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Silver’s Future

16 Apr

CrystalBall1NEWSMAX reports that in A.D. 2012, America’s largest investment bank (JPMorgan Chase & Co.) held 5 million ounces of silver. Today, JPM holds a staggering 91.5 million ounces of silver! In just 5 years, JPM increased their stockpile 1700%.

In the first three months of A.D. 2017, JPM reportedly purchased 9.4 million ounces of silver. That’s an average purchase of over 3 million ounces per month. JPM clearly believes that silver’s price will rise.

Since A.D. 2000, silver has enjoyed an average annual growth of 10%. Plus, we know that silver can go to $48 per ounce, as it did in 1980 and 2011.”

More, since 2000, silver supplies have been in a deficit every single year. That means the supply of silver has not kept up with the growing demand for over 17 years and is unlikely to do so in the foreseeable future. Diminished supplies coupled with growing demand means higher prices.

Financial expert John Rubino believes that silver could exceed $100 per ounce. According to Rubino, the silver market is so small that if even a relatively modest amount of currency (“a few tens of billions of dollars”) flows into the silver market, the price of silver could start jumping by “$5 or $10 per ounce per day”.

Keith Neumeyer, CEO of First Majestic Silver says silver is the most reflective and conductive element on earth. There are no suitable substitutes in the electronics, defense, transportation, and solar energy industries. Because it’s a powerful bactericide, non-toxic to humans, silver is also essential to the medical industry.

Even if the global economy does not strengthen, the demand for silver should continue to grow. Thus, the price of silver should continue to rise even if the global economy weakens. Neumeyer predicts that the price of silver will reach $140 per ounce.

Judging from JPM’s massive investment in over 90 million ounces of physical silver, JPM agrees with the previous analyses and therefore expects the price of silver to not only rise, but rise big time. I agree with JPM.

More, JPM also appears to believe that, on a percentage basis, silver is a better investment than gold. I also agree. (Even so, I prefer gold if only because you can currently store as much wealth in one ounce of gold as you can in nearly 4.4 pounds of silver.)

As I’ve written previously, I see silver as, primarily (say 70%) an industrial metal. I’m inclined to view silver as only 30% a monetary metal. In other words, 70% of the price of silver is based on industrial demand and only 30% is based on monetary demand that will result if the fiat dollar inflates or dies. Because the supply of silver is so small, silver will do well if the global economy strengthens. Because the industrial demand for silver is so great, silver should even do well if the global economy weakens. Thus, silver appears to be “an investment for all seasons”.

I see gold as primarily (say, 80%) as a monetary metal and only 20% as an industrial metal. Thus, 80% of the price of gold depends on the state of the monetary system and only 20% dependent on industrial demand. Gold will primarily do well if the fiat dollar suffers significant inflation and/or risks possible destruction. I regard this monetary problem as massive and unavoidable. I therefore view gold as an inevitable and spectacular winner. My only problem is that I don’t know when that inevitability will take place. But it seems to be coming closer all the time.

I believe that in the midst of a global collapse of the fiat monetary system, the resulting economic chaos will cause the industrial demand for silver will fall. In that worst-case scenario, the price of silver may still rise—but not as much as gold which is a more “monetary” metal. In the end, after a global fiat-currency collapse, the industrial demand for silver in new cell phones will be less significant than the panicked monetary-demand for gold as money. Assuming my belief is valid, I’d say that all investments in physical silver are good, but investments in gold will (ultimately) be great.

Whatever price peak happens for silver, we can assume that gold (currently about 70X the price of silver) will be at least 50X silver. If so, $50 silver could correspond to (at least) $2,500 gold. $140 silver could correspond to (at least) $7,000 gold

The silver/gold price ratio is confusing and unpredictable. Silver should do relatively better than gold if the economy strengthens. Gold should do much better than silver if the economy falls into stagflation and/or the fiat dollar is devalued or destroyed by inflation. Gold should particularly do better than silver in an era of stagflation where the economy slows (less industrial demand for silver) and inflation is high (pushing all prices higher) and the fiat dollar comes closer to destruction.

In the end, silver is primarily an industrial metal while gold is mostly a monetary metal. Silver will do best if the economy strengthens and the industrial demand for silver rises. Gold will do best if the global economy weakens during any variety of inflation (including stagflation) and the fiat dollar inflates and devalues closer to destruction.

Where do you think the U.S. and global economies are headed? Up or down?

Where do you think the fiat dollar and fiat monetary system are headed? Will they grow stronger or weaker? How much more inflation/devaluation can the fiat dollar endure before it (and the fiat monetary system) are recognized as worthless?

Your answers to those questions should determine whether you invest primarily in silver or primarily in gold. Either way, you’ll do well over the mid- to long-term. But the big question of “When?” remains.

Even if our fiat dollar survives and the monetary system does not collapse, inflation (and even hyperinflation) will be a fundamental monetary force favoring the most “monetary” metal (gold). Inevitably, the prices of both silver and gold will rise dramatically—just as, inevitably, the price of an average new home might rise to one million inflated/devalued dollars. Questions about whether the price of silver will rise to $48, $100 or $140 are not as important as answers about the timing of such price increases. Sure, so long as we have a fiat currency and inflation, silver will some day go to $100 to $140—and the price of gold will rise to $5,000, $10,000 or even $25,000. But when, when, when?

In the end, the difference between an economist and a medium running a séance may be this: The economist (if he has his head screwed on straight) can tell you what will inevitably happen—but only the medium will claim to tell you when it’ll happen.

(If you know any good mediums, have ‘em give me a call.)

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3 responses to “Silver’s Future

  1. abchtg@tranquility.net

    April 17, 2017 at 1:21 PM

    Thank you so much. I think it was said that they are a part of the corporate government. john all rights reserved

     
  2. kate younger

    April 17, 2017 at 1:36 PM

    Silver is so critical to so many manufactured products it cannot climb in price too greatly as the prices of many industries products would bring change to too many areas financially. Financial changes would be so drastic the resulting destabilization would be overwhelming if silver was allowed to gain too much. Does that sound right or is there another reality?

     
    • Adask

      April 17, 2017 at 2:47 PM

      It sounds like a reasonable consideration. I won’t argue that the need for cheap silver is controlling, but it probably exerts significant influence on the price of silver.

       

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