While many investors still believe that gold and silver will crash along with the markets as they did in 2008, I think we may see quite the opposite. In this video update, I provide even more important information on why the gold and silver setup today is much different than it was in 2008.
Also, it’s important to understand that when I discuss this information, I am not concerned about what happens to the precious metals or the markets today, tomorrow, next week or even next month. Rather, I am focused on the long-term trend change. Which is precisely why I show these charts using a “monthly timeframe.”
Furthermore, I answered the question by many commenters in the previous video on the validity of a “200 Month Moving Average.” Yes, there is such a thing, and if you watch the video, you will find out why there is and why it’s important to use it as a guide for changes in long-term trends:
In the video, I explain why the gold and silver price is currently searching for a BOTTOM, while they were extremely OVERBOUGHT in 2008 (as well as in 2011, technically speaking). Please understand, I am not saying gold and silver can’t go lower, but the indicators don’t point to a massive selloff as they did in 2008 because both precious metals have been in a 7-year bear market, not a 7-year bull market as they were from 2001-2008.
One of the charts I explain in the video is the Dow Jones-Gold Ratio. This is just dividing the Dow Jones Index by the gold price. Currently, the Dow Jones Index can buy 21.3 oz of gold versus 6 oz of gold at the peak in 2011 and 2.5 oz of gold in 1981.
Lastly, I really believe we are going to see one heck of a GOLD & SILVER BREAKOUT after the markets correct and crash lower. Not only will we likely see a considerable increase in physical gold and silver investment demand, but we will also experience a tremendous run-up of the precious metals mining companies.
Please check back for updates and new information on the gold and silver miners setup for big gains in the future.
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Keep on dreaming!!!
Hi Michael
What’s on your mind? Would like to hear your side of the story.
Michael,
It’s all about the setup. Nothing is oversold forever…. especially for seven years.
steve
Hi,
What is your view on Platinum, it seems oversold as well, do you have any data on mining cost and energy in this sector as you provide the best information in that field (thanks a lot by the way)
Could we expect a big rally as it’s not so often that it’s lower than gold (and gold seems low to me currently)
thanks again for your time
Max,
A simple distinction between gold and platinum…the latter has never been money in the history of the world, and gold still is internationally. Could it go up? Yes. But not as many interested/potential buyers as gold.
Reminds me of late 2015 when I loaded up a small wagon of precious metals. Stupid me, I should have bought Barrick for the same amount, it was trading for like 7 bucks per share and a few months later it went over 20.
Also, a bag holder on PM’s; however, I do believe in the “set up” Steve is speaking to. Probably, the break out would have already happened were it not for the bitcoin phenomenon and trump’s election perverting the markets in gross.
Assuming the current fiat currencies still exist when reality sets in. I think not.
From james R end last thread
“My personal view of post collapse in US dollar would include the use of precious metals as money for transactions that include big ticket items such as real estate, housing, boats and cars. I think what we will see in the coming years will be trusted metal exchanges that will assay your metals and give you a credit/debit card based on the amount of precious metals you own. I believe big ticket items will be sold in ounces or grams not in dollars. On the other hand essentials like food, clothing, etc will use local currencies or barter for transactions. Since not everyone will hold the metals. At this time we will witness an enormous contraction of the economy in which resources will be hard to come by. As the contraction continues those holding the metals will gradually convert their metals to other hard assets or services which in turn will distribute the metals to those who do not own or want to acquire the metal for future transactions. The process will continue to repeat until there is some kind of normal distribution of the metal throughout the state/country. I think in the next decade this will come to fruition.”
love your ideas James, and appreciate you responding to my post.
Can you elaborate?
Do others have these views and is website or sites you recommend?
Are you in North America, Europe?
You agree with my post that metals can only have this utility in much more decentralized world and the reality you depict is such?
If decentralized the case how would debit cards supported by local metal exchanges where you can walk in with your own metal to be assayed work? For instance in US the grid is in 5 relatively independent parts. Conceivably some large blocks could hold together to keep electricity up for awhile on a regional basis. Is this what you think?
Who would do this?
Still, current credit/debit card system is nation wide and requires a nation wide banking system. Am I wrong in supposing this would be very difficult to organize in a small region of maybe a state or two?
Also question your supposition that there are enough metals in private hands to eventually become distributed on the kind of equitable basis that a commerce system would require. At least the one you depict. have you looked into this aspect?
