December 2, 2022

Warren Buffett’s View On Silver

A lot of people probably won’t remember this event, but in February 1998 Warren Buffett announced that he had amassed  a huge position in physical silver.  Over the previous seven months Buffett had quietly acquired almost 130 million ounces of silver which, according to CPM Group, amounted to 37% of the world’s above ground raw silver stock.

Buffett’s holdings were probably acquired under $6 since the price range of silver fluctuated between $4.22 and $6.26 during the last six months of 1997.

Buffett’s plunge into the silver market was an extraordinary event.

Prior to his silver purchase, Buffett had made his fortune by shrewdly purchasing common stock  in undervalued companies.  As usual, Buffett was ahead of the pack when he correctly foresaw the long term potential for huge gains in the price of silver.  When asked why he purchased silver, Buffett replied coyly that the “equilibrium between supply and demand was only likely to be established by a somewhat higher price.”

What happened next in the Buffett silver saga was just as unusual as Buffett’s original purchase.  Buffett is famous for saying that his holding period is “forever.”  Yet, a mere eight years later, the silver position was gone.

In response to a question at the Berkshire Hathaway shareholders meeting in 2006, Buffett replied curtly – “We had a lot of silver once, but we don’t have it now—and we didn’t make much on our prior holdings.  I bought early and sold early.”  Not much of an explanation for a man who is usually at no loss for words.  Even more curious, Buffett said that his silver hoard was sold for only $7.50 per ounce.

A quick look at the price chart of silver during 2006 raises an obvious question – how did Buffett wind up making such a small gain?  The other big mystery is – why did Buffett liquidate his silver position in violation of his “forever” holding rule?  Theodore Butler of Silver Seek has constructed an intriguing hypothesis that COMEX traders took Buffett to the cleaners.

Here’s what I think happened. Buffett didn’t sell his silver willingly, it was taken from him. He lost it. He lost it through speculation in derivatives of the very kind he publicly vilifies.

Those who have followed the silver market closely have come to know the incredible reliability of the pattern of tech fund/dealer buying and selling of silver futures on the COMEX. This pattern has been documented by the weekly Commitment of Traders Report (COT), which I have written about in countless articles.

I believe that Mr. Buffett (or his advisors) also came to appreciate the compelling logic and power of the COTs. I believe that Mr. Buffett (or his advisors) became a card-carrying member of the dealer silver wolf pack, skinning the tech funds for years. I also believe that Buffett’s involvement in beating the tech funds regularly ultimately ended with his silver being taken from him.

It worked like this. When the tech funds plowed onto the long side in silver as the price broke through various moving averages on the upside, Buffett (or his advisors) would sell short against his real silver holdings. When the tech funds finally sold as prices fell back through the moving averages, those shorts established by Buffett would be bought back., booking substantial recurring profits.

But what worked swimmingly for years, namely, the regularity of tech fund buying and selling at expected price points, stopped working about eight months ago. The tech funds plowed onto the long side back in September at around $7.50 and the dealers sold short aggressively. But instead of the price collapsing, as it always did in the past, the price of silver doubled. And it caught many, including me, off guard. I think it caught Buffett off guard as well. So much so that he had no choice but to turn over his real silver to cover his going short at $7.50 or so. He could have bought it back at $12 or $13 and booked a big loss while keeping his silver, but that disclosure might have been embarrassing.

This would explain how Buffett emerged from silver basically breaking even and selling too early.

Mr. Butler’s astute insights make sense to me and it’s probably the only time Warren Buffett ever got beat up on a position.  But here’s where it gets intriguing for present day silver investors.  Warren Buffett’s record of selecting long term winners is still intact – silver was a brilliant investment.  Buffett’s original position of 130 million ounces bought in 1998 would be worth almost $4.2 billion today, a gain of $3.4 billion or 429% on his original cost of $780 million.

By comparison, Berkshire Hathaway A common stock went from $78,305 in June 1998 to $143,484 as of today, for a gain of only 83%.

Remember that Buffett’s holding period is “forever.”  If Buffett hadn’t had his throat ripped out by Comex traders, silver would still be in his portfolio today along with Coke, Wells Fargo and other “forever” holdings.  Something to think about the next time some “expert” starts snorting off about silver being in a bubble.

Gold and Silver Will Protect You From The Looming Financial Hurricane

By: GE Christenson

What Storm?

