Friday, May 13, 2011

3 Charts To Watch For SILVER

I realized very early on that using the dollar as a measuring stick is trick the Elite use to manipulate the masses. Through the insidious process of inflation, the Elite can shift power from us to them. The more money they print the less the dollar buys. When you understand that prices are not going up as much as the purchasing power of the dollar is declining, then you have made an important leap.

Everyone was crowing that silver reached it’s “bubble top” of $50 back in 1980. The reality is that $50 in 1980 had a ton more purchasing power than it does now. 31 years of debts and money printing has cut the value of that $50 tremendously. If you go by the rigged BLS numbers adjusting for inflation, silver would have to get to $143 to get to it’s inflation adjusted highs from 31 years ago. If you use REAL inflation adjusted numbers, like those of, then silver needs to get to at least $450. And that is just adjusting for inflation… When you factor in the decades long physical deficits of silver, the unfunded liabilities and a mathematically inevitable, world-wide fiat currency collapse, the case for silver is even better.

I knew the dollar could not be trusted as a measuring stick so I started to search for something else to guide me. I found that ratio investing is the best way to overcome this dollar centric view of the world. The idea is simply taking the currency out of the equation and simply divide asset by asset to get its ratio of purchasing power. It is also important to use this line of thinking when you look back in history to make historical analysis of the real purchasing power of silver. (Read: Historical Case for $960 Silver.)Most importantly, this line of thinking will help you see values in a post-dollar world.

In a recent exchange between me and another investor, he made the case that I should sell my silver because I am still up 500% on my silver investment and that I could buy other assets that are cheaper and not in a “bubble.” I first made the case that by any inflation adjusted level, we are so far off the record high, that I can barely see the top. We also have not seen the public buy into the market with the same level of excitement that they did in the housing and stock market bubbles. The biggest argument was, what other asset class is better? So I let him in on the big 3 charts that I have been watching for 6 years now.

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