Getting into Bargain Territory
Watching silver since 2009, you know one thing is for certain: When silver dips below $20/ounce, it is entering the lower part of the valuation spectrum.
$15/ounce is, without a doubt, the bargain basement price for silver, but even if we don’t get there, the damage has been felt, if one bought silver above $20.
In January 2021, with the GameStop saga, WallStreetBets short squeezes and the attempted squeeze on silver, we concluded that the peak had been reached.
Since then, the metal has crashed by over 33%; by the time this is over, it may plummet by a full 50%, going from around $30 in January 2021 to $15 in the summer/fall of 2022.
The reason that silver is crashing by this much is the same as with previous major smashes… fears of recession and emboldened U.S. Dollar strength.
Even after silver hits the bottom, it can trade sideways for months, so what I want to focus on are the conditions we need to see silver rally and what’s likely to occur.
DEFLATIONARY EXPANSION to INFLATIONARY RECESSION: PART 1
INFLATIONARY DECADE: 2022-2029 – PART 2
From 2009 to January 2020, when Covid-19 was declared a global pandemic and ended the economic expansion, central banks and governments were able to create credit and lower interest rates to zero, continuously implementing policies that shocked them, when they succeeded without much blowback.
Central bankers came on the air and noted that they were shocked unemployment was so low and inflation wasn’t going up. They were stunned that the U.S. lost its AAA credit rating, the UK left the Eurozone and Trump slapped tariffs on China and lowered corporate taxes – all with no real inflation materializing.
The economy was growing in a way that was able to absorb the seemingly never-ending stimulus measures and debt loads.
So, when the Covid-19 virus was declared a pandemic and the governments of the world discussed the possibility of shutting down the economy for as long as three years, they responded with both monetary policies from the Federal Reserve and fiscal stimulus checks, as well as other accommodative policies to alleviate the hardship of households.
Once the March/April 2020 initial panic subsided, governments did not appreciate the changes happening in real time, specifically when it came to the ordering of goods, as services dried up with consumers at home, quarantined or self-isolated.
Supply chains, which could be counted on to deliver on time for years became unraveled, and on top of that, manufacturing facilities couldn’t keep up.
It would be like Michael Jordan’s 2-year retirement from basketball to baseball. When he wanted to return, he needed to adjust his routine, from his diet to his strength training – the best player in the world was gone for two years and almost had to learn everything anew.
Governments favored health and safety measures disproportionately over other considerations, and by doing that unchecked, some of the unintended consequences are being felt today.
For the entirety of 2021, the government failed to exit the mindset of the healthcare crisis and plan for the future, while the Federal Reserve did not appreciate the looseness of its policies until inflation was visible to all.
We are now paying the price with an inflationary recession and we believe that once the GDP numbers confirm our suspicion that we are in a recession, silver will bottom around September 30th and begin its climb.
Silver will really start to rally again, when the FED ceases hiking in early 2023.
Governments Have Amassed ungodly Debt Piles and Have Promised Retirees Unreasonable Amounts of Entitlements, Not In Line with Income Tax Collections. The House of Cards Is Set To Be Worse than 2008! Rising Interest Rates Can Topple The Fiat Monetary Structure, Leaving Investors with Less Than Half of Their Equity Intact!
Protect Yourself Now, By Building A Fully-Hedged Financial Fortress!
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