Sounds great tho, and if true I could be moved to start buying a little silver. Could spare a c note a month maybe
Hi Frank,
Thank you for your reply. I was just reading some of the other comments and it was nice to see a range of different opinions on how gold and the dollar will react after the collapse.
I will try to answer your questions as best as I can, but please keep in mind I am only speculating and nobody really knows what events will take place when the dollar collapses.
First, you asked if I know anyone else who shares my view. Off hand the only person I know who has mentioned trading gold and silver as real money would be Mike Maloney. He likes to call it “Sound Money” or “Honest Money”. He has a series of videos that gives the history of gold/silver and US dollar and how it has impacted the way we used today. He believes instead of a gold backed currency we should just trade in gold/silver as we did prior to the creation of the Federal Reserve.
Right now I am living in the US.
As for metals being utilized in a centralized vs. de-centralized world, I do not have a clear answer. To be honest I have not given too much thought on the idea. After the collapse of the dollar, I still see the central banks will continue to play a role in their local and global economies. Currently as you know the central banks still have quite a bit of gold in their deposits and will act accordingly when the collapse arrives. I think those nations holding gold will try to back their currencies with some kind of gold standard to stop the raging inflation. I think in the short term it will work, but ultimately the markets will reject the new gold-backed currency because we have been down this path before and we know what the outcome will be. So when this happens I believe we will see the central banks will play a lesser role in influencing economic growth.
As far as metal exchanges, I see no problem in a centralized or decentralized world. The technology already exist, the credit/debit cards can be used they way they are used now. When you make a purchase the amount of the purchase will be debit from your account. But instead of dollars it will be in grams or ounces. The settlement can be done just as quickly as we do now. The exchanges would have to rebalance their deposits every so often.
Also I want to point out that the government may also give an incentive to those holding gold and silver to sell their metals for real estate and properties the government holds to help distribute the metals to private citizens that do not own the metals. This would help facilitate the economy during the crisis.
As for your last question, the elegance of having a debit/credit card that is backed by precious metals is that it can be easily divisible. You want to trade 1/2 of silver? No problem. How about a 1/10 of ounce? No problem!
This way it makes it easy for distribution.
Anyway the way I see it, there is going to be a lot of opportunity for those folks who are prepared. And I dare say exciting times await those who have been preparing.
hi James,
Appreciate the nod toward Maloney.Have read some of his ideas but somehow totally missed that he believed one could have an economy totally based on metals. I had some fuzzy idea that his “sound money” meant a metals backed currency. Don’t get the reference to “before the federal reserve” as at that time while we did trade directly with metals the majority of trade was mostly metals backed dollar. As has always been cause metals direct exchange eventually regarded as too inconvenient and doesn’t support any level above pure agrarian.
But will go back and read maloney on this. Just answering you now partially in off the shoulder fashion before thread changes or while you’re around.
I gather he supports your idea of metals backed plastic? this is clearly a very exciting idea for the reason you mention. Peter Schiff is only one seen fly this but in an inferior fashion. First, his card is only gold backed, no silver option, and no local off the street assaying of your own metal which is essential. You have to buy his gold.
The advantage of metals backed plastic (MBP) that you mention is real. That you can, as opposed to MBD (Metals backed dollar) break value down into infinitely small amounts.
not sure tho that this divisibility would solve the low quantity of metals problem. At any civilized level human commerce and consumption represents an enormous amount of energy exchange and while a coin is stored energy it is still only so much (based on how much energy took to mine it) and supply extremely limited. And there is, as you say, no other money and there can’t be, i agree, cause all else is empty fiat and bad money always chases out the good.
Disregarding this tho, what happens when you say, based on low physical supply, that .0001 gram buys you a house, truck and sexy homemaker. Instantly 1 million people in the USA own everything and all else are slaves so you can’t possibly induce them, as you say, to trade for any additional hard assets to spread wealth around. Have to kill all the stackers and seize it so great let’s do that. Won’t work. So easy to hide It’ll stay hidden. Or most of it.
Back to advantages. It sure couldn’t be run by visa, the banks or the Gubmint as MBP could be corrupted just like MBD can be by handing out more digits then metals on hand. Advantage possible is maybe could be set up on blockchain on a global basis so your wealth can’t be easily
surveilled or seized by authorities cause you got a big mouth or be subject to failing banks/ economies
But if not set up right we’re right back here.
Stepping back tho, not sure how this meshes with bigger picture, Tho I gotta go here.
