Wednesday, March 2, 2011

Silver will hit $100 per ounce: UPDATED

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.

On inflation:

On debt:



  1. Subprime,
    I don't mean to put pressure on you here, but I actually have been basing a few of my financial decisions on your writings, having charted successful predictions of yours in the past.
    In your estimation, how likely are the prices of gold and silver to fall as outlined in the scenario in paragraph two of this post?

  2. Five years ago Republicans were claiming deficits were no big deal. Now they are the biggest deal in the world. I suspect the truth is somewhere in the middle, when political expediency is removed from the discussion.

    And when I was very little, I remember my parents talking about losing their shirt in the gold bug fever that marked the 1981 recession. Gold always goes up in response to humbug and uncertainty. Silver too. But what goes up must come down.

    I think things are pretty bad, but I really don't think we're going to end up trading each other lumps of metal for goods and services.

    So far, the US has cut a middle path between Ireland and Iceland. I'd like to see us more on the Iceland side of things, but even if we go all Ireland and bankrupt ourselves to pay off the bankers, we're not going to be handing each other metal for any reason. It's just a fact.

  3. Anon at 853

    Please email me at darkktrader@gmail to discuss in greater detail

  4. Liz,

    In 1980 Paul volcker raised the fed funds rate to 18% whereas bernanke has kept rates zero

  5. Anyone who writes this:

    "Deflation kills bad debts while inflation destroys everything."

    Just doesn't know what he's talking about. Sorry, man, I like your blog, and I respect your opinions, but it's true.

  6. As a chronic debtor, I don't fear hyperinflation. If we can devalue my student loans into the ground, the world would be a better place.

  7. I agree with Anonymous. Study the economic panics of the 1870s-1890s if you want to see how much fun a country can have on the gold standard with a high-value currency and heavily indebted consumers. Deflation is HELL for a consumer-based economy, and the US economy is 70% consumer spending.

  8. I think nickels are a good investment.
    each one is worth about 7 cents.
    So ask your local bank teller about change.
    Some think that gold and silver are going up BECAUSE of deflation. People are afraid of ENTIRE countries going under (sovereign defaults) so they are putting money into gold and silver.

    If you think silver is going to $100 based on inflation then you should also consider the DOW going to 36,000 as inflation (or re-flation) lifts all boats.

    The Fed is printing and issuing CREDIT and not paper dollars. The average American and even the above-average American has very little in actual paper dollars on hand. I doubt banks have much either.

    I think cash money is still good (no one really has it, but everyone really needs it to pay off debts), some gold (holds up better than silver if commodities go down), and food (because you can't eat gold).

    I think we could see a repeat of 2008 where stocks declined and gold and silver declined with them.

    da bear

  9. subprime and others,

    if you really wanna stick it to the banksters and want to put your money in something that will hold its value then put your money in nickels. They are currently worth more than face value.

    Nickels are both a fiat currency play and a play on metals.

    da bear

    Ask your local bank teller about change!

  10. "By the time this round of monetary sodomy is over...."

  11. I have spend 70% of my money on silver because silver is rarer than Gold, And nowadays is being use more for electronics and hospital equipments and it don't matter what happens to our dollar or the economy silver will go higher and higher .. I remember when silver was @ $5 per ounce and look at it now!! If is not next year it will be latter but I am 99.9% sure that I will triple my money even if it for the good use of my garnd kids . So REALLY!! Buy it while you can you won't regret doing so :)

  12. Silver is king. The upside is huge. Just look at the gap between silver and gold and you will see the massive upside. Gold will go over 100 per oz. In 2012. By now and be happy in 2012.

  13. Meant to say silver will go over 100 an oz. In 2012.

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