I fully expect the price of silver to break the $100 mark within the next several years. By the time this round of monetary sodomy is over fortunes will have been made and many others ruined. I have been posting about the money supply, gold, silver and commodity prices for quite some time now, even over a year ago. I continue to stand by my bullish precious metals calls. In fact silver hit yet another 31 year high by reaching $34.90 this morning. Gold is currently making yet another all time nominal high by pricing at $1,437.40.
Hopefully in the next few months we will see some dithering from the federal reserve governors as to whether or not quantitative easing should continue or not. Some of these spawn of satan have said that more easing (money printing) will be necessary while others have said that enough printing has taken place. If the fed actually stops printing or announces that it will stop sometime towards the end of spring then we will see a sharp correction in risk assets, stocks, commodities, and even gold and silver. I'm hoping this is the case so we can all go in and buy the fucking dip!
The reality is that the federal government is broke and cannot finance its own operations without the federal reserve purchasing government bonds. Were the fed to stop purchasing gov bonds that would mean the government would have to "spend" within its means which would spell layoffs, a slowdown in the economy and a deflationary spiral to hell which would crater bank balance sheets. As much as people don't want to accept it, however, a deflationary scenario would be a much better outcome than the hyperinflationary disaster that the fed is taking us on. Deflation kills bad debts while inflation destroys everything. We have already seen defation work its magic in housing and thank God it has as housing prices were shooting to the moon. Even today, home prices are still historically high based on price to income ratios. Nonetheless, at the first sight of deflation taking place I predict our policy makers to panic and hit the print button again. We truly are in a bizzaro world with inflation and deflation on both sides of the tight rope we all walk on. Not enough printing and the economy will crash into deflation while too much printing will lead to hyperinflation. Many believe that the federal reserve will be able to manage this narrow path between the two evils. However, I and many others believe that this is a exercise in futility as the true solution is clear: monetary reform. Our debt based exponential money system is inherently unstable, just as the last several years have proven.
To what extent will inflation ravage our nation no one knows but the one thing we can say with some certainty is that gold and silver will prevail in this type of environment.
Some final words. While some have criticized this blog in the past for talking about "off topic things" such as silver, money and finance, I see all these things being interconnected. Besides, this is a monumental event in world history as the world reserve currency is in danger of losing its esteemed status. Indeed this "dollar crisis" will affect all of us in some form or another. Thus, for those who have some cash on hand please do yourself a favor and get some precious metals. I recommend that 10% of savings be stuffed into PM's.
This post has stirred some debate as to whether inflation is a good thing or a bad thing. The videos below are from Dr. Chris Martenson's Crash Course that provide a great historical lesson on US monetary history. The second video talks about debt.