CHARACTERISTICS OF BUBBLE CRAZINESS:
- S. stocks, according to many measures, are the most
over-valued in history. We live in a Bubble Zone! Read
Mystery Markets, Bubbles, and Less Risky Gold.
- Bitcoin and other cryptos are definitely in a bubble,
but they could rise even higher.
- Bonds yield little, and in many European countries, less
than zero. Central banks have created this distortion to the detriment
of savers, insurance companies and pension funds.
- Real estate: Some locations, such as New Zealand, Canada
and Australia are up a factor of 8 to 20 since 1980. Houses have become
unaffordable for many, even with historically low interest rates.
- Silver and gold: No bubble since 1980. Prices have been
repressed since 2011 and are attractive now.
INVESTING IN BUBBLE CRAZINESS:
- Institutions buy stocks because bonds yield so little.
This works until the inevitable crash. Think tech stocks in 2000 or
2018(?).
- Institutions and central banks buy bonds trusting the
“greater fool” theory. Argentina sold 100 year bonds. What happens when
the world runs out of “greater fools?”
- People buy Bitcoin because it is going up, and it might
double again from here. Are you comfortable investing savings with that
plan?
- Others deposit their digital currency units into a “high
yield” checking account that yields 0.01% interest. Or they “invest” in
a CD that guarantees a yield of 1% per year in a currency that will be
devalued by far more. Others buy a motor coach that depreciates $100,000
when they drive it from the dealer lot. Or they purchase a house that
costs $10,000 to $50,000 per year in taxes, insurance, maintenance and
utilities before principal and interest.
- Demand value! Not doing any of the above!
Avoid fads, bubbles, central bank distortions and obvious financial
insanity.
WHAT’S LEFT? GLAD YOU ASKED!
- What has been money for thousands of years?
- What is more permanent than ephemeral digital currency
units that are continually devalued?
- Asia has aggressively accumulated it for decades.
- What has been secretly sold from western vaults and
shipped to Asia?
- What is used in thousands of industrial and medical
applications?
- What has been suppressed by governments and central
banks because they promote their own digital and paper currencies which
have zero intrinsic value?
THE WINNERS ARE SILVER AND GOLD!
- But “they” claim gold and silver are volatile and
dangerous. Gold and silver might go up or down (for a few years) when
measured in digital currency units created from “thin air” by corrupt
central banks. Gold in 1971 was $42 and is about $1,250 today. Silver
prices have increased similarly as central banks devalued the dollar.
- For other examples of volatile and dangerous prices,
consider the price chart for Global Crossing stock or Enron stock. Or
the NASDAQ 100 from 2000 to 2002 (down 84%). Or the S&P 500 Index
from 2007 – 2009.
- But “they” claim gold and silver are relics of a bygone
era, and digital is the wave of the future. So why are Russia
and China accumulating gold bullion? What happened to Iraqi
gold, Libyan gold, and Ukrainian gold, and who wanted it?
- Do dictators escape while carrying paper currency units
or gold bullion?
- Would you prefer 100 ounces of gold or 130,000 paper
dollars in a ten year time capsule?
- Central banks create trillions of U.S. dollars, euros,
pounds, yen and Swiss Francs each year. The Swiss central bank “creates”
currency units and buys U.S. stocks. The media thinks “creating from
nothing” is normal and healthy, yet informs us that investing in gold,
to protect from devaluing currencies, is silly and dangerous!
GOLD AND SILVER IN THE BIG PICTURE:
U.S. dollars are created as debt. Central banks and governments want more
currency units so debt, deficits and expenses exponentially increase.
Graph the price of silver (times a trillion) divided by the national
debt. The ratio is low because debt has increased rapidly and silver
is inexpensive.
Graph the price of silver (times a trillion) divided by U.S. government annual
expenses. The ratio is low and silver is inexpensive
compared to total U.S. government expenses.
Graph the price of silver (times one trillion) divided by currency in
circulation as measured by M3 (St. Louis Fed).
Graph the ratio of silver to the Dow Jones Industrial Average over 30+
years. The ratio is low, as it was in 2001 when silver sold for under
$5.00. In late 2017 the DOW is too high and silver is
inexpensive. Both will reverse.
SHOULD WE BUY SILVER OR GOLD?
Graph the ratio of silver to gold. Since 1971 a high ratio has
indicated the top of a bull market in both silver and gold. But when
the ratio is low (silver is inexpensive compared to gold) both silver and
gold are cheap, especially compared to other paper and digital assets – like
now!
The lows in the ratio show excellent times to purchase both silver
and gold, particularly silver. Silver prices are listed in the
boxes at the ratio lows. Expect the ratio to increase as both metals rise in
price during the metals bull market that restarted in December 2015.
CONCLUSIONS
- Bonds, most stocks, and Bitcoins are too expensive and
have risen too far and too fast.
- Some, perhaps most, real estate is overpriced and ready
to fall.
- Silver in late 2017 is inexpensive compared to
M3, National Debt, government expenditures, the Dow and gold.
- Call Miles
Franklin and tell them Gary says it’s time to BUY SILVER!
Gary Christenson
