While silver investment demand is totally off the radar, certain indicators, including the Gold-Silver ratio, suggest that interest in the poor man’s gold will likely increase significantly over the next few years. The rising interest in silver will also occur as the broader markets continue to meltdown towards more realistic valuations.
In my recent youtube video, Amazing Silver Setup & Stock Market Update, I had a few comments stating the selloff of silver and rise in the stock market suggested that my analysis was incorrect. I find this sort of short-term thinking quite interesting when I noted that the information in the video was presented to occur over the next 1-2 years. Furthermore, in looking at my Youtube analytics of that video, the average watch time was about 10 minutes. The video was 24 minutes long.
Unfortunately, the attention span of individuals today isn’t what it used to be. So, even though the material is presented in detail, many people don’t even take the time to either read or watch it in its entirety. Moreover, when someone replies that the silver price selling off since the video was produced doesn’t understand that markets trade over a LONG PERIOD OF TIME. Anyone who is concerned with the silver or gold price on a daily basis (not including professional traders), needs to realize that TRENDS TAKE TIME.
Also, the naysayers that claim the precious metals analysts have been wrong since 2012 tend to overlook the massive money printing, the enormous increase in debt and the continued disintegration of the global oil industry. If I am not getting my point across, let me provide the following chart that shows just how quickly things can fall apart when investors have been BAMBOOZLED by the Fed and Wall Street:
How did Bear Stearns go from nearly $90 a share down to $2 in a relatively short period? How did the market not realize the big problems at Bear Stearns had taken place years prior to its selloff?? The market was oblivious due to the type of rubbish put out by Wall Street analyst CNBC’s Jim Cramer on March 8th, 2008 stating the following:
Tuesday, March 11, 2008, On Mad Money
Dear Jim: “Should I be worried about Bear Stearns in terms of liquidity and get my money out of there?” – Peter
Jim Cramer: “No! No! No! Bear Stearns is fine. Do not take your money out. Bear Sterns is not in trouble. If anything, they’re more likely to be taken over. Don’t move your money from Bear. That’s just being silly. Don’t be silly.”
Well, by March 14th, 2008 liquidity and financial conditions deteriorated rapidly at Bear Stearns. We also must remember, that Lehman Brothers, an investment bank that had started right after the Civil War, also collapsed and went bankrupt in a very short period of time:
You see, underneath the Wall Street veneer was a heaping pile of garbage being masqueraded as quality companies and stocks. Today, we have the same problem, but orders of magnitude worse. Unfortunately, investors don’t realize that the volatile trading taking place on the Dow Jones Index is WARNING SIGN for much lower prices to come:
When the Dow Jones Index is trading up and down by 1,000+ points a week, it is setting up for a BIG MOVE LOWER. As I have mentioned over and over, nothing goes down in a straight line, and it will likely take 1-2 years for the Dow Jones Index to bottom well under the 10,000 level. So, we will probably see the index continue to rotate up and down from its high of 26,600 in January.
However, all bubbles pop. And when this market pops, one asset that is most certainly undervalued or is totally off the radar is silver. If we look at the Gold-Silver Ratio long-term chart, we can see a very interested trading range:
For the past 20 years, the Gold-Silver ratio has been trading in a range of 80/1 and 47/1. Currently, the Gold-Silver ratio is in the higher range of 81/1. Of course, the Gold-Silver ratio could rise even higher, but when we include that the current breakeven price for the primary silver mining industry is about $15-$16 and the record low Commercial Net Short position of 3,700 contracts, a level I haven’t seen for years, then it provides clear evidence that the silver market is now getting at an extreme level looking for a reversal.
Here is the recent COT Report for Silver:
As we can clearly see, the Commercial Net Short Position (Red Bars) is well below its low of 20,000 contracts. Furthermore, the Large Speculators (Light Blue Bars) are now short silver by 12,000 contracts. The last large spike in Spec short positions was back in 1997:
Soon after the large spike in Spec Shorts, the price of silver surged. Even if we look at the smaller Spec short positions in the 2000-2004 period, we can also see a move higher in the silver price after each small spike lower in the Spec shorts.
By looking at these indicators, we must understand that it is difficult to gauge the value of silver on a daily basis. Rather, I look at the changing trend and what will happen to the silver price in the future… over the next few years.
If we assume that the massive leverage, debt and trading margin are going to cause the stock market to fall more than 50% over the next 1-2 years, so will Real Estate prices. However, it may take longer for Real Estate values to lose 50%, but this time around home values may not rebound. So, it is imperative that investors change their strategy from trying to BUILD WEALTH, to PROTECTING WEALTH.