We’re talking collapse here, right? Fundamentals. All wealth based on energy, and net energy in oil is falling fast. Could be wrong but memory of Maloney is while good on financials, far better then me, he totally is leaving energy out of the equation. Which means can’t just have a reset. For this MBP to work we need some level of electrical grid to stay up and computers running which is what was inferring in my post end of last thread referring to decentralization that you responded to. Could it be done on a locality 1 or 2 states wide with some electricity/computerization but limited. MBP, while hopeful, seems somewhat dubious in this regard. At least at the moment with limited understanding
Encourage you to comment more on this subject. Also any ideas as to why gold backed dollar, say at 25% ratio won’t work or even be tried. Have some thots on that myself but haven’t really studied it hard and seems like you have. Will try next weekend to look at Maloneys stuff more
Hi Frank,
Again thank you for your reply. Quite a bit to digest. Let me think about some of the points you mentioned. And in a later post I will try to answer as best as I can.
James R.
Hi Frank,
You made a few valid points of concern. I will try to address them as best as I can.
1. The low quantity of precious metals.
I think this will be one of the most important issue at hand. And people who maybe holding the metals may not want to part from them. I did mention in my prior post that the government should give an incentive to those holding the metals to sell. Be it real estate or other properties the government may hold. I also want to point out that during this time of crisis the dollar will still be used as currency and would help during the transition phase from fiat to metals.
2. The amount of energy to transact the metals. I do not think this will be an issue because during this contraction period oil will not be in demand so the price of oil should not be a factor.
3. The exchanges. That is a good question. Who will maintain these exchanges? Certainly the private sector should be able to maintain these exchanges. Just like our current banking system. As for having a block chain algorithm to verify transactions would be an optional idea.
4. A gold back dollar 20% ratio.
I personally do not like the idea since I do not trust government officials keeping their word. First it will be 20%, then 5 years later it will be 10%, then 5 more years later 5%. Anyway you get the idea.
Anyway would love to hear from others how our economic world will be after the collapse.
Steve,
michael doesn’t understand the setup. He never reads your stuff
much less understands anything. never seem him emit anything but 5 abdominal blasts
you don’t get that? maybe he just kicks in a lot of coin
houtskool | August 24, 2018 at 2:20 pm | Reply
“Assuming the current fiat currencies still exist when reality sets in. I think not.”
Yep, Relatively “strong dollar” is blowing up emerging market countries which is spreading to Europe. Current talk is of US taxpayers bailing out all of Italy. Maybe presently just talk, not sure. Hard to believe the stupidity, but gotta keep the Central banks afloat until after next presidential election at least, they hope. Maybe will fail.
Barring war US dollar probably last to go. Or there are convincing arguements for that thesis. After Europe collapses better gird up if your Murican
Houtskool, you got any opinion as to whether gold backed currency will work and if instituted will it cause discouragement of private gold ownership as it has in past?
Barring war Dollar probably last to go. After Europe goes gird up if you’re Murican
Hi Frank, the dollar does not exist without other currencies because the whole financial construct is based on their connection through economies, trading, stocks, derivatives etc. A few can fail, Cyprus, Venezuela, but that’s it. When a major currency fails, trade grinds to a halt. Trust in currencies dissapears, maybe a hyperinflated dollar could buy you something. Gold backed money cannot exist as long as there are fiat currencies around, the balance would be gone. I hold some physical gold and silver as backup for monetary events that will come, whether we like it or not. Governments will go full retard when the time comes, if that includes confiscation i don’t know, and i don’t care. Live your life, and watch your back. There’s not much more we can do. What goes for most mammals goes for us too as soon as reality sets in; adapt or die.
BTW Frank, there’s not enough net energy to get us out of this one. A whole new paradigm arises. It won’t be pretty, forget about central banks etc., that system will cease functioning. Focus on a local level. When the grid goes, the large fancy BIS building filled with Davos dudes and dudettes will be nothing more than a symbol of failure.
Unfortunately ,first gold is going below $1000 within few months , then will skyrocket next year but could be temporary. They can make gold illegal for example , what then??
Biggest problem for us is how current system can be changed , because if we get Crush then it is going to be planned by them like last time and now they stronger than ever.
Don’t be silly to believe , they going to change for better or they will live the office. There must be solution to it otherwise we are going to be slaves.