  • A hurricane of digital money created by central banks to purchase government debt and other dodgy assets from banks.
  • A tidal wave of deficit spending by governments around the world. It continues, regardless of whether you call it business as usual, stimulus, payoffs, or bailouts.
  • A perfect storm of derivatives – the weapons of mass financial destruction that continue to plague our financial system – but make $Billions (Maybe $Trillions) in profits for the huge banks.
  • A tornado of bailouts, giveaways, loans, and currency swaps from the Federal Reserve to backstop banks, politically connected individuals and corporations, European governments and others.
  • An approaching thunderstorm of new and higher taxes – perhaps a carbon tax, a VAT, and a wealth tax. We hope most of these will be downgraded to a hot air disturbance.
  • A tsunami of Japanese Yen based on the election of Prime Minister Abe and his avowed intention to weaken the Yen.

Why Do We Need Shelter?

  • Derivatives involve huge counter-party risk. The international financial system seems increasingly shaky. Those derivatives might be triggered by a Greek government default, another Lehman-like implosion, or a “black-swan” event that causes derivative contracts be paid. Will the counter-parties be able and willing to pay as required? Was sufficient margin set aside to protect all those derivative contracts? Doubtful!
  • It seems that the $700 Trillion in derivatives is largely based on $70 Trillion of sovereign debt, much of which is of marginal quality. When the collateral is worth less than face value, the derivative is worth considerably less than face value, or perhaps nothing.
  • Medicare and Social Security costs to the US government are huge and increasing. More deficits and accelerating national debt will be the result.
  • Will the dollar weaken against other currencies? Will the bond bubble finally burst?
  • Consumer price inflation is here and increasing.

Where Is The Shelter?

The problems are unbacked paper assets, excess debt, too much government spending, massive government deficits, derivatives that could implode, and lack of political will to correct the problems. We need a shelter that will minimize these risks.

One shelter is to divest out of paper assets and into gold and silver bullion and coins, land, farms, hobby farms, diamonds, and other physical assets. If you must stay in paper, consider using ETFs for crude, grains, sugar, gold, silver and other commodities. Read Ten Steps to Safety.

Conclusions

The investment world is increasingly dangerous. Few understood in late 1999 that an epic crash in the NASDAQ was about to occur. Housing crashed despite a wide-spread belief that real estate always goes up. There are several candidates for another crash – sovereign debt, derivatives, and the dollar.

We can depend less upon the safety of paper assets. We can depend less upon 1′s and 0′s on a financial server that claim we have assets in a brokerage account. When your government is seeking revenue, your assets are less safe. As Doug Casey says, your government currently sees you as a milk cow but may eventually view you as a beef cow.

Give your savings and retirement a chance to preserve their purchasing power. Minimize currency risk, find an alternative to a CD that pays 1% per year or a 30 year bond that pays about 3% per year for 30 years and is guaranteed to be repaid with increasingly depreciated dollars. Gold from 1/1/2000 to 1/1/2013 (13 years – from $282 to $1,655) has increased at a compounded rate of 14% per year. You have choices!

Doug Casey believes we are currently exiting the eye of the financial hurricane that started with the financial crisis of 2008 and that the next phase of the financial storm is imminent. Assets could be “blown away,” and supposedly safe structures might collapse in the financial winds of change.

If the financial hurricane is downgraded to a minor storm, you will still be sheltered in gold, silver, and other physical assets and have lost nothing. However, if the hurricane destroys many paper assets, then gold and silver will shelter you until the storm wreckage is cleared and financial life begins anew.

GE Christenson
aka Deviant Investor

Silver’s Biggest Gains Are Yet To Come

I think I am becoming a non-fan of infographics.  Maybe it’s just me, but many infographics are getting way too long and complicated.  With that in mind, the latest infographic on silver from the Visual Capitalist is worth a look – they keep the story focused and simple while explaining the investment facts on silver.

The fact that silver has corrected from its highs of 2011 is meaningless in the long term.  Every major multi-decade bull market will have sharp corrections along the way, especially when manipulated downward as was done by the COMEX in May 2011 (see How The COMEX Crashed The Silver Market).  Long term investors can calmly accumulate silver on sell offs and continue to build their wealth.

After breaking out of a long base, silver has had double digit gains in 7 of the past 10 years but is still super cheap as a competing currency to fiat money.  With virtually every major central bank in the world flooding the markets with newly created paper currencies, the value of money based only on  the “full faith and credit” of the issuer is guaranteed to decline against the value of real assets – especially gold and silver.

Silver as an Investment - The Silver Series Part 3

Non-Predictions For Gold and Silver

 

Non-Predictions for 2013 and 2014

A train wreck is in process. We have been warned. Protect your finances, investments, and retirement. The official numbers may not represent reality.

