I recently published an article projecting possible prices for gold in the year 2020 based on the S&P 500 Index and the ever increasing population adjusted US national debt. I assumed three scenarios and three different gold projections. Time will tell regarding gold prices, but what is nearly certain is that national debt will exponentially increase. Further, over 30 years, the sum of the S&P and gold have increased similarly to the population adjusted national debt.

Similar analysis can be used to project silver prices. Based on the past 15 years, we should expect considerable and increasing volatility, as the next few years will probably see dramatically increasing debt, stock market corrections (the S&P is overvalued and probably peaking in 2015), deflationary forces and increasing debt defaults, desperate central banks “printing” even more currencies, a derivative scare or crash, central bank created consumer price inflation, another financial crisis, and the list goes on.

Given the difficulty of predicting prices in central bank managed markets, this analysis relies upon long term trends. Consider the following:

Population adjusted national debt and the sum of the S&P plus 92 times the price of silver show clear exponential increases over the past 30 years. Expect debt and the sum of the S&P and 92 times silver (SUM) to exponentially increase, perhaps even more rapidly.

national_debt_vs_silver_s&p500_1985_2015

national_debt_vs_silver_sp500_1985_2015

Why use the sum of the S&P 500 Index and 92 times silver? Broadly speaking, the S&P represents paper assets while silver represents real assets, and the 30 year average ratio is 92. Both markets are heavily influenced by central bank manipulations and often one increases as the other decreases, but the sum increases along with debt.

silver_plus_s&p_1985_2015

silver_plus_sp_1985_2015

BIG PICTURE SUMMARY

Population adjusted national debt increases exponentially. The SUM (S&P + 92*silver) increases in an exponential channel at about 6% per year.
The numbers will be slightly different in Japan, the UK and Europe but the concept applies.
The S&P recently hit an all-time, central bank assisted high. Look out below!
Silver has fallen 2/3 from its near all-time high 4 years ago. The next major move is likely to be up.
The important question is: How will the silver market be affected by continued QE, gold price manipulations, central bank management of our casino-markets, Chinese gold purchases from western central banks, deflationary debt defaults, and consumer price inflation? One might also ask when confidence in fiat currencies and paper assets will deteriorate or plummet and when the world will return to the sanity of gold backed money and constrained government spending.
As in my gold article, I offer 3 scenarios based on various combinations of the above macro-economic conditions.

SPECULATION REGARDNG SILVER PRICES IN 2020:

MORE OF THE SAME SCENARIO: (I find this unlikely but the media likes it.)

CHICKENS COME HOME TO ROOST SCENARIO:

HYPERINFLATIONARY SCENARIO for 2020:

CONCLUSIONS REGARDING ALL SCENARIOS:

History and current actions justify the expectation that governments and central banks will increase debt, devalue fiat currencies, and thereby force silver and gold prices much higher.
Convert digital dollars, yen, pounds, and euros into silver and gold while you can. Current “on sale” prices will not last much longer.

Original Article

The belligerent United States continues to assert its fading but still lethal destruction around the globe. Just one guess who is behind the Saudi invasion of defenseless Yemen, covered here previously, [See What Moved Price? Ba el-Mandeb ]? The Military Industrial Complex [MIC], finds it financially rewarding to sell all the military might necessary to wage war of any kind, anywhere around the world. After all, when the primary country you occupy has over 6,000 retail stores closing, domestic business is not doing very well, so the federal government needs income from somewhere.

Are we unfairly picking on the United States? Absolutely not, unless you are a U S citizen whose sole source of information comes from the NWO mainstream news media which is prevented from ever covering the truth. [See Obama More Hostile Towards Press Than Any Other President In History]. Rather than try to convince anyone, in a sentence or two, that freedom of the press is just a myth in this country, we will let this WashingtonsBlog article do the heavy lifting as just the tip of the news media iceberg.

Our focus on gold and silver is more of an unconventional approach because the conventional news stories on them regurgitates a never-ending supply of statistics that have nothing to do with current prices. What does? The ongoing existence of the New World Order’s lead “hit man,” the corporate federal U S government, forcing the debt-ridden fiat Federal Reserve Notes [FRN], aka the “dollar,”as the proxy for keeping the largest and longest ever Ponzi scheme of enslaving the world.

It is the same US that is arming the Saudis, [who by the way, are killing the US shale oil fracking industry, thereby further weakening the both the country and its fiat petro-dollar to ensure there is no other competition for Saudi oil], that started the [failed] Ukranian War, also over money, [preventing Russia from being the top energy supplier to Europe, and thus keeping the EU under the financial thumb of the US].

