The labor force participation rate fell 2/10 of a percent to 63.9%, also a new low, and the lowest level in 25 years. (chart left)
It’s interesting to look at this trend with gold, but it’s absolutely fascinating when you plug in the numbers for silver. Not only may silver outperform gold before this is all over, but silver is more “affordable” to the masses.
Take a look at how many ounces of silver have been needed to buy a median-priced home in the U.S.
In 1970, it took 14,067 ounces of silver to buy a median-priced U.S. home ($23,000). By January 1980, it had dropped all the way to 1,603 ounces, based on silver’s average price that month of $38.80. The ratio bottomed at 1,258 at silver’s record high of $49.45 (London PM Fix) on January 21. (We can argue later how much of that spike was due to the Hunt Brothers hoarding of the metal, but I will point out that gold and silver peaked on the very same day, implying the same forces were influencing both).
The ratio peaked in 1990 at 22,616 due to silver’s average price that year of only $4.06, and was still at 18,365 in July 2006, the pinnacle of the real estate boom. However, look what happened to the ratio in the four years and three months since: it’s dropped 66.1%, to 6,213.
You may think the ratio won’t fall further since it’s already declined 69.2% in the last ten years. But I would point out that it collapsed 88.6% during the 1970s – and that was amid a 170% rise in home values! Only economists on government-laced Kool-Aid could fathom home prices rising that much over the next decade.
All this adds up to one thing: the number of ounces of silver to buy a median-priced home at some point in the near future will likely fall below 2,000. And given the unrelenting abuse to fiat currencies, it’s very possible it could hit a measly 1,000 ounces. Now that’s affordable.
The fine print, of course, is that you actually sell when the silver price is high, and that you pay the tax on the gain from another source. But I would argue that even a modest budget could come up with a few extra ounces to offset the tax bill.
Think silver is too volatile to use as a savings vehicle? The price fluctuates, no doubt, but ask yourself this: if you were to put ten grand into a savings account and another ten into silver, which asset will have more purchasing power five years from now? Even with the savings account earning interest, you’d be able to purchase much more with the stash of silver when you go to spend the proceeds.
NEW Buffalo/Indian Head Nickel Art Coin 1 TROY OZ .999 SILVER BULLION
Doug Casey is insistent real estate hasn’t bottomed because we’re on the cusp of a depression. I’m convinced the silver price won’t be stopping when it hits $50. If we’re right about these trends, that million-dollar vacation home you spotted on Nag's Head five years ago could be had for less than 2,000 ounces of silver.
Vacation home, here I come.
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