Lastly, here is the most recent chart from the information provided by the Savills World Research on Global Mainstream Asset Universe:
As of April 2017, the current Global Asset values of Real Estate, Securitized Debt, and Equities equaled $398 trillion versus $3.1 trillion in total Gold and Silver Investment. As investors throughout the world start to realize they are holding onto assets they will continue to lose value over the next 2, 5 and 10 years; the smart, prudent and wise investor will move into gold and silver to protect wealth. If only 1% of these assets ($4 trillion) move into gold and silver… we could see some pretty insane values.
In conclusion, STOP LOOKING AT DAILY MOVES in the markets and precious metals. That is nothing more than white noise. However, it is important to understand the disintegrating dynamics in the oil industry as well as the changing indicators mentioned in this article. Most precious metals analysts do not understand the negative ENERGY DYNAMICS, so a group has moved in the Crypto Market. I have provided many articles stating that the cryptos were in a massive bubble.
Today we see more carnage in the Crypto Market as Bitcoin is down more than 11%, Ethereum down 13% and Litecoin down more than 13%. I will be putting out a new video on the FRAGILE NATURE OF CURRENCIES, and I highly recommend you checking it out.
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Thank you Steve –a great read!
“…the average watch time was about 10 minutes. The video was 24 minutes long. Unfortunately, the attention span of individuals today isn’t what it used to be.”
A bit of feedback… with today’s information bombardment from all around, it is often not possible to allocate almost half an hour to watch a video. Even if interested, people often switch off half way. Plus a few of us know a bit more than the average joe and likely know much of what it contains, or at least the overall message. I know it’s sometimes not enough but info should be condensed down to around 10 minutes per video – this seems to be a sweet spot that people will watch. In any case I’m watching it right now!
Thank you Steve. Obviously gold and silver hold value as we can see by noting that a roll of 50 times from 1964 and a roll of dimes from 1965 have values of $65 and $5 because of content. Why would we trust governments and their price manipulation when we can see the what the value has done in time ?
Thanks Steve I watch all your videos all the way through, and I share them with other people. Maybe the poster above is right, we get bombarded with information all the time so I think people are burning and tuning out.
I still think there is a place for asset backed encrypted blockchains, for silver and gold and I also think when fiat currency hits it’s eventual endgame we’ll see states open up repositories for silver and gold issuing crypto-silver and crypto-gold coins fully fungible with physical metal.
Banks have just abused the paper money system for far too long, it will cycle back eventually just hope I don’t die before it does lol.
Steve, What if they cut rates again? instead of continuing raising them. what impact would you expect from this?
rob,
The Fed will only cut interest rates if we have an undeniable recession. In such a case the hoped-for impact would be to lift us out of or lessen recession.
Rob,
According to six decades of Fed Rate Hikes & Cuts, they have NEVER cut rates until well after the market has gone into the crapper:
As we can see in this chart, the Fed will continue to raise rates until the market heads into a deep recession. Unfortunately, lowering rates won’t stop the recession-depression or alleviate the ongoing MARKET MELTDOWN.
steve
Now that you have a businessman in the White House do you think they will change the way they have been doing things?
Dan,
Trump is NOT in control of how the economy is run. He can have a lot of false bravado, and he MIGHT make things slightly better or worse for the lower 90%, but the TBTF banks, the Fed, etc. run the economy.
People need to understand the president, the congress, the Supreme Court DO NOT RUN the U.S. Those who control the currency/money run the country.
Rob, only in a growth environment, we can afford ‘rates’. Negative rates are like a solar panel on an oiltanker.
It’s all theory. In other words we do not now what will happen only then when it happens…
Rewatched the video.
Egyptian and Mexican predicaments parallels are superb., Mexico
is not even self-sufficient in their staple food “tortillas” (corn)
Pemex had a tiny surplus for the month of February balance of trade but it was the
exception to the rule(trend).
http://www.pemex.com/ri/Publicaciones/Indicadores%20Petroleros/ebalcomx_esp.pdf
26 million surplus.
http://www.pemex.com/ri/Publicaciones/Paginas/IndicadoresPetroleros.aspx
Steve: You said and I quote ” The naysayers claim the precious metals analysts have been wrong since 2012 tend to overlook the massive printing, the enormous increase in debt and the continued disintegration of the global oil industry.” This is a Faux Pas on your part. It is the analysts like Morgan, Cloud etc. that are sellers of silver at every opportunity they can get that did not include those same basic fundamentals in their forecasts. They could not give a rats ass about their readers or they would have done their due diligence as any decent analyst does. Don’t blame the reader Steve. Blame the forecaster.
