Silver: Will it Crater or Explode Higher?

Silver is gold’s manic depressive cousin.  Silver typically (although sometimes with multi-week or month delay) trends in the same direction as gold, albeit in much more dramatic fashion.  It screams higher when times are good.  Silver also drives owners mad when its price drops seemingly faster and harder than any other asset price.

The turbulence is enough to convince most people that owning silver is a fool’s game.  Who would want to hold something that is always falling so fast and furious in value?  And yet, can you name any asset that has increased as much in price over the last decade?  This is the wild bull ride we are on in silver.  The insanity that comes along with manic price drops is enough to convince the bravest of souls that the 500% + gains achieved over the last decade aren’t worth it.  And more importantly, to constantly question whether the good times are gone.

The fundamental question you have to ask yourself is…Have the reasons that you believe silver is going much higher been sufficiently “fixed” or dealt with?

The answer is a resounding NO.

Silver has been real money for the vast majority of human history.  One of the reasons this is so is because the quantity of it is limited.  Thus, it is “precious”.

Green pieces of paper with dead US Presidents on them are multiplying themselves at a very rapid pace thanks to the combined efforts of presidents, Congress, & the Federal Reserve.  As long as the money supply keeps rising and the debt keeps rising thanks to a gargantuan deficit each year, you should feel safe and secure that the value of your silver in USD terms will rise.

Since the USD is the world reserve currency, the above facts are probably enough to make the value of silver in pretty much every currency in the world rise as well.  However, because Europe, Japan, & Britain are playing the same game as the US, they simply add more fuel to a very hot fire.  Prices will rise far higher than most people believe possible in the coming year.

We feel quite certain of that.  What’s much more dangerous to predict is that the price of silver will be higher by the end of 2012 than it was to begin.  Last year we predicted higher prices and we saw the price practically double over the course of the year, only to get kicked in the shins to end the year down 9%.  A month later, the price was up 20% from there.

Where will the price in USD be on December 31st, 2012?  We really have no idea.

It is quite possible that a major crash in most every market will occur this year.  As a matter of fact, we believe this is a very large possibility.  If this were to happen, it is quite possible that the price of silver will nosedive along with everything else.  It wouldn’t be completely shocking to see the price fall in half from here.  Silver is like that.

However, you must also understand that the exchange traded price of silver represents a “paper” price of silver.  It has nothing to do with the supply and demand of actual silver.  The bullion banks push the price of this tiny market around at will by maintaining a position size that dwarfs the rest of the market.  This is all very illegal as even a member (Bart Chilton) of the governing body over the issues has stated, but it seems very clear that the western governments are involved and this case will never actually amount to anything.  We’ve covered the facts and proof of this in great detail over the last couple years.  If you’re interested, check out the Economic Update Videos that focuses on gold and silver.

Try as we might to avoid talking about this issue, we can’t seem to help ourselves and will get deeper into it on Monday as well as break down a couple potential outcomes coming and what it means to you and your family.

This is the 17th post in a series.  You should read the initial thoughts on these forecasts here. and the Overall Prediction Page here.  Here are the rest of the posts:  3) Ben Bernanke’s Dollar Devaluation Plan, 4) The Coming US Dollar Devaluation, 5) Stock Market Volatility, & 6) Stocks to Fall in 2012, 7) The European Crises, & 8) European Options, 9) European Prediction, 10) Recession in Japan, 11) Japanese Yen Crash,12) War with Iran, 13) Jewish Perspective on Iran, 14) Commodities to End 2012 Lower, 15) Where Will Gold Go Next?, & 16) Gold, Should you Wait?

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