BrotherJohnF is back with another Silver Update: Metals Decouple




  1. This is a good essay on the Dow and gold price.

    I recall that gold and the Dow were 1 to 1 in about 1980 when gold and silver skyrocketed.  Some interesting stats give some modest support to the theory that the Dow and gold will go to 1 to 1 again. 

    In 1980 or so the Dow was around 800.  It started the 1970 decade at 800 and ended it stalled in the same place.   Gold started the decade of the 1970’s at $35 an ounce. Inflation roared to life and while the Dow did virtually nothing for that decade, gold surged to $800 and oz and silver hit nearly $50 an ounce

    People fled the stock market and piled on to precious metals

    If you compare the 2001 to 2011 Dow and S&P they also have not changed that much.  The Dow started the 2000’s at about 12,000 plus and ended that decade at nearly the same level.  Gold started the 2000’s at about $250 and ended the decade at $1,700 or so.  Dow went nowhere despite some enormous ups and downs.  Gold went up about 7 fold.   You might even compare the lost decade of the 1970’s and its cousin of the  2000’s  re the Dow and say they were similar with the exception of the inflation adjustment to the value of this index.

    Here is some food for thought.  Europe and the US are headed down the wrong path.  Debt and economic troubles will hit very hard this year despite the debt bailout  of LTRO and Fed QEIII.  About 20% of the S&P companies are either HQ in Europe or owe a large part of their business in Europe.  As Europe implodes (see France stuck in recession) this will affect our markets.  If the damage is as great or greater than the 2008 crash and some say it will be many times as bad, the DOW and S&P will be hammered at much as 50% or more of their present value, just as they were in 2008. 

    Gold and silver took a hit  in 2008 but took off after that.  Therefore it stands to reason that if the DOW dropped 50% and gold more than  tripled in value due to its safe harbor and inflation protection (and we have 10% inflation now), there could be a case made that there could be a  crossover in value of gold at $6,000 an OZ and DOW at 6000.  Silver has been an also-ran in this equation but since there is so little of that metal, its rise in price may be even greater than gold with a 3 bagger or more.  Silver price explosion would have negligible effect on inflation.  It would be in response to a correction to gold to silver ratio and the inevitable scarcity and supply crunch of silver that is already showing up in the markets.  If the GTSR is even 20 to 1, silver could be $300 an oz.

  2. @Danno

    Just keep buying phydical silver and it will take more ounces of paper silver to reduce the price of silver. People are starting to notice that. Like for example, Blythe appearing on TV about the silver manipulation.

  3. @ Sumkid

    I’m grabbing every single ounce I can get my hands on! I’m literally selling “the farm” to add to the stack…
    And all Blythe did by saying what she did in the interview is make everything look more incriminating for them… She gonna feel the pain of getting kicked in the nutz one day and I really hope we all get to watch!

  4. @Danno

    Especially the canadians should buy physical gold and silver cause our currency is becoming digital. When I’ll get a MintChip, I’ll never keep my savings on it and instead, I’ll put it in physical gold and silver.

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