Nickel Rant™
I See a Silver Moon Rising
Edgar J. Steele
Published April 19, 2006
I see a bad moon rising
I see trouble on the way
I see earthquakes and lightnin'
I see bad times today
-- Creedence Clearwater Revival, Bad Moon Rising (circa
1969)
[NOTE:
This piece was written on April 2, 2006]
On January 28th, here is how
I responded on a public forum to someone who wondered aloud as
to whether silver might break through the $10 price level by
the end of 2006: "This year!?! How about this next week?
$20 silver by year end, perhaps even summer, is looking more
and more likely to me. And just think, if it goes there then
you will be able to say to yourself: 'I did know what would happen!'
If it does dip back down at any point, back up the truck because
you won't get another chance. History will show today's price
to have been a bargain and last year's price as a ridiculous
aberration, a result of illegal government market rigging. Mark
my words well."
Y'know, when your investments
are going your way, it is easy to make the mistake of believing
you are a financial wizard. I harbor no such illusions, despite
my BA in Finance, MBA in Accounting, law degree and the fact
that, at one time, I aspired to become a Specialist (stock exchange
market maker) on Wall Street. I've lost way too much money over
the past decade.
What is happening today has
been obvious for over ten years - that was just about the time
that the Plunge Protection Team heaved into action, a response
to the Reagan and Bush excesses, all of which continued in spades
under Clinton. For the next eight years or so, all my accounting
and financial analyst training and experience told me one thing
while the markets did exactly the opposite. I lost a lot of money
during that time; first in S&P futures, but more recently
in contrarian funds like BEARX. For that, I have mightily damned
Clinton, Bush and, especially, Greenspan.
Now, however, market forces
have grown too large for even the mighty central banking oligopoly
to control... except the general level of the stock market, of
course. Inflate the money supply as Easy Al and WhirlyBen have
done and you guarantee the market never has to decline, regardless
of what may be going on elsewhere. Of course, you end up destroying
the value of your currency, but nobody ever got fired for doing
that.
I give up. Now I expect the
stock market never again to decline, at least not for long. However,
an 11,000-plus Dow in the future's dog dollars is... how much,
again? And your house - suppose its price never goes down, but
the purchasing power of today's dollar goes to 10 cents due to
WhirlyBen's helicopter-based monetary policy... doesn't that
look a lot like the 90% real estate price declines of Depression
I?
About that Jan 28 forum posting:
Silver actually took two weeks to hit $10. Last week, Silver
vaulted over $11, then hit a high spot bid close of $11.54. At
the end of the week, though other metals got hammered in the
PPT's predictable fashion, silver dipped only a nickel.
Do I smell a correction in
the air? Maybe. Or, maybe this is the big wave, at last. We will
see. But, this isn't day trading. You've got to be in the game
to play the game, so think twice before taking profits. As for
myself, I think silver is a no-brainer long-term hold. And gold,
platinum, palladium and all the base metals. All commodities,
in fact. But, especially, silver.
If the economy goes south,
silver goes up as people retreat to it as a hedge.
If the economy goes up or sideways,
silver goes up due to industrial demand and the new EFTs.
If we go to war against Iran,
silver goes up. If we don't go to war, silver goes up.
If Bush gets impeached (be
still, my beating heart), silver goes up. If Bush continues as
the Clown-in-Chief, silver goes up.
If the dollar crashes, silver
launches Moonward.
Only if the dollar strengthens
in the face of both the massive debt buildup that has been occurring
and foreign rejection of the dollar's role as the world's reserve
currency, does silver maybe decline some... and, in the immortal
words of Clint Eastwood, that ain't gonna happen. WhirlyBen Bernanke
said so, loud and clear. A stronger dollar will require higher
interest rates - much higher interest rates - and economic pain
unlike anything ever imagined by anybody alive today in America
whose first language is English. Pain which will cause a rush
to silver, among other things.
As I said: a no-brainer.