By: GE Christenson

More of the Same

  • More money printing by central banks. A trillion here and a trillion there, printed money everywhere.
  • More deficit spending. $3 Billion per day, but who cares?
  • More useless commentary about controlling spending, but the result will be increased spending and more useless commentary.
  • More and higher taxes. More consumer price inflation.
  • More QE. Printing money props up the stock market, but for how long?
  • More debt. More student loans, more credit card debt, more mortgages, more sovereign debt, and eventually some nasty defaults.

Less of the Same

  • Less Congressional credibility – low and going lower.
  • Less belief in a better future. It is difficult to believe in a brighter future when the food stamps and welfare payments just don’t buy what they used to.
  • Less employment. People continue to drop out of the employment statistics because they have given up hope of finding work. This is called “structural unemployment.”
  • Less purchasing power for the dollar. The more the central banks print, the higher the cost of food, fuel, beer, and wine.
  • Lower standard of living. With much higher costs, the standard of living for most Americans will continue to decline.

About the Same

  • The media will continue to assure us that gold is in a bubble – a decade of nonsense – wrong then and wrong now.
  • The media will assure us that silver prices are volatile. That and $2.11 will buy a grande coffee.
  • Inflation and unemployment will continue to be under-reported, even in non-election years.
  • Congressional accomplishments will continue to be over-reported.
  • SNAFU: System Non-functional, All Funding Unlimited.
  • TBTF banks will remain Too Big To Fail.
  • European financial troubles will continue. Ditto for Japan, the UK, and the US.
  • The Federal Reserve will bail out banks and fund much of the government deficit. They will claim this benefits both employment and the economy. That benefit plus $2.11 will buy a grande coffee.

GE Christenson
aka Deviant Investor

Oversold Gold Stocks Set For Strong Rally

By: Vin Maru

In spite of the recent down turn in the price of gold and silver, we still remain bullish on precious metals and its equities. Regardless of its paper manipulated price (if you believe this is currently happening), history has shown us that gold is money (not fiat currencies) and it is no one else’s liabilities. When it comes to gold, as always we suggest owning the physical metals outright fully paid for and stored safely where only you have access to it. If you have a significant holding in the physical, it may be wise to diversify your gold internationally in order to minimize country and political risk by reading Getting Your Gold out of Dodge (GYGOOD). Gold seems to be gaining strong support under $1650 which should most likely hold, so now is a great time to be adding to physical holdings.

We could be at transition period in this bull market where the paper gold price dictatorship comes into question and the democratic free market physical price will start ruling the golden kingdom. The dictatorship by Western central planners over the gold price is ready to be challenged and we may come to a point in history where only votes based on actual physical holdings will be counted. There will be no hanging chads counted on this financial election ballet, its either you own the gold legally and outright, or you have paper promises for imaginary gold (similar to government bond and fiat money) where the question around ownership will arise. Trust us; you don’t want to be one holding paper receipts in questionable gold backed investments engineered by most western financial institutions. Ask yourself, can you trust the source of gold dictatorship to protect your financial assets, especially when it comes to your gold holdings?

HUI and the Gold Miners

When it comes to owning the gold miners, we actually believe we hit the bottom of the market this past summer and then most recently this December. Back in the summer we suggested adding to positions and selling into a September rally for trading positions and then look to add back position in the November/December time frame.

Looking at the HUI chart below, it seems this past December low finished off the correction that started in October. If this does turn out to be the lows, then I see some really positive signs in the charts. Since the beginning of December, the RSI, and MACD have been turning up after being in negative territory and they both look like they have room and momentum on their side to move higher. This means the HUI has a good chance at starting an intermediate uptrend which should last at least a month to two and go towards an initial target of 475 before taking a pause.

What is most encouraging is seeing HUI start to make a new trend upward from May 2012 in a series of higher highs and higher lows, this is a positive development especially if the December lows of 425 hold. What would be more encouraging would be to see the HUI start a new uptrend right now, go to 475 and then blow past it to test the resistance seen at 525 in September. If the gold miners do catch a strong bid and can get past the 525 hurdle that is in front of us, then we can be confident that we really do have a strong rally in the miners and that the uptrend will continue to make higher highs and higher lows moving forward. Eventually it may blow past the old highs of 625 which may come sometime towards the end of this year, but most likely in early 2014.

