Here are a few facts to understand, before we begin identifying elements of the coming storm. For instance, there is a gold:silver ratio within the Earth’s crust of 1:17 (1 ounce of gold for every 17 ounces of silver). Over 4,000 years of recorded history, the gold:silver ratio for trading purposes was approximately 1:15.The most efficient means to newly acquire precious metals was to search where they were found in the greatest abundance and to mine those deposits. So originally, gold came from gold mines, silver from silver mines, copper from copper mines, and so on. However, a little over 100 years ago, the amount of silver withdrawn from silver mines began to dwindle and 75%-80% of silver production began to come as a byproduct of copper/lead mining operations, which brought the mining cost down as well as the metals’ perceived value.
However, within the past fifty years, demand for silver has increased consistently. Particularly, in new technology fields like; solar energy, electronics and medical technologies. The human race is currently consuming silver at a rate of more than 1 billion ounces annually and miners are only producing about 800 million ounces per year. Additionally, silver production and grades have been declining for the past three years. This was mainly due to artificial, governmental market manipulations. Worldwide, these governmental manipulations (quantitative easing, negative interest rates, etc.) have artificially reduced the value of silver. But global economic production is slowing rather dramatically and inflation is sure to follow.
By the end of 2018, thanks to a “strong” U.S. dollar, propped up by four interest rate increases, silver saw an artificially-induced 14% loss, but quickly gained in 2019 as Fed policy reversed. As all of the artificial economic manipulations begin to take their toll, precious metals and silver in particular stands to benefit. The gold:silver ratio recently found itself at 1:87. Released from artificial manipulations, silver could easily return to its true water level of 1:15. With gold at $1,482.40 per ounce today, that would provide silver with a price of $98.83 per ounce (and that’s before the storm). These are not at all unrealistic possibilities. The world’s governments have kept economies dieseling for several years, with temporary and in some cases inane “fixes,” but a day of reconciliation is coming, where all of these artificial manipulations will fail and a free market and economic system will return.
When you factor in negative elements of the coming economic storm, i.e. impeachment proceedings, global recession, trade disputes, currency devaluation, election anxiety, geopolitical disputes, civil unrest, inflation, and all-time high, personal, corporate and national debt levels, let’s just say that precious metal values are set to potentially skyrocket (with silver leading the way). Precious metals have historically been the world’s most successful protection from cataclysmic economic conditions. Is there any reason, at this time, not to own a disproportionate amount of physical precious metals, particularly in light of today’s low prices and the potential ferocity of the coming economic storm? Call the experts at American Bullion, at (800) 653-GOLD (4653).
Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.