When I wrote the chapter entitled
"Money's End Game: Depression II," for my book, Defensive Racism,
I made a strong pitch for silver, even over gold. Silver then
was at about $4.50 an ounce and gold was hovering around $300
per ounce. In that chapter, I summarized my detailed analysis
as to why I thought gold would skyrocket, saying "I believe
gold will spike to as much as 3 or 4 thousand dollars per ounce
in terms of today's (2004) dollar, no later than 2010 and probably
much sooner, then settle in at around $1500." You see, I
was hedging my bet, at the behest of one early proofreader -
I actually thought (and still do) gold would/will spike to $10,000,
then settle in at around $3,000 to $5,000 in 2004 dollars (not
tomorrow's dog dollars, either).
Two years ago, in that same
chapter, I said the following about silver: "Silver, in
particular, seems poised for a serious breakout once the rigging
stops, as stop it inevitably must. Though bulky to store and
handle, silver actually is a much better bet than gold."
Last fall, on October 7, once
again I pitched silver, via "Peak
Silver," in which I stated: "Silver's relative
scarcity is a vitally-important concept that simply has yet to
sink into the minds of almost everybody in the world today. Else,
why does silver trade for only $7 and change per ounce, versus
nearly $470 per ounce of gold? Stand by, because all that is
about to change." At that point, I traded my gold for silver
and recommended that others do the same. Since then, gold has
climbed 24%, a remarkable performance, while silver has shot
up an astounding 60%. I concluded my article with the following
observation: "To the Moon, Alice. That's where the price
of silver is headed, now that we have hit Peak Silver. To the
Moon."
How high is the Silver Moon?
We barely have attained low orbit, folks - well below the deadly
Van Allen radiation belt. We still are retracing the steps of
silver held back by artificial government manipulation. Next
comes the increase due to rarity, vis-a-vis gold, not to mention
industrial shortages. Finally, when Depression II really takes
hold (unemployment will go from the current real 12% to beyond
last century's Depression I mark of 25%), the premium of silver
as a refuge will go into effect, thus the relevance of the song
snippet recited at the outset of this piece.
People who spoke of $100 silver
(again, not in tomorrow's dog dollars, either) used to be seen
as loons. No more. Well, at least, not so much.
On January 28, in "Paper
Bad - Metal Good," once again I recommended silver,
as its spot price closed at $9.57 bid, up about a dollar from
a month earlier. Last week, of course, it closed up almost another
$2 per ounce since the end of January. That's a 2006 "run-rate"
of a buck a month. Lessee now, December 31 price of $8.50 plus
$1 times 12 months ... ... hmmmmm... .why... .that's $20 and
change! Hey - am I psychotic, or what?
If you haven't yet bought silver
with every spare dollar you can scrape up, I can only ask when
you're going to trust the force, Luke. Last summer, despite the
worried look in my wife's eyes, I refinanced our house mortgage,
taking out $100,000, all of which I invested in gold, silver
and palladium stocks. That $100,000 has become $250,000 today.
I expect it to pay off the mortgage altogether before summer's
end. Once again, I am her knight in shining armor.
Under WhirlyBen, the dollar
easily could slip to half its current purchasing power by this
time next year. Guess what happens to silver in that case?
Another clear tip: most analysts
are, as always, calling for a major correction in precious metals
and screaming, "Sell, sell, sell... " Lessee now, they're
the same ones who always get us to buy high and sell low, now,
aren't they? The ones who get paid to shovel us that dreck. I
must be doing God's work here, because there is no way I get
paid for what I tell you.
If there is another correction,
that is all that it will be. Remember that the word correction
implies an eventual, if not quick, recovery, usually to higher
levels. Don't try to day trade metals. This is a loooonnnnnng
bull market for metals that we just recently entered, make no
mistake. So long, in fact, that I doubt I will outlive it.
I'll say it again: $20 per
ounce silver by year's end. Mark my words well. I'm willing to
be wrong, but I don't think that will happen.
-ed
April 2, 2006
Edgar J. Steele
email: steele@conspiracypenpal.com
Copyright ©2006, Edgar
J. Steele
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