If you plan on trading these markets, pay attention to the above mentioned numbers on the HUI for places to lighten up on positions and then buy back in on any pull backs in a series of higher highs and higher lows. If we are right on this pattern and uptrend, then the next wave up should take out the September high of 525 and more likely run to 575 (hopefully by spring) before we see a significant correction going into the summer doldrums maybe back towards the 450-475 level. Then I suspect we could see a strong yearend rally that goes well into the early part of 2014 and at that time I expect the HUI to be back close to all time highs. This is what I see happening technically on the charts and hopefully the fundamentals will allow this to play out over the coming year and a half; of course this is based on normal market activity and no market manipulations. This is the strategy we have been planning for TDV Golden Trader subscriber and how to play this new uptrend that could be emerging over the next year.

If you enjoyed reading this article and are interested in protecting your wealth with precious metals, you can receive our free blog by visiting TDV Golden Trader. Also learn how you can purchase and protect your gold holdings by getting a copy of our special report Getting Your Gold out of Dodge or protecting the stock investments you currently own with Bullet Proof Shares.

Cheers,

All Money Printing Schemes End Badly

By: GE Christenson

William H. Gross (manages the largest bond fund in the world – PIMCO) has much to say about Quantitative Easing and money printing. His latest article, Money For Nothin’ Writing Checks For Free, discusses Quantitative Easing (printing money) and the inevitable consequences. He notes that central banks have printed over six trillion dollars in the last few years. This begs the question, “Why not print even more?” Mr. Gross and many others have suggested that central banks should be hesitant with money printing schemes since they tend to end badly. He also quotes Sir Isaac Newton regarding the temporary success (and subsequent crash) of the English government’s money printing in the early 1700s South Seas bubble, “I can calculate the movement of the stars but not the madness of men.

What about the madness of men? Do YOU really believe the following are true?

  • Congress can NOT reduce spending! (Would the deficit be eliminated if members of congress lost their salary and benefits every year the government overspent revenues?)
  • We can solve an excess debt crisis by creating more debt! (Will vodka also cure alcoholism?)
  • Printing money (QE4Ever) will create economic prosperity! (It creates wealth for banks, but not for the economy.)
  • More government, at much more cost, will improve the economy!
  • 47,000,000 Americans on food stamps (SNAP) indicates a recovering economy!
  • Paper money will always have value and will always be accepted in payment for real goods! (History indicates otherwise.)
  • Loaning money to an insolvent government at about 3% per year for 30 years is a good investment when the government has assured us that it will devalue the dollars used to repay the loan!

What about the sanity of men? Is it more sensible to believe the following?

  • YOU can control your finances, wealth, and retirement.
  • Gold is real money.
  • Physical assets are safer than paper assets or digital “money” on a computer server. Avoid the train wreck.
  • Gold will retain its value, dollars will not.
  • If you own physical assets, you have less need to trust the safety of the stock market or the bond market.
  • Physical assets are much less vulnerable to the actions of central banks, the “Plunge Protection Team,” High Frequency Trading, and other market manipulations.

Conclusion

“A man sees what he wants to see and disregards the rest.” Simon & Garfunkel

If the government needs money for excessive expenditures, it sees loans and a central bank that “prints money” and disregards the inevitable inflation.

If a bank sees huge unrealized losses on mortgages, derivatives, and mortgage-backed securities, it sees bailouts from the Federal Reserve along with lobbyists purchasing favorable legislation and disregards the economic cost to the nation.

If an aware individual sees unbacked paper money being printed in quantity, he buys physical assets such as gold and silver and disregards the continual media noise and nonsense.

Avoid the madness of men, and seek the safety and sanity of gold and silver. We have been warned.

GE Christenson
aka Deviant Investor

American Silver Eagle Bullion Coin Sales For 2012 Tops 33 Million Ounces – Mint Runs Out Of Coins

According to the U.S. Mint, total sales of the American Silver Eagle bullion coins for December 2012 totaled only 1,635,000 ounces, down by 18.6% from 2,009,000 coins sold during December 2011.  The lowest monthly sales for the year occurred in February when 1,490,000 Silver Eagle Bullion coins were sold.  The highest monthly sales of the Silver Eagles occurred in January when 6,107,000 coins were sold.

Demand for the Silver Eagle bullion coins has been robust this year and the low sales for December do not reflect reduced demand but rather reduced U.S. Mint production.   As reported by Coin Update, the Mint reported in mid December that all Silver Eagle bullion coins had sold out and no additional coins would be struck during 2012.  The Mint announced that the 2013 Silver Eagle bullion coins should be available to authorized purchasers on January 7, 2013.

