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Green Light Silver – Part 2

Commodities / Gold and Silver 2015 Oct 26, 2015 - 02:38 PM GMT

By: DeviantInvestor

Commodities

In part one we stated that “Silver looks like it has bottomed and will move substantially higher.”  In summary:


  • The long-term silver to gold ratio is a good indicator of bottoms in silver prices. That ratio was recently exceptionally low and appears to be climbing.  Expect higher silver prices.
  • In the long-term, whether you start in 1913, 1971, or the year 2000, silver prices, on average, follow the US national debt. Currently silver prices are far too low compared to that debt.  We all know the national debt is exponentially increasing and therefore we should expect silver prices to substantially increase from here to “catch up” with the dramatically increasing debt.
  • Silver prices – weekly basis – are low, oversold, and moving higher. They have recently broken an important downtrend resistance line.

What Happens Next?  What Do Others Say?

Craig Hemke suggests that in the near-term prices may experience another engineered fall.  Read his excellent commentary here.

“There can be little doubt that The Banks are once again preparing to smash the paper prices of gold and silver.”

We all know that short term prices for paper silver are easily pushed up and down by interested players.  Consequently let’s seek longer term analysis that is less affected by the HFT manipulations.

From Richard Russell who has seen it all in 90+ years of market observations:

“This bear market (and I’m calling it one) has developed a case of internal erosion.  Stocks are falling apart one by one as the big averages mask the damage.  Bear markets are sneaky beasts and they like to do their damage as secretly and as unobtrusively as possible.  I hate to say it, but somewhere ahead the bears are going to get together and the innocent little stream is going to turn into a waterfall.”

What can you do about it?  Stay out of the market.  Protect yourself by remaining in pure wealth, gold.  For thousands of years, silver and gold have been treated as pure wealth.”  [emphasis mine]

From Michael Noonan who is concerned about US foreign policy blunders and a march to global war, which will propel gold and silver prices much higher:

“By opposing the US and in calling the US bluff, Putin gains international respect at the expense of a lying US administration.  This also strengthens Iran’s influence over Assad and Syria, plus Iraq.  At the same time, it puts the Saudis and Qatar into a compromised position.  The remaining question is, will the Saudis, Qatar, and the US quietly stand by while Russia takes control over the ME, or once backed into a corner, will those three come out fighting, potentially leading to WWIII?”

From Michael J. Kosares regarding movement of money from stocks and bonds into gold and silver:

“Now with warnings of the next leg of the financial crisis surfacing almost daily, that demand could accelerate to an even higher level.  The massive, artificial wealth built-up in the world’s stock and bond markets will be looking for a place to go and one likely beneficiary will be the underpriced gold and silver markets.”[emphasis mine]

From Christopher Aaron regarding a technical case for a tremendous silver rally.  READ HIS ANALYSIS!

“Our technical model is showing the completion of a downside capitulation signal for silver prices, indicating that a significant long term bottom is either already in place or will be finalized over the next several weeks across the silver market.  Whether or not we see additional short-term weakness to the extent of a few dollars per ounce, the emergence from this pattern will represent a long term silver buy signal of similar magnitude to the one that occurred in November 2008, which saw silver rise over 400% within 2.5 years.”

From a daily email from Miles Franklin quoting a post on LeMetropole Café (subscription service) from a reader named “Derek:”

“Well, it seems as though the criminals who control the COMEX have a serious dilemma with silver.  If they continue suppressing the price, as they’ve done for decades, they will create a worldwide shortage of silver.  If, on the other hand, they allow the price to rise to its true free-market level, they will, once again, due to excitement such circumstances would foster, create a worldwide silver shortage.”

“…however, they can continue keeping the price of silver locked in a narrow range of a few dollars and not allow it to rise or fall to any meaningful degree.  What will happen in this case?  Well, we’re already witnessing the result:  the creation of – you guessed it – a worldwide silver shortage!”

From Business Insider regarding billionaire hedge fund manager Paul Singer:

“Singer said the balance sheets of developed countries were hopelessly and utterly insolvent once long-term entitlements were added in.”

SUMMARY:

In the next few weeks the banks may engineer another gold and silver smash, but silver prices will rise considerably in 2016 – 2020.

  • The US and most global stock markets have entered a bear market. Some paper wealth will move from collapsing stock and bond markets into pure wealth – gold and silver, causing prices to rise.
  • The Middle-East events from the past several weeks have humiliated the US and damaged belief in US control over the region. The South China Sea is another “hot zone.”  Both could lead to an escalation of war, especially if misdirection is needed to distract the populace from the trauma of further stock market and economic declines.  Silver prices will rise as war, spending, and debt escalate.
  • Aaron’s analysis (along with others) shows that silver prices are in a technical position similar to late 2008. Silver prices climbed from under $9 in 2008 to nearly $50 in the subsequent 2.5 years.
  • Retail silver is more difficult than usual to source. As they say, “the cure for low prices is low prices.”  A shortage of physical silver shows up in higher premiums above the paper COMEX prices.  There is no shortage of paper contracts for silver, which can be created in an instant with digital currencies created from nothing by a compliant central bank.  Physical silver and gold are not so easily created and consequently can experience severe shortages.  Prices for the real stuff will rise.
  • Western governments are “hopelessly and utterly insolvent.” This is easy to see but difficult to fix without massive trauma to many who “own” the politicians.  Expect more QE, “printing,” and “helicopter drops” instead of sane and rational action to correct a broken financial system.  Silver and gold prices will rise as debt based fiat currencies continue their “swan song” dive toward eventual worthlessness.
  • It has happened before and it will happen again. Paper dies, silver thrives.
Gary Christenson

GE Christenson aka Deviant Investor If you would like to be updated on new blog posts, please subscribe to my RSS Feed or e-mail

© 2015 Copyright Deviant Investor - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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