Gold is international, you can’t make it illegal per se, its no longer the 1930’s, what keeps an american from buying gold and storing it in Zurich, the flight ticket surely won’t keep people from doing it, how about all the dealers offering storage within the click of a mouse, making it illegal would actually make the price of Gold skyrocket
Central Banks run the Show and they are above everybody and everything, They can do anything they like.If there is Big Crush maybe you wouldn’t have chance to fly anywhere ,if they ban trading of Gold ,you will have restriction .There is no point seeing far future , we have to look what is happening now , Central Banks are getting stronger but Brics countries getting weaker.That is why gold is going weaker.
First, Can’t board planes without metals scanning and likely a pervert rubbing, probing your privates. Gold will be seized as will more then a few thousand cash. Aint 1970 anymore, bro. wakeup
Second, metals stored elsewhere are very easy to seize and will be
“They can make gold illegal for example , what then??”
Actually the US Treasury or the US government can’t make gold illegal as has been proven by the various states that have already allowed gold and silver to once again become legal tender including Arizona, Idaho, Texas. Utah, Wyoming, Kansas, Tennessee and Louisiana.
Also for gold to become ‘illegal’ then America via the Federal Reserve Debt Note would have to lose its World Reserve Currency status and gold would have to once again become the World Reserve Currency in settlement for trade.
There is absolutely no way America wants a return to any form of gold standard, it would mean instantaneous bankruptcy and force America into having it’s rumoured gold hoard inventoried for the first time in modern history.
One… the gold may be there but it has been encumbered with multiple re-hypothecated claims, in other words there are hundreds of claims of ownership for each ounce of America’s mythical gold.
Two… for a gold backed currency the price in Federal Reserve Debt Notes would have to cover existing national debt (21 trillion and growing) plus the total of all outstanding foreign reserves (China has as est. 3 trillion alone) so a quick estimate is 26 Trillion divided by 262 million ounces of claimed gold held in Reserve or $100,000 per ounce based on a 100% backed gold standard.
Even at a standard 10:1 fractional reserve, the gold price in US Dollar would still be $10,000 an ounce.
So no need to worry one iota that gold will become ‘illegal’.
Your fear should be that the American dollar is essentially worthless when compared to gold.
Sorry, missed adding that the gold price would have to cover all existing world debt based on US dollar settlement, not just direct US debt.. Total outstanding world debt is north of 247 trillion so I was going to round off to 260 trillion and not the 26 trillion I was using to get the $100,000 per ounce.
If we were to resume a gold standard then all debt worldwide would have to be converted and since all debt worldwide is essentially referenced to the US Reserve note or can be converted to it.
Sorry again for any confusion
I don’t care about US dollar , I live in Australia and I don’t care about any fiat money.The Gold is only money. My point is that those crook bankers must be terminated otherwise we no going to see free Markets and Democracy.
Gold going down below $1k? This scenario is unlikely but I hope it happens so I can buy more PMs. Gold is stable as it’s a store of value although crypto has attracted a new generation of investors.
As for a barter economy it’s always transitory. Might be that way for a couple of years if things get bad enough but governments have this uncanny way of surviving and imposing their will on their serfs, primarily through the monetary system. Their systems are more resilient than ever – and weaker than ever at the same time. Don’t underestimate the governments ability to control the money supply and supply of goods and make a barter economy where goods available at fair value at nearly impossible to maintain.
I see gold and silver as a store of value that has brief periods of meteoric rise, in which a window of opportunity exists to translate it to some other form of wealth that can be bought at attractive prices. Pretty straight forward. It’s cyclical and will happen again.
Steve,
I noticed while looking at the world silver surveys published for 2007 and 2008 where silver hit $9 an ounce they stated that there was some silver (about forty percent of supply) that had production cash costs in the negative. Can you provide insight into how silver can be produced for negative capital? The only thing I can think of is byproduct credits which just means that real capital and energy are subsidizing a lower silver price.
Actually, IMHO the United States does have about 8,000 metric tons of gold at four different places(Fort Knox, the largest, Denver, West Point, and I believe at the SF or Philadelphia mint). Listened to a podcast where the previous mint director under Obama’s administration was extensively interviewed. He has a visited all 4 gold reserve storage places on multiple occasions. If you googled it I think you will be able to find his interview. He related that he will never be able to convince the conspiracy buffs otherwise. I think that we need to put it at rest that the US doesn’t have any true gold reserves. I have zero trust of Wall Street and our Govt. but the interview just rings true to me. Thanks
This is a “for what its worth” anecdotal account. My wife is currently in a small island coastal town in Negros Occidental in the middle (Visayas) region of the Philippines where she is fixing up our beach house. The Philippine Peso has depreciated against the US dollar to 53.5 to 1. This is the lowest we have ever experienced in 20 years.