If you listen only to the mainstream news, Russia, which means Putin, is the despised enemy. Yet, there is not a single piece of evidence that supports the US-led propaganda agenda that demonstrates Russia was an aggressor in the illegal CIA-induced coup of Ukraine’s previously elected president [who happened to not support US interests.]

Exactly what has that villain Putin been up to over the past few years? He has been one of the chief architects behind the BRICS coalition, initially Brazil, Russia, India, China, and South Africa. Today, the BRICS association now includes over 100 other nations choosing to become affiliated with their commerce-building efforts. This is in sharp contrast to the US-led force of debt-enslavement at the end of a barrel. For as long as the US maintains its destructive ways, all as a means of protecting the fiat Ponzi “dollar” scheme, gold and silver will be kept artificially suppressed.

Yes, there are talks under way of having the IMF’s Special Drawing Rights [SDRs], a basket of the leading fiats: US “dollar,” the British fiat Pound, the completely fiat Euro, and the toxic fiat Japanese Yen, become the next replacement for the “dollar.” It is to include the Chinese renminbi, another fiat, but issued by a country that has accumulated one of the [unofficially] largest gold reserve holdings in the world.

The inclusion of the renminbi will not go into effect until January, 2016, at the earliest. Will this be the often touted gold and silver reset that will cause the price of both to reach new and much higher price levels? That remains to be seen. We believe there is no chance whatsoever that China will have its currency be gold-backed, that is convertible into gold. In fact, there is no country that has enough gold to issue a gold-backed currency. The SDR will remain a basket of fiat paper, and any change, although perhaps welcome to what exists, will be temporary, maybe for a decade or more [or less].

The US fiat FRN will still be a part of the SDR basket of currencies, and its “worth” is no better than the “worth” of the Pound, Euro, or Yen. You can put lipstick on a pig, but it is still a pig. The SDR is still a creature of the IMF, and the IMF is still a creature of the BIS, [Bank for International Settlements], and the BIS is still a creature of the Crown, the NWO, the Rothschilds. Who is fooling who, here? Adding the Chinese yuan is not going to resurrect a corrupt-to-the-core system.

We do not know the end game for the Chinese? Part of it is certainly to be recognized as the world’s dominant new-kid-on-the-block financial power, and the Chinese want their just due, understandably. What part will Russia and India play? Both countries also have significant gold holdings, whereas the Western countries have mostly divested themselves of that “barbaric metal,” the one that earns no interest. There is less and less mention of that long time standard phrase now that fiats are starting to charge a fee for holding cash, the same cash that generates no interest in a BIS-dictated world of zero interest rates so the entire Western banking Ponzi scheme can be kept afloat.

If the Chinese are willing to become a greater part of the system, will that parasite system eventually destroy China as it has the United States? The entire apparatus is already well-entrenched. All that need to be done is shift the focus from the West to the East, a changing of the guard, as it were. How smart are the Chinese? Are they becoming the world’s next economic powerhouse to undergo an eastern-style fleecing as has occurred in the completely shorn West?

What if China has longer term plans to destroy the Crown, the fiat king-makers, driving them from the fiat temple? It certainly cannot be accomplished overnight, if ever. By gaining a foothold in the IMF’s SDR basket of currencies, China will be positioned to have a much greater say. Right now, China has the US over a debt-ridden barrel from under which the US will never recover. This country is being asset-stripped in its ignominious end as a once mighty super-power falling from fiat grace, actually and ironically by design.

It is not the US that has been dictating the turns, but the moneymakers, the invisible Crown that has been, and still is, controlling every aspect of life on this planet, certainly in the Western world. The largest question that remains is, to what extent does their dominance extent to the East?

Yes, Putin purportedly kicked the Rothschilds out of Russia and took back control of Russia’s financial destiny, but Putin also has long ties to Kissinger, and has expressed cooperation with the IMF, as has China. Will the two largest Communist countries and enemies actually become financial white knights to overthrow the Western-dominated capitalists in a literal reversal of fortune?

There are many unanswered questions that go way beyond the seemingly most pressing ones of wanting to know when gold and silver will rally, and by how much? For how much longer can the reality of an acknowledged shortage for physical gold and silver go on in the face of an unprecedented and growing supply of worthless fiat, where the former have a historic intrinsic value and the latter has no value, whatsoever, except in the mindless minds of the users?

The fiat “dollar” charts are included because it remains the nemesis for any meaningful gold and silver rally, near term, or even longer as the charts suggest. Tops are often not confirmed as a top until some time after the fact, even months. It is too soon to say the “dollar” has topped, yet. It is likely in a topping phase, but if the high volume spike is a preliminary indicator of this process, there are many more months to go.

If a final top is in but not confirmed, there are still a few months of activity that could keep the “dollar” at current to slightly higher price levels as distribution gets more underway.

