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Message Subject Silver shortage used up by 2020 USGS
Poster Handle Anonymous Coward
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Silver About To Break $20 and Looking Better Than Gold

By: Peter J. Cooper



-- Posted 15 May, 2010 | | Discuss This Article - Comments: Source: SilverSeek.com



Go back to the 1970s and the last precious metals boom. In the late 1970s gold prices rose eight-fold and silver by a factor of 25.

Fast forward to today and you have ArabianMoney editor Peter Cooper publishing a book predicting a rise in gold prices to $5,000 as the world goes through something like a re-run of the mid-70s.

Then as now a massive credit expansion produced a huge bust in property and then stock prices, and governments reflated to counter the downswing.

Inflation not deflation

Inflation resulted after the initial price deflation, although stock and real estate prices stayed low, and bond prices fell. Even gold prices took a nasty tumble in 1976 as they did in late 2008 but then came the spectacular 1979-80 blow-off in precious metal prices with gold at $850 and silver at $50 an ounce. Is that final spike about where we are today, only to far higher price levels?

Note that silver is the only commodity in the world not to have passed its previous all-time high, and that was set three decades ago now. So will history repeat itself again?

If we look at what has happened to house prices and stocks (about due for another dip if 70s volatility is any guide) then things do look very similar. Governments have also been taking desperate measures to counter the financial crash, and signs of inflation are already emerging in places as far flung as China and the UK.

The next shoe to drop will surely be the bond market as it was in the 70s. Interest rates rocketed in the late 1970s and that is bad for bond prices. Today governments around the world need to borrow a lot of money to finance their deficits and the markets are going to exact a higher price for that money.

As real estate, stocks and bonds cease to be attractive investments then that leaves the precious metals as a store of value. The silver market is much smaller than the gold market and in the 1970s became cornered by the Hunt Brothers, forcing the price through the roof until the market rules were changed and the price slumped.

It could be different this time but actually the huge short positions in the silver market are already there and a very similar kind of spike to the upside is built into the market as it begins to achieve traction. That could happen very soon with silver up $2 in the past week or so.

[link to news.silverseek.com]
 
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