As with other bullion programs, the US Mint does not sell Silver Eagle bullion coins directly to the public, but distributes them through a network of authorized purchasers. The primary distributors are able to purchase the coins in bulk quantities at a price based on the market price of silver plus a fixed mark up. The coins are then resold to other bullion dealers, coin dealers, and the public.

The US Mint originally began accepting orders for the 2012 Silver Eagles from authorized purchasers on January 3, 2012. After a strong January, monthly sales trailed the levels of the prior year until October when demand started to move higher. In November, bullion sales continued their renewed strength, with sales of American Gold and Silver Eagles more than doubling the figures from the year ago period.

The strong sales in November caused the United States Mint to adjust their production plans for one ounce and one-tenth ounce American Gold Eagle bullion coins in order to avoid selling out prior to the end of the year. Apparently, the Mint did not adjust production plans for American Silver Eagle bullion coins.

The sales figures for December would likely have exceeded 3 million ounces if the Mint had produced enough silver bullion coins to meet demand.  Nonetheless, total sales of the Silver Eagle bullion coins for 2012 were the third highest on record with a total of 33,742,500 coins sold.  All time record sales of the Silver Eagle coins occurred during 2011 when almost 40 million coins were sold.

 

Demand for the Silver Eagles has soared since the financial crisis began in 2008 and recent announcements by the Federal Reserve and other central banks pledging unlimited money printing is certain to increase investors demand for safe haven precious metals.

Since 2000, investors have purchased an astonishing 232,143,000 American Silver Eagle one ounce coins worth over $7 billion at current market prices.

Silver Investment Demand Soars In China

The use of silver as a monetary asset in China goes back for centuries.  As detailed in the latest report from the Silver Institute, China’s entire monetary system was based on a silver standard until 1935.  Things changed dramatically after the Communists came to power in 1949 and effectively nationalized the entire silver stock.  Private citizens were prohibited from owning silver or gold and private sales of silver and gold jewelry was banned.

As China slowly adopted free markets principles, government control over silver was liberalized and in 2000, China finally ended the government monopoly on silver trading.  Private exchanges were established which allowed both the supply and demand of silver to expand rapidly.

A momentous moment for silver occurred in 2009 when the People’s Bank of China finally allowed private investors to buy silver.  The opening of the silver market to the Chinese public along with explosive economic growth resulted in an exponential increase of silver demand.  A middle and upper class that was rapidly accumulating financial assets saw silver as the logical store of value to protect their wealth from inflation and currency debasement.

Removing the prohibition on the private ownership of silver resulted in explosive demand for silver bar, coins and metals.  Demand for coins and medals increased from 3.0 million ounces in 2009 to 5.8 million ounces in 2011.  Demand for silver bar increased from 1.3 million ounces in 2009 to 11.3 million ounces in 2011.

The Silver Institute projects that retail investment demand for silver will grow robustly as silver becomes more available to the growing masses of the Chinese middle class.  Currently, investor demand for silver accounts for only a small part of total silver demand.  In 2011, total Chinese silver demand was 170.7 million ounces, with investors purchasing only 17.1 million ounces of coins, medals and bars.  With a population of almost 1.4 billion people, demand for silver could surge exponentially.  If only 1 out of 4 people in China buy one ounce of silver each year, that would represent silver demand of a staggering 350 million ounces, which exceeds total annual silver supply of 281.5 million ounces in 2011.

Long term investors in both gold and silver who understand the underlying fundamental reasons for owning precious metals should ignore short term price fluctuations and increase positions on short term weakness.

Demand For Silver Tops One Billion Ounces Per Year

Here’s a great infographic from the Visual Capitalist showing the supply and demand statistics for silver.  Interestingly, most of the silver produced each year is consumed in thousands of different industrial applications, leaving a relatively small amount available for investment in coins, bars and jewelry.  Unlike gold, the vast majority of silver produced over the years has been consumed, with much of it lost to landfills, leaving a relatively small above ground supply.

 

Why Silver Will Hit $100

By GE Christenson

There are many predictions for the price of silver. Some say it will crash to nearly $20, and others proclaim $100 by the end of 2012. The problem is that some predictions are only wishful thinking, others are obvious disinformation designed to scare investors away from silver, and many are not grounded in hard data and clear analysis. Other analysis is excellent, but both the process and analysis are difficult to understand. Is there an objective and rational method to project a future silver price that will make sense to most people?

Yes, there is!