Either way, it is too soon to declare the “dollar” is dead, for it is not.

DX-W-9-May-15

DX-W-9-May-15

 

The best and most informative information comes from the manner in which price responds to an obvious support or resistance level, this one at support. If support is to hold, a rally should ensue, soon. If support is to fail, price will continue to hug the 94 level prior to giving way, if it does not simply give way, sooner. In all events, the way in which price reacts will be an important clue for direction and possible trend change.

DX-D-9-May-15

DX-D-9-May-15

Our old friend, Bearish Spacing is being reintroduced as a reminder of why this event can be significant information. It began to form in August of 2013. It is now May 2015, and price has yet to challenge that bearish indicator, and in fact has continued lower. The thinner horizontal lines are simply additional potential layers of resistance for silver.

SI-W-9-May-15

SI-W-9-May-15

So many waste time trying to figure out in which direction price will move from the middle of a TR [Trading Range]. It is almost always an effort in futility, unless price has shown some obvious activity that will lead to a more apparent directional move. We do not see any, or at least one that holds a lot of promise, either way.

SI-D-9-May-15

SI-D-9-May-15

The weekly silver analysis applies to gold, as well. Charts are charts. The bearish story has not yet ended.

GC-W-9-May-15

GC-W-9-May-15

For as much as we enjoy reading charts, this one is tedious.

US National Debt: We know the progression of debt – it increases, or it increases rapidly. Since 1913 the official US national debt has increased about 9% per year – every year. Has the economy increased 9% per year? Of course not! And that is why, in truly simple terms, prices rise. The same is largely true in the UK, Europe, and Japan. It is the same old story throughout the history of other fiat currency experiments.

Prices rise for consumer goods and for gold, stocks, and almost everything else (gasoline no longer costs 15 cents nor coffee 5 cents per cup).

But you might argue that the population increased and that was why debt increased. Not so! Examine the (linear scale) graph below. It shows the US national debt divided by population and compares it to the SUM of gold and the S&P 500 Index for 40 years.

national_debt_1975_april_2015

national_debt_1975_april_2015

This is the same data shown on a log scale graph. Debt and prices increase together exponentially.

national_debt_gold_stocks_1975_april_2015

national_debt_gold_stocks_1975_april_2015

Why use the Sum of gold prices plus the S&P 500 Index? Gold prices and the S&P move higher together in the long term because the dollar buys less each decade. But in the short term they often move in opposite directions. Gold represents real assets while the S&P represents paper assets so the Sum relates well to population adjusted national debt. Examine the following log scale graph of monthly prices.

gold_plus_stocks_1975_april_2015

gold_plus_stocks_1975_april_2015

SUMMARY:

SPECULATION

MORE OF THE SAME SCENARIO

CHICKENS COME HOME TO ROOST SCENARIO

HYPERINFLATIONARY SCENARIO for 2020

CONCLUSIONS REGARDING ALL SCENARIOS

History and current actions justify the expectation that governments and central banks will increase debt, devalue fiat currencies, and thereby force gold and silver prices much higher.
Convert digital dollars, yen, pounds, and euros into gold and silver while you can. Current “on sale” prices will not last much longer.
Look for similar analysis regarding silver prices in 2020 in an upcoming article.

Gold Silver Worlds has received the minutes of the latest Advisory Board meeting by Incrementum Liechtenstein and is pleased to summarize the key insights that were discussed by a panel of experts. Incrementum had launched the “Austrian Economics Golden Opportunities Fund,” a fund that takes investment positions based on the level of inflation based on their proprietary “Incrementum Inflation Signal.” Ronald Stoeferle, author of In Gold We Trust, is the managing partner along with Mark Valek.

The Advisory Board gathers once per quarter to discuss the economic and financial outlook. Respected people like Jim Rickards and Heinz Blasnik are part of the panel.

The detailed transcript of the Advisory Board is embedded below. We encourage serious market students to thoroughly read the document as it contains wealth of insights. We picked out 25 insights related to the state of the monetary system, economy and markets.

Before looking into the details, it should be noted that the Incrementum Inflation Signal is “neutral” at this point. This is pretty unusual, based on the calibration of the model, but it quite accurately represents the tug-of-war between inflation and deflation.

incrementum_inflation_april_2015

incrementum_inflation_april_2015

What does this suggest for precious metals investors? Mark Valek comments on that question: “Given this ongoing neutral signal we recently adopted a “Barbell strategy” for both scenarios: rising inflation and also rising deflation. On the deflation side, it was plain vanilla going long treasuries. On the inflation side, we were long gold miners and complimented this with some straddles on the SLV Silver ETF. The volatility on silver had been quite low before volatility spiked after the Fed Meeting – that was quite a successful position. We started to accumulate some of the miners – midMarch, before the Fed Meeting. Right now, we are tending towards rising inflation, but we are still positioned with this Barbell strategy. This has started to pay off since the end of March.”

