Friday, February 15, 2013
Throughout history the prices of gold and silver have moved together, usually with gold costing 10 to 20 times as much as silver. The historical ratio is 16, so the current ratio (in excess of 50) is high. There is room for silver to explode higher, narrowing the ratio to perhaps 20 to 1. As gold climbs in the next few years, and assuming the ratio drops to approximately 20 to 1, the price of silver could exceed $200 per ounce depending on the extent of the QE currency printing, panic, hyperinflation, and investor demand.
That may sound outrageous, but is a national debt in excess of $16 billion any less so? If unfunded liabilities are included the “fiscal gap” is approximately $100 billion to $220 billion. That places the unfunded liabilities of the US government at approximately $700,000 per person the US. Is that more believable than silver at $200?
Americans will eventually realize that:
Government spending is out of control and will not be voluntarily reduced. Printing currency is necessary and inevitable in order to continue funding excess government spending, and more currency means declining purchasing power for the dollar. The real value of savings diminishes as the dollar declines in value. People will panic and shift into real assets to preserve their purchasing power. That panic will cause gold, silver and other real assets to drastically increase in price, as measured in devalued dollars.
Do you believe that excessive spending and debt will be reduced? That the decline of the dollar’s purchasing power will suddenly reverse? That Congressional promises for Social Security, Medicare, Medicaid and government pensions will be broken? That the Fed will continue to print the currency to pay for those promises? That your savings are totally safe in paper investments denominated in dollars? That the world will suddenly stop using silver, instead of finding new uses for it every year?
Finally, would you rather trust silver coins in a safe place or paper money and political promises? Most people will do nothing to protect their financial future. Will you?
Posted by Unknown at 6:19 PM