I am not predicting a future price of silver or the date that silver will trade at $100, but I am making a projection based on rational analysis that indicates a likely time period for silver to trade at $100 per ounce. Yes, $100 silver is completely plausible if you assume the following:

  • The US government will continue to spend in excess of $1 Trillion per year more than it collects in revenue, as it has done for the previous four years, and as the government budget projects for many more years.
  • Our financial world continues on its current path of deficit spending, debt monetization, Quantitative Easing (QE), weaker currencies, war and welfare, ballooning debts, and business as usual.
  • A massive and devastating financial and economic melt-down does NOT occur in the next four to six years. If such a melt-down occurs, the price of silver could skyrocket during hyperinflation or stagnate under a deflationary depression scenario.

Still with me? I think most people will accept these simple and rather obvious assumptions.

Many individuals find it difficult to believe any projections for silver, either higher or lower, because silver is hated, loved, often ignored, and seldom recognized as another currency. However, most people know that the US government national debt is huge and will grow much larger during the next decade. Examine the following graph:

Click on image to enlarge.

National debt is plotted on the left axis – yes, it was larger than $16 Trillion as of September 30, 2012. Silver is plotted on the right axis. The data covers an 11 year span from September 2001 through September 2012. This period includes the time after the stock market crash of 2000, the game-changing events of 9-11, the real estate crash, and the new bull market in commodities. Each month represents one data point. Note the similarity between the two trends. The statistical measure R-Squared for this 11 year period of monthly data is 0.838 – quite high. R-Squared increases to about 0.90 if national debt is correlated to the monthly price of silver after it has been smoothed with 9 month moving average.

This expansion in the national debt is a simple proxy for expansion of the money supply and the devaluation of the dollar. The exponential growth rate for the national debt averaged over this period is 9.7% compounded annually, while the rate averaged over the last five years is 12.3%. The exponential growth rate for silver is a bit larger – about 20% per year compounded annually. I attribute this larger rate, in excess of 12.3%, to the realization that silver is a competing currency, mining supply is growing slowly, most governments are aggressively “printing money,” industrial demand is increasing, and some investors are actively buying silver. In short, demand is increasing while the realization that silver is still an undervalued investment and cannot be “printed” at will (like dollars and euros) has reached the awareness of individual investors. I believe it is very likely that national debt and the price of silver will continue their 11 year exponential growth trend.

Since silver correlates relatively closely with national debt, we can use national debt as a clear, objective, and believable proxy to model the future price of silver. Extend national debt and silver prices forward for the next six years based on the exponential increase from the last five years, and the result is the following table. Bracket silver prices, high and low, based on past annual volatility of roughly +60% and -35%. You can see from the graph that silver prices are very erratic – silver rallies too far and too fast, and then crashes to absurdly low levels. These stunning rallies and crashes have happened for at least 35 years and probably will continue throughout this decade.

Whether or not prices and crashes are manipulated, and there seems to be credible evidence to indicate such, the “big picture” view is that silver has rallied from about $4 to nearly $50, crashed back to about $25, and is set to rally to well over $100 in the next few years. The week to week movements will become even more extreme so focus on the long-term trend to reduce anxiety and fear.

As you can see, this projection for silver prices indicates that silver could reach $100 as soon as late 2015, with a theoretical projected price of $100 about 2017. The price of silver is about $32.00 as of November 1, 2012.

The next graph shows the price of silver, on a logarithmic scale, with high and low trend lines. The horizontal line at $100 shows the earliest and latest dates at which the trend lines project silver will reach that price. Those dates are 2015 through late 2017, which are consistent with the above projection based on the tight correlation to the national debt. The important realization is that $100 silver is just a matter of time – say three to five more years – depending on the level of QE “money printing,” inflationary expectations, dollar devaluations, fiscal insanity, government deficit spending, wars, and welfare. We have been warned!

Conclusion

We may be skeptical of price projections for silver, but projections for national debt are quite believable. Since the correlation is very close, future silver prices can be projected, assuming continuing deficit spending, QE, and other macroeconomic influences. A dollar crash or an unexpected bout of congressional fiscal responsibility could accelerate or delay the date silver trades at $100, but the projection is reasonable and sensible. Silver increased from $4.01 (November 2001) to over $48 (April 2011). A silver price of $48 seemed nearly impossible in 2001, yet it happened. An increase from about $32 (October 2012) to $100 (perhaps in 2015 – 2016) seems much easier to believe, especially after Bernanke’s recent announcement of QE4-Ever. Read We Have Been Warned.

“Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.” – Ronald Reagan

GE Christenson
aka Deviant Investor