The monetary system

I believe that all the economies in the world are on very shaky ground. The central bank experiment, which has been going on since 2008, is a very, very big mistake. In the end, this is going to lead to the implementation of another monetary architecture – only I fear it will be another type of fiat money system, probably an even more centralized one than is now in place. (by Heinz Blasnik)

No monetary authority can do anything to get us out of this mess. We need structural changes, not monetary stimulus. (by Jim Rickards)

Asian Infrastructure Investment Bank: what it really means is that China wants to be part of the old boys club, which is the IMF. (by Jim R.)

The big guys – United States, Europe and China – do not really think of gold in terms of the dollar and price. They think about gold in terms of quantity. What matters is the weight, how much gold you actually have, how much gold is available when they restructure the national monetary system. (by Jim R.)

None of these [the growth phenomena of recent years] are normal cyclical recoveries! All these are the temporary effect of a cheap currency, but no one has come up with a solution to the global problem. The only solution is structural reform, which we are not seeing; the other solution is to merge all the currencies into a single global currency and then print a lot of that. (by Jim R.)

In November 2011, the year-on-year rate of growth of money supply was 14.8%, and then by October 2013 it had fallen to 5.8%. This is the reason for the sharp fall in the growth momentum that we are witnessing. (by Frank Shostak)

Printing money by itself, it does not matter what kind of Quantitative Easing, is not going to fix the issue if we are in a depression; it will make things much worse. (by Frank S.)

I think crude oil and gold look like quite good bets at the moment, especially the former. (by Zac Bharucha)

The economy

The ECB has begun with its Quantitative Easing program; money supply is growing in Europe already above 11% annualized. Hence, there is a big push in money supply growth in Europe and we already see that economic data in Europe is beginning to improve. (by Heinz B.)

We have seen economic data weakening across the board in recent months. This is some indication that the economy – especially the US economy – is weakening, which I attribute to a lagged effect of a slow-down in money supply growth that happened a while ago. (by Heinz B.)

What I would watch in terms of data are certain components of the ISM, for instance the new orders component. If the reading falls below the 50-mark, then you know the danger of a recession is elevated. (by Heinz B.)

The Fed has the worst record when it comes to forecasts. All the way through the last 6 years, they have been wrong each year with their growth forecasts by a huge magnitude. So they are relying on forecasts that are always wrong. But they still trust those numbers. (by Jim R.)

The defining characteristic of a depression is growth that is significantly below potential. So if potential is 3 or 3.5% in the long run and 5% in the short run and your actual growth is 2%, this is a depression from my point of view. (by Jim R.)

We are now at the point where the United States is bearing the entire cost of global adjustment through the strong Dollar. The Dollar cannot get much stronger, technically it can, but it probably cannot without putting the US into a recession. The Euro is probably at its lowest. (by Jim R.)

The biggest bubble in the world right now is the Shanghai Stock Exchange; when that bursts, it is going to be one of the biggest collapses in the world. (by Jim R.)

The momentum of price inflation will weaken further, such that we could end up with a severe price deflation by December this year. (by Frank S.)

Next year, we will probably have a sudden bounce in economic growth again, based on the current structure of the money supply. (by Frank S.)

I am surprised that the S&P is still holding – it would not surprise me to see it plunge. (by Frank S.)

Japan and Germany have enjoyed better progress due to their courses of trashing their currencies. (by Zac B.)

The negative effects of the declining oil price will be visible in the data before the positive effect on oil consumers. (by Heinz B.)

Interest rates

Right now the Fed Funds Future Market is pricing a rate increase for December. It would not take much to push this out to 2016. If they should actually raise rates in September – which is not my assumption – this could be a disaster, as they would be hiking into weakness. (by Jim R.)

Nobody thinks rates are going to rocket up here. I think we all appreciate that something structurally has changed since this last crash 2007/2008. (by Zac B.)

Asian state of affairs

Entrepreneurs in South East Asia are pretty confident that the future is theirs, but they do at the same time feel that they are falling short in identifying entrepreneurial opportunities. They lack creativity and culture in a certain sense. (by Rahim T.)

I am a bit doubtful about China’s economic expansion strategy – labor productivity is generally very low in Laos and Cambodia and those countries that are not already even part of the Chinese-driven bubble economy. (by Rahim T.)

In contrast to South East Asia: We have seen a lot of diversity in the area of the Alps, and this diversity has led to quite a large cultural capital, which still has survived in crafts and quite a lot of cultural knowledge is embedded. (by Rahim T.)