 looks insane now.
- How insane is the current nearly $12 Trillion in global sovereign debt that “yields” negative interest rates? This will result in tears and far worse. Meandering toward the cliff…
- How insane is allowing and encouraging an exponential increase in debt when it is mathematically obvious that it must cease, probably fairly soon? The consequences will be ugly, yet the world persists with an untenable system. Marching toward the cliff…
- How insane is a global nuclear policy that could result in global destruction from one accident, one crazy leader, one mistake, or one miscalculation. Sleepwalking into global nuclear destruction seems insane. Jumping off the cliff…
- Is $700 silver more crazy than any one of the above? Is it more crazy than the combination of all three?
- Yes, $100 silver is coming as a result of diminishing supply, increasing demand, and financial craziness. However $700 silver might require an extraordinary degree of insanity, hyperinflation, and worse. I hope our leaders do not “pull the trigger” on financial, nuclear, or hyperinflationary measures that might drive silver to $500 or $1,000 in a world we do not want to live in.
“They have fixed nothing because nothing can be fixed. No bullet has been dodged!”
“If I’m right, a long-expected collapse in the purchasing power, and of the very concept of fiat currency, will evolve from current events.”
“… monetary policies of central banks never succeed, except perhaps by pure chance.”
“The failure of central bank monetary policies appears to have reached an inflection point.” Examples: crashing share prices for important banks, political disintegration of Europe, negative interest rates, wildly over-priced government bonds, and rising gold prices.
“… it is not possible the world can escape 2016 without a catastrophic financial event.”
“.. my belief that the BrExit referendum was the most important – and Precious Metals bullish – election in history.”
- Silver prices have risen from under $14 to over $20 in about six months.
- Silver prices will spike far higher in coming years.
- How high silver rises depends partially upon how long current fiscal and political insanities are allowed to persist.
- Expect $100 silver in a few years, or less.
The Deviant Investor
Gary Christenson is the owner and writer for the popular and contrarian investment site Deviant Investor and the author of the book, “Gold Value and Gold Prices 1971 – 2021.” He is a retired accountant and business manager with 30 years of experience studying markets, investing, and trading. He writes about investing, gold, silver, the economy and central banking.