Joe Lindell,
You are a perfect example of the type of individual I was discussing…. LOL.
steve
“It is the analysts like Morgan, Cloud etc. that are sellers of silver at every opportunity they can get that did not include those same basic fundamentals in their forecasts. They could not give a rats ass about their readers or they would have done their due diligence as any decent analyst does.
THIS IS A 100% RIDICULOUS STATEMENT. CAN’T YOU UNDERSTAND THAT????
No writer/seller knew what the FED et al was going to do from 2012 onward to the present…the currency creation [digital or printed] out of thin air. QE. Market interventions. COMEX price controls.
And they have a right to write what they want and sell what they want. It is caveat emptor [let the buyer beware] for buyers of ANYTHING, whether physical or philosophical.
Your attitude is born out of bitterness, blame, and anger. Likely you would have had the same attitude if you bought a stock in 2012 based on what you had read or heard and it was at the same or lower valuation than it was when you bought it.
“No writer/seller knew what the FED et al was going to do from 2012 onward to the present…the currency creation [digital or printed] out of thin air. QE. Market interventions. COMEX price controls.”
WRONG. I knew and I am just your average Troglodyte according to TPTB. That has been my point, if I could figure out what these criminals were going to do why couldn’t the PM leaders? Answer: They were getting paid not to figure it out i.e. pandering to their readers getting paid to tell them what they wanted to hear….so sad…
GLP,
You may have known in general what the Fed at al might do, but you didn’t know any details. “PM leaders” being paid…that’s an interesting conspiracy theory.
GLP,
First... I sense via your comments that you are a bit frustrated due to the ongoing selloff in Cryptos.
Second… the PM dealers have been doing the PRUDENT & WISE thing by promoting the ownership of gold and silver during the biggest BUBBLE & PONZI SCHEME in history. Acquiring precious metals should be done on an ongoing basis. No one blames the insurance agent if they never get in an accident. However, the biggest STOCK, BOND, REAL ESTATE & FIAT MONEY ACCIDENT is coming.
Lastly…. if you own a lot of Cryptos, you may consider selling some and not HODLing them as the Crypto Aficionados advise. Better get some value before most head back towards ZERO.
steve
Steve,
Not frustrated at all. I took out my original crypto investment long ago and now on house money. I have purchased many ounces of silver with my profits over the months. Cryptos are not going to Zero. You will be proven wrong and will have missed a great opportunity. By the way, nobody knows the future and anything can happen. Only God produces prophets.
“It is the mark of an educated mind to be able to entertain an idea with out accepting it” Aristotle
A similar visualization of types of financial assets but increased detail:
http://money.visualcapitalist.com/worlds-money-markets-one-visualization-2017/
There are dozens of political, economic, social, military, and monetary factors influencing financial markets at any given time. Many of them planned and managed.
It is the aim of the elites to further enrich a very small percentage of very wealthy people, allowing their greed and short sighted stupidity to imperil the future well being of entire nations.
The basic underlying economic, financial, and geopolitical fundamentals continue to show two developments:
The onset of a Greater Depression and War.
One irrefutable, fundamental truth rooted in long term statistics is:
There have been ZERO times when interest rates have risen, that did not eventually lead to negative economic and financial market consequences.
Time is growing ever shorter to protect your wealth.
My understanding with silver (and gold): at $80,- i won’t sell. Because i don’t care about a few thousand ‘profit’. At $480,- silver, i won’t sell either, because with $480,- silver the whole system is down the sewer. I really don’t care about ‘price’.
You CAN buy more silver and gold at this moment though, for your fiats. That is the only moment i think about price. In the buying, not in the selling. Think about that.
AND, for those asking why the hell i am buying silver, well, that’s for the next stage of collapse. I’ll have to whisper it in your right ear, sitting by the fire, lurking moonshine.
Aaa Haa you gave it away. Your going to pick up a distillery for pennies on the dollar.
Well, you might be correct. Booze is a good trade in a severe downturn. First come essentials, after that booze and smokes. A copper moonshine kettle is on my list, indeed. 😁
houtskool,
They will kill you for liquor; might want to keep it secret lol
Hi There: I don’t understand why, if/when silver jumps from where it is to the claimed $600/oz, why someone has not suggested that everyone should be loading up and buying JP Morgan bank stock. They have supposedly 600M bullion ounces in storage. So at $ 600/oz. won’t that mean that JP Moran stock would be a no-brainer to own?
