Wednesday, September 7, 2011

Silver rubber band

11:22 am (Hawaii) All this fluctuation action in gold, silver, equities, bonds, Treasuries, weather, the size of Lindsey Lohan's (you name it) ... nothing matters as long as I can lay here in the shade, outdoors and stare at the blue sky. Sunshine sparkling on the foliage nearby. Birds singing. Breeze lilting. Fuck all the other stuff. I treasure this moment of peace.

That being said, it was on a long drive the other day when I started thinking, who the hell really knows how high (or low) gold and silver will go. Even Mike Maloney thinks both will rip, then burst as the investment turns into a bubble at some point with pop culture flooding through the entry gate. For now, though, maybe a rubber band snapback to higher highs and higher lows is in effect regardless of puppetry by the CME mafia, Swiss National Bank, JP Morgan, blah blah blaaah.

So in the most overly simplistic mathematical ratio possible, here's one dense summary of spot silver:

The most recent surge took price from $19 to $49, followed by a pullback to $32. (Yes, I'm ignoring the run to $21 and that subsequent pullback to $9.) That's an increase of 258% and a drop of 35%, so those are the numbers I'll use for this rubber band action.

$19 —> $49 (+258%)
$49 —> $32 (-35%)
$32 —> $82 (+258%)
$82 —> $53 (-35%)
$53 —> $136 (+258%)
$136 —> $88 (-35%)
$88 —> $227 (+258%)
$227 —> $147 (-35%)
$147 —> $379 (+258%)
$379 —> $246 (-35%)
$246 —> $634 (+258%)
$634 —> $412 (-35%)
$412 —> $1,062 (+258%)

Now, at this point, sure this is pure fantasy. Nothing repeats perfectly over this long a time frame, especially when manipulation is so prominent, and when it comes from the freaking highest levels of power. But there are real possible reasons why silver can go to $1,062 and beyond. Though the bubble will burst at some point, before then, public demand will be insanely heavy. And before that, the central banks and elitists will have plenty of gold and silver in their coffers. Buried in chests and all that. Treasure maps hidden away. Whatever. But the large numbers will overwhelm what we currently view as TPTB. That's what makes governments tremble, when millions are in the streets calling for change. The Swiss caving in to economic and political pressure yesterday doomed the last vestige of stability for currency in Euroland. Sure, there's short-term bliss, but longer term, there's no footing for any Euro economy.

There isn't a single stable fiat currency in the world. And there won't be one until the US quits printing dollars by the trillions.

Almost every silver and gold bug anticipates a period of anarchy followed by fundamental governmental change. Political change. Fiscal change. Control change. Silver at $1,062 will probably mean a gallon of gas and a bag of rice (or loaf of bread) will be astronomically expensive. That's the down side of viewing silver and/or gold as an investment. Unlike holding AAPL from $15 to $400, there's no real way to beat inflation and hyperinflation. Precious metals will allow me to retain buying power and not lose to inflation. That's the reality. (The other reality is to own farm land and live off the grid, but that's not an option for most of us, is it?)

That's why I don't automatically assume AGQ runs to $382 when spot silver returns to $50. The landscape constantly changes, and so will price action. But, if the rubber band effect of my fantasy is realized, I'll enjoy some relief in knowing that it was wise to be proactive.

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