Alasdair McLeod wrote an excellent article in which he said,
“So if anyone asks you when you might take your profits in gold and silver, smile sweetly and just say, ‘When paper money stops losing its value.’”
When will paper money stop losing its value? I submit that unbacked fiat paper money will, based on history, never stop losing value – as long as it is backed by dodgy sovereign debt issued by governments descending deeper into debt ever year. A viable alternative is currency backed by gold and silver, but even though precious metals have been used successfully as money for centuries, there is far more profit for TPTB when they use the paper stuff. Consequently paper and digital currencies will not disappear anytime soon.
But given that we are stuck with the paper stuff… and given that we erroneously believe that the paper stuff is an adequate measuring tool… and given that we live our daily lives within the universe of paper currencies… and given that we need silver (and gold) to compensate for the loss of value in paper currencies… THEN:
The critical question is: Is silver inexpensive now? Consider silver ratios to the S&P 500 Index, the official US national debt, and others.
Examine the following ratio of (1000 times paper COMEX) silver to the S&P 500 Index. Silver is at the low end of its long-term range indicating that the S&P has been levitated by QE and central bank policies while paper silver prices have been crushed. Massive profits came from levitating the S&P so this is sensible, but the ratio indicates that silver is likely to substantially increase in price over the next several years.
Examine the following ratio of (1 trillion times paper COMEX) silver to official US national debt. Silver is at the low end of its long-term range indicating that silver prices are low compared to the national debt, which has increased consistently for a century. The ratio indicates that silver is likely to substantially increase in price over the next several years.
Examine the following graph of monthly paper COMEX silver prices on a log scale back to 1988. Note the following:
Courtesy: Gary Christenson – The Deviant Investor
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