What am I missing OR if I’m right, why has no one written about this point??
Thanks,
Vince
Vince, JP is a derivative on steroids. If you don’t hold it, you don’t own it.
You’re welcome.
Vince, first JP Morgue has to steal it from the client(s) that has their name attached to the silver. Don’t expect the bank to use their own money to accumulate a horde.
I come here for the energy articles but…..
You said “In conclusion, STOP LOOKING AT DAILY MOVES in the markets and precious metals”.
Learn to trade futures and you will profit handsomely from daily moves. Not everyone waits for that pie in the sky metal move that never comes. I do put 25 per cent of my profits into physical as insurance but it just sits there and bores the hell out of me. It’s the other 75 per cent that is all the fun.
If I remember correctly, I read somewhere that the average attention span of most Americans is around 5 minutes. That explains a lot. I was one of the ones that watched your entire video. Rock solid in my humble opinion. I remember the dot.com bust. Nothing like coming into the office of a multi-billion dollar financial firm and seeing all the really glum faces when the SHTF back then. We had all got our 401k statements the day before. No one knew. Well, I knew, but I wasn’t actively managing my 401k like I should have been doing, and I took the hit just like everyone else. I learned a lot from that experience. In other words, I really woke up. People have no idea how fast things can turn (e.g. “The Roaring Twenties”). I read all your articles. Most people have no idea how to read financials. It’s obvious that you do. Grade: A+
“If only 1% of these assets ($4 trillion) move into gold and silver we could see some pretty insane values.”
Pray tell. What is the industrial value of Silver exactly? I.e, consumption/production goes off the cliff so while investment demand for silver increases, industrial demand sharply decreases. If you have any evidence that the latter will not overcome the former please present it. I’d really, really like to know.
If you have no evidence then it is not correct, imo, to continually stress only one side of an obvious duality.
Perhaps you have covered this somewhere and I missed it. I have to work for a living.
But the other valve is that silver mining is a largely a by-product of industrial metals, so if industrial demand shuts down, the supply corrects – although desperate debt shenanigans might make for a medium-term lag that would be psychologically challenging.
People watching less because they ve been waiting for too long . Despite the bullishness of your videos or articles , the results were always bearish.
—
Bear Stearns and Lehmann? Well do u forget the fed didnt bail them out? Now we have Deutsch Bank may be 10 times worse than them combined. And nothing happens. U should know that they re being bailed out. As long as central bankers do these … nothing will change.
Muhammad Aidid,
Ye of such little faith. Our NEGATIVE ENERGY PREDICAMENT will be the CURE-ALL for all the BAD BANKS & DEBT in the world. Don’t you worry.
Have a little faith…LOL.
steve
I found your site because of your excellent articles on energy. But found something unusual about precocious metals advocates.
Sometimes I think you want the system to fail. Like you have some kind of morbid pleasure in a perceived likelihood of the financial destruction of millions of working people.
I own gold and silver and hope with all my heart I don’t need them. That is because I am skilled and don’t pin my future on some dumb metal that does nothing.
I don’t really like the attitude of people who are looking forward to profiting whilst others suffer.
Hidden in the “gold and silver community”, what ever that is, is a hatred of the world that seems to stem from a conservative American Christian epistemology.
And it is very strange to us “foreigners”.
Barry,
No, I don’t want the system to fail, because it could get quite UGLY. However, I can’t stop Gravity and the forces of nature.
We have done a PISS-POOR Job in educating the trouble ahead to the masses. So, when it happens, it will be a complete shock.
steve
Hi Steve, I really appreciate your articles, always have. Actually, I much prefer them over YouTube videos. That’s ’cause I like to spend time analysing charts, and especially re-reading content. While a video is certainly more entertaining, I find I don’t get as much out of videos compared to reading content. Maybe I am an ‘old-fogey’ that way – but please continue writing those comprehensive and in-depth articles, despite publishing videos. Cheers! Anistemi
Steve,
I want to thank you for refraining from overuse of all caps and insults. I do think you have valuable information to share and appreciate you doing so with restraint.
Having said that, IMHO it is a good time to buy some silver. The GSR is high and the stock market looks shaky. Also heard that markets do not do well in Q2 and Q3 in election years, but have not verified it for myself.
Please keep up the good work and unique POV.