Several years ago, we could employ unskilled Filipino labor for 2-4 dollars a day. She reports now that with the influx of well moneyed S. Koreans, the wage has increased to 4-8 dollars a day. Furthermore, these supposed uneducated Filipinos insist on being paid in USD, not Pesos! food costs are also noticeably higher. I wonder if there will be a Ferdinand Marcos revolt again.
It seems to me that indeed the fiat currency tide is receding in the rest of the world and that the USD will be the stern of the fiat Titanic.
Only once the USD becomes worthless and people have no other choice for a payment system will gold and silver “reluctantly” re-emerge, just like mammals could not emerge to become preeminent inhabitants of the world and successful until the dinosaurs had first been wiped out. Remember, the dinosaurs ruled the earth for millions of years. We humans have not even come close to matching that level of success, even though we think we should because we are so “intelligent.” The ultimate biologic hubris if you will which I think spills out into our attitudes of the USD. In the same way, I don’t think gold or silver will emerge as the controlling form of monetary payment, even if employed as a partial 10% backing of a new payment system until all fiat systems are first wiped out by a comparable dinosaur extinction type event. The dollar will be the last fiat standing. This extinction may take a long slow route, like gradual climate change, or a sudden calamitous event like an asteroid impact, which explains why no one can predict when fiat will ultimately fail.
I think it will also depend on which political system emerges as to whether people will be able to hold physical PMs as an asset and exchange for fiat or other form of electronic payment. It seems that no matter what, especially after the failure of fiat, people will eventually require some form of tangible backing- until after a few generations, they then forget and have to re-learn the same old history lesson. Then there is the issue, which I am not educated enough to voice an opinion, whether we are talking cause or effect. Does socialism precede a collapse of currency, or does collapse of currency precede the fall of a government and from there socialism emerges at least temorarily), or is it that it happens both ways? IMO, PMs can be used for local barter and payment, but not transactions involving long distances. Some form of electronic, crypto, credit card etc. payment will still be required, but will require some kind/percentage of backing. If a pure socialist form of govt emerges then PMs will be restricted to local barter as they will be outlawed, but a few holders will be able to survive quite nicely under the radar, while rest of the masses suffer Venezuelan style. If a capitalist system emerges/or is preserved, then ownership of PMs will be allowed and a physical partial backing will co-exist as before 1971 or 1933. It is almost a mutually exclusive requirement. Capitalism can only survive if the currency has some tangible backing. I just think these (fiat and PMs) will have no choice but to coexist whether we like it or not, regardless of an alternative monetary/currency system- as long as we are not in a socialist state.
Great post Hubbs. Never forget: fiat currencies can only exist in a growth environment. Growth is over, period, so we will return to solid money. Be it chickens for potatoes or silver for plumming, but we will.
Good to have some dollars though in the Fillipines. Don’t show them there’s more where it came from…..
World War II shocked the world when horses were no longer necessary but fighter planes and tanks and submarines and radar (German)overran all opposition!
Now Whole nations are dropped to their knees with one simple line of computer code.
Multiple military divisions are frozen without communication,
Not with missiles or bombs but with a simple line of code.
How would you know if we were in a 21st century cyber world war right now?
How would you know you were not?
How would markets behave in a global war?
Consider researching Cyber Warfare….
If we are in a 21st century World War, then who is fighting who?
Do governments really understand what is going on?
If not governments then who is warring against who?
Consider researching Cyber Warfare….
Getting back to the article [before all the speculation of what will happen in the future]:
“Also, it’s important to understand that when I discuss this information, I am not concerned about what happens to the precious metals or the markets today, tomorrow, next week or even next month.”
Well in the next month or so, for those who are interested:
“According to the latest Commitment of Traders Report released Friday…the hedge fund net short position in Comex paper gold futures soared to an all-time high of 89,972 contracts.
Conversely, the Comex banks are taking the other side of the massive hedge fund short bet. Given the history of extreme positioning by the hedge funds and the banks (the banks are normally short paper gold – thus a long position by the banks is considered “extreme”), it’s a safe bet that at some point in the near future gold (and silver) are set to soar.
Perhaps the more interesting question would be to ask why the banks have assumed a large long position in gold. What is it that the banks “see” that has them positioned for a big move higher in the precious metals?”
http://investmentresearchdynamics.com/wtf-just-happened-gold-and-silver-set-up-to-soar/