Monday, November 20th, 2017 MST

Gold and silver to gain relative to other commodities

As is the case with most firms in the financial field, we have TVs running in our offices from the time we open to closing. Sometimes, we learn something of value, but most of the time the commentators talk about meaningless developments, such as the daily changes in value of the dollar to other currencies. Whether the dollar is up or down relative to the British pound, what does it matter in the overall scheme of things?

What really counts is the big picture, such as Fed changes in interest rates, the European Central Bank’s quantitative easing scheme and massive budget deficits. Yet those topics receive about as much attention as whether Facebook’s revenues will meet or exceed expectations.

The big picture is not hard to see at all, and at the risk at the oversimplifying I will expose the flaws of Keynesianism, which is the accepted economic doctrine worldwide.

Keynesianism advocates that governments, or surrogates such as the central banks, control interest rates, the money supply and run budget deficits “to stimulate economic activity,” which is the cornerstone of Keynesianism. Who reading this doesn’t “know” that deficit spending stimulates economic activity? It’s taught in nearly every college economics class.

Only in a few circles, such as at Mises.org, the world’s foremost advocate of Austrian economics, will you hear that production creates demand. That’s production of goods and services, not fiat money, which distorts markets and causes booms that are always followed by busts.

Another “big picture” is that few persons in political power view gold as money despite its 6,000-year history of being used as money. The same goes for silver.

The most recent boom is unwinding into a bust. It is only a matter of time before gold and silver are again recognized as “the monies of last resort” and are highly sought after. Then their values will gain relative to other commodities, resulting in the precious metals bull market that will reward patient investors.

6 Responses to “Gold and silver to gain relative to other commodities”

  1. Eric Mecham

    It is impossible for politicians to even entertain the notion of converting to a precious metal standard. To do so would require balanced budgets, the inability to buy votes through massive give away programs, and dare I say it – discipline. They can’t do it. They won’t even think about it, therefore anytime the question is asked, the quick, simple, dismissive answer is given – ‘not possible.’

    Therefore we prepare and await the time when the system unravels and our very civilization comes crashing down with the collapse of the economy. Ugh, I’m not excited about it, but I’ll be ready when it comes.

  2. Michael Schley

    When do your experts feel another 2008 Financial Crash will occur ? I feel it will occur very soon.

    Also I feel right now is time to take the 30% loss from your 401K and invest in silver right now because the silver market I believe is about to rise sharply in the next one to three years. I am ready right now to invest in silver 850 oz bars. My brother has 3.5 million in his 401K. I am urging him to take the 30% loss which would be a balance of 2,450.000 to purchase Silver bars which I feel that will recoup his loss in about 1 -6 years as well as almost double or even triple if within the next four one to six years the price of silver rises back to above $45.00 US dollers per oz. What is your opinion?

    I tried to talk my brother into cashing in his 401K before the 2008 crash and he did not believe me. He lost over 1 million in value of his 401 K. This time he is taking me more seriously. If your response is positive maybe I can convince him to join me into making a huge investment of over 2.6 million in 850 oz silver bars. I feel I’m am right on the money with my own intuition. I was right on before the 2008 crash. I feel that another crash is just on the horizon as well as I feel a sharp increase of silver prices is also just about on the horizon. Please be honest. If you feel I am correct and or at least have a very logical view of the current economical conditions as as a good potential picture of what could happen in the next few years just send me your potential outlook of the next few years. I can then try an persuade my brother into joining me to combine our financial assets and make one huge purchase and then divide our net amounts on our end. Also with a purchase this large will you possibly lower your price for the 850 oz bars just a little?

    I am very interested in your response because I feel I am right on the money just like I was before the 2008 crash.

    • Bill Haynes

      I find your strategy sound, move from over-valued assets into under-valued assets. See my January 20, 2016 post.

      As for lower prices, yet we give lower prices on big purchases.

  3. Hosting

    The Earth has a finite supply of each metal, and intrinsic value of silver and gold is ultimately tied to their physical abundance. When you compare the total number of silver and gold deposits, the ratio rounds out to 17, which reinforces my point about silver being grossly undervalued.

  4. PATRICIA GILLETTE

    You know when it comes down to food for gold/silver..at the “ground level..” Who will have the say as to the “exchange rate”

    It seems to me if I bake and have the bread. That I would have the upper Hand..X Oz.for that loaf..But then..when suppliers won’t sell me the goods to bake more..but I have *the gold ” ..but I am not an international player..that THEN I become the one who loses leverage to others MORE globally connected..”saying : your gold? $1500 +:an ounce? Hell no..here’s $10.. Take it or leave it..* So I take it so that I can bake a few more loaves..this time for myself..

    Now I am far from an economic guru..but it seems to me , we will have to go back to bartering goods/skills even..add to that ..the Bible has scripture referring to a time when people will throw their silver AND gold into the streets.. always wondered WHY..

    • Bill Haynes

      Patricia,

      You are right in that you will have the “upper hand.” You can’t eat gold, it is a money. However, how much of an upper hand that you would have would depend on your competition. How many other people are also banking bread? Additionally, how willing would your suppliers to accept gold for the ingredients you need?

      As for your “bartering skills,” the market would work that out. A couple of trades and you’d know the value of your bread.

Leave a Comment

You must be logged in to post a comment.