The Mission Of The Silver News Surfer Has Always Been & Will Always Be – To Preserve Your Wealth, Protect Your Purchasing Power and Create Generational Wealth!
May Health Wealth And Success Be Yours!
Of course, being the Silver News Surfer, I always put an emphasis on precious metals, particularly silver (because I believe in my heart that it is the best hedge) but today, I will put more emphasis on the overall economy, this way, you can clearly see that at this particular time, you should be over-weight hard assets and under-weight paper liabilities.
Here’s what we have to look forward to in the economy…
Why Are The IMF, The UN, The BIS And Citibank All Warning That An Economic Crisis Could Be Imminent? The warnings are getting louder. Is anybody listening? the global financial system is absolutely primed for a crisis, and now some of the most important financial institutions in the entire world are warning about the exact same thing.
For example, this week the Telegraph had published an article with the following ominous headline: “$3 trillion corporate credit crunch looms as debtors face day of reckoning, says IMF“. And actually what we are heading for would more accurately be described as a “credit freeze” or a “credit panic”, but a “credit crunch” will definitely work for now. The IMF is warning that the “dangerous over-leveraging” that we have been witnessing “threatens to unleash a wave of defaults” all across the globe…
IMF Chief Lagarde: The next financial crisis is coming – it’s a just a matter of time – and we haven’t finished fixing the flaws in the global system that were so brutally exposed by the last one.
This Has Never Happened Before In US History – For the first time ever, the U.S. government has sold a three-month Treasury that pays nothing. From time to time, the U.S. government holds auctions where it sells bonds to raise money.
On Monday, the government held an auction selling three-month Treasuries that yield 0.00%. The auction raised $21 billion. This is not how things work in a normal economy. Lenders are supposed to be compensated for loaning money.
Fed minutes: Members worried about slower global growth – The U.S. Federal Reserve thought the economy was close to warranting an interest rate hike in September but policymakers decided it was prudent to wait for evidence a global economic slowdown was not knocking America off course.
This statistic suggests a 90% chance stocks will fall: BofA – Suddenly, stocks are hot again, with the S&P500 is on track for its best week of the year. The index has rallied nearly 5 percent since the start of the fourth quarter, but if history is any indication, the recent rally could soon fade into the abyss.
How and Why Banks Will Seize Deposits During the Next Crisis – The financial system is predominantly comprised of digital money. Actual physical Dollars bills and coins only amount to $1.36 trillion. This is only a little over 10% of the $10 trillion sitting in bank accounts. And it’s a tiny fraction of the $20 trillion in stocks, $38 trillion in bonds and $58 trillion in credit instruments floating around the system.
Suffice to say, if a significant percentage of people ever actually moved their money into physical cash, it could very quickly become a systemic problem. Indeed, this is precisely what caused the 2008 meltdown, when nearly 24% of the assets in Money Market funds were liquidated in the course of four weeks. The ensuing liquidity crush nearly imploded the system.
Here is what we have to look forward to in the Hard Asset catagory… Remember, just because it hasn’t done what you want it to do, when you wanted it to, doesn’t mean it’s not getting ready to! This is a prime atmosphere…
So… Are you still hesitating to acquire hard physical assets to secure your wealth and store them outside the financial system? If you are still worried about “gold and silver might go down” in price, then you don’t understand wealth preservation.
If you call me and we talk for a few minutes, you will discover that price doesn’t matter with physical assets – In another 2008 style event, you will just be glad you had them, because regardless of price – They always have value and I truly hope you understand the difference!
I’m sure you’d agree with me that THE BEST time to sell an investment is when it is “overvalued” and THE BEST time to buy something is when it is “undervalued”…
PERIOD – END OF STORY!
One of my readers sent me this… Thanks Kevin C.
Silver Prices Forecasted to
Soar Based on This Indicator
Quantitative easing has weighed heavily on silver prices, but the grey metal is poised for massive gains. This miraculous indicator has an unbelievable record of predicting a sudden rise in silver prices. Investors who ignore the potential offered by this indicator could miss out on 422% in gains, similar to 2011 when silver prices hit $50.
I should clarify; you won’t get rich overnight. Markets are a sea of raging volatility these days, with several macroeconomic stories still playing out across the world. The idea of suddenly doubling or tripling your money is a red herring.
Be wary of anyone who tries to convince you of get-rich-quick schemes. Investing is a patient man’s game. That being said, history reveals some patterns to those of us who pay attention.
Looking at silver data over the last 20 years, we’ve noticed a peculiar phenomenon that happens like clockwork. Every time this indicator rises, silver prices are in a lull.
When the indicator deviates too far from the mean and for too long, a crash is not far behind. Interestingly, the indicator’s downward swing almost always predicts an upward movement for silver prices.
Silver investing can be challenging. However, the smart silver investors do more than simply bet on the intrinsic value of hard assets. They watch for the opportune moment.
Silver Bullion: The Ultimate Hedge
Precious metals form the backbone of monetary history. Silver and gold were currency before paper money was even considered legal tender. There is weight in that history, and also in the durability and security of hard assets.
Silver bullion does not yield to fire, plague or water. Its physical integrity is far greater than paper money, but it’s bound by physical quantity. Governments prefer fiat money, because central banks can print money to counteract the effects of business cycles.
Modern currencies are defined by the health of the economy. Well, that and currency speculation. The result of fiat money was not the end of silver, but rather the beginning of silver as an economic hedge. The same is true for gold.
Gold and silver became talismans against economic uncertainty, a safe haven for investors to weather the instability of financial markets. They tend to move in tandem, rising and falling in opposition to stock market movements.
But occasionally the market falls into distortion. The gold-silver price ratio helps us make sense of the relationship between gold and silver.
Gold and Silver Prices Are Out of Balance
Silver prices have tumbled along way from their high in 2011, falling over 70% from the $50 peak to $16.01 at the time of writing.
Chart courtesy of www.StockCharts.com
The grey metal is unusually despondent considering the level of uncertainty around the world. China’s stock market crash during the summer should have stoked considerable fear, not to mention Greece’s showdown with the EU and IMF.
But prices are stagnant. The most striking feature of silver’s decline is how much further it fell than gold. Gold is down just over 40% in the same time frame.
The 40 year historical average between gold and silver shows the ratio hovers around 42.8. That means every ounce of gold should convert to 42 ounces of silver.
However, 40 year average still measures the ratio after hard currencies were abandoned for fiat money.
A true accounting of the gold-silver price ratio should be drawn from the natural relationship between each substance. How much gold would there be if we mined every deposit on Earth? And how much silver would we find?
When we calculate the natural rate of the gold-silver price ratio, it works out to around 17. That’s considerably less than where it is today.
Chart courtesy of www.StockCharts.com
Over the last 20 years, a startling pattern has emerged. Every time the gold-silver price ratio goes above 70.0 (70 silver ounces to 1 gold ounce), it means that investors are severely undervaluing silver relative to gold.
The ratio peaked in 1997, 2003, and 2009. On each occasion, the resulting rebalance between gold and silver caused huge upswings in the price of silver. Silver investors who bought at the right time would have made 70%, 200%, and 420% respectively!
Here’s the Bottom Line on Silver Prices
Right now the ratio is sitting at 75.0. Remember that 70.0 is the magic number, and we’re definitively past that point. Last time silver prices skyrocketed, the grey metal hit $50 an ounce. History suggests it may happen again sooner than most people think. Remember, 90% of the biggest moves comes in the last 10% of the time.
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