Really – it depends on your time frame. Why? Consider your “2% inflation” yearly compounding over 100 years where gold was $20 a hundred years ago, now it is touching on 100x that. In another 100 years, could gold be 100x higher than now? What about 600 years out?
The ultimate problem here with time duration is trying to put gold and silver in the lenses of the USD. Why? Think about if the USD still existed 400 years from now, and silver went up 100x each of those 100 years. You are looking at something like $2T an ounce. But, if a gallon of gas is $200B, then you can say that an ounce of silver can buy 10 gallons of gas.
Meaning – I think we can look at silver in 2 ways:
- Nominal dollar value based on today’s reality with supply and demand
- Value relative to other things – this gets complicated and deals with a hyperinflation
Nominal dollar value
I just heard a Clif High clip from on Greg Hunter, and he talks about how much silver could go up in a day. A dollar a day, then $5 a day, then $20 a day – you get the point. There are limits how much something can go up or down in a day, and I believe at some point, yes, we can hit the limit up.
I’ve been writing a lot lately about Ted Butler’s 800m oz short concept. I don’t think it’s that much – I think it’s closer to 300-400m. He derived that number by dividing the OCC derivatives by the price of silver to get 800. I showed in my last writing on this how my math came out to 792m, so I can see where he gets the 800m. I’ll leave this here, as I want to move on….
What the contention is, of sorts, is that over the last few years, we have had significant deficits between supply and demand. The Silver Institute charts are impressive. But, they fall short of obvious signs of short selling into a market to push price down. Meaning – there’s more supply hitting the market than they are tracking, and it appears to be a big entity with a big pile of metal short selling into price rises to flood the market with metals to dash any hopes of a rally. The idea, strategically, is to get investors discouraged from investing by smashing the price – at which the investment demand every year falls and while the industrial demand increases, you find a balance again without all of those pesky investors. Haven’t they heard that silver isn’t money anymore?
I believe that game is coming to an end, and with this, we have a reckoning coming. My best guess is there’s a 20-30m oz per month deficit not showing up on that SI report. Could be much more investment demand than they want to admit to, more EV usage, more solar usage – I don’t know, but if you were selling a massive pile short into these markets, you would see silver collapse, and not hold a channel. Meaning – all of the silver short sold into the system is being absorbed. That should be a rally cry for us and scare the shit out of them.
There are some price points here that is of interest….
- $30 – my immediate psychological target to break out of this sideways trading channel. Once breached, I can see some selling pressure between $35-$50, but FOMO may be in full effect.
- $50 – this is your psychological number, and as we get closer to $50, all of the bag holders that are left from the 2011 run up who bought over $30 who have been waiting to break even may be ditching. However, many who bought on the way down may see this moving up and actually acquire more. I believe at $50 you start to see lots of tea sets, silverware sets, and jewelry sold. Problem is, refineries seem to have a capacity somewhere around 200m oz per year. Sustained prices over $50 may cook for 1-2 years and refineries may be able to boost production from 200-300m oz or the like. More mining supply could come to market as mines that are profitable over $30-$40 start coming online.
- $75 – to me, this push is pure demand not being met by supply, as the EV/solar panel demand along with increasing investment demand cannot be met. However, this number is important because this is the number where recycling can tap into 27b oz of silver stuck in motherboards, electronics, medical devices, cars, etc. Now, at this level, you may see some recycling companies start to be profitable, but scale is an issue. Who is going to spend millions to build these unless prices are sustained? To me, this is important because if we start to see $100-$200 silver, these companies can print money and will sell back into the markets – but could be 5-10 years out in scaling to make a difference with the markets.
- $100 – This seems like a price, if sustained, really starts to get that 25b jewelry/tea set/silverware sets brought to market – but refining limits will have to be greatly expanded. Some mines like Silver Elephant who are “good at $40 silver” may come online after 5-10 years of exploration and higher prices. Discovery and Bear Creek are printing money.
- $200 – this is distressed, as we may have seen a lot of inflation as well over 10 years. Mine supply at this point may be trending down. From 850m now to maybe 650m then due to mine supplies being exhausted. While we have now boosted refinery scrap production AND introduced recycling, we are continuing to find that with EVs, solar, and other electronics, we still have several hundred million ounce deficits per year. At this point, the COMEX registered and eligible have barely any left and it’s very hard to find. By now, a lot have sold out of ETFs for profit and ETFs have sold back silver into the market. This is potentially 2031.
To me, the highest I can really go using everything I can see based on the dollar is a $200-$300 range. Remember, there are 27b oz in silver trapped in products and 25b in tea sets, jewelry, and silverware sets. Even if we have a deficit of 200-300m per year, you are looking at 15-20 years to run all of that down.
Relative value to other things
Where it REALLY gets interesting is this. Now we start talking stupid numbers 50 years from now.
If silver is found in the crust at 7.5:4, it’s nearly 2:1. At THIS point, we have a 75:1 or so gold to silver ratio. If we have found a lot of the easy silver, it would then stand to reason we need to go a lot deeper for silver, and run a lot more pay to get the ounces we need. This means that the cost to extract silver with $20 or so at Discovery will be a bargain compared to the $40 with silver elephant in Ethiopia. Or, perhaps we find silver in my county, but it’s only 30 million ounces, but costs $200 to mine. Over time, these smaller and more costly deposits WILL be found, and those will be the only sources of metals.
Think about 1971. Gold was $35 an ounce. That means gold miners were making a profit at $35 an ounce, or else they wouldn’t be mining it. Let that sink in. Today most miners are looking at a cost of maybe $1000-$1100 for an ounce of gold. Meaning – all of the easy gold was found, and then they had to go deeper into the ground. It costs more to mine, and grades were lower. Currently now, you are looking at miners to get the green light on .5 gpt gold for a strip mine. That’s about $30 in revenue to run a ton of ore.
Now, most gold ever mined is above ground in vaults or jewelry. Something like 97%. With silver, you are looking at only about 5% sitting in investment grade, where most is in electronics, jewelry, etc. And, the demand continues to outpace new supply. At some point, deficits will need to be trimmed with recycling/scrap – how many billions of ounces are in a dump, and at what price can this be profitable – or even stupid profitable?
But there’s an inflection point. Where grades hit a number and lack of mines is recognized, and there is potentially a 10 year lag before mine supplies can even hope to begin to catch up. At issue is about the 2:1 existence in the earth’s crust to gold. If it is 80:1 now (simple math here) and it eventually will get to 2:1, that is suggesting silver may have a 40x performance to gold in the next 10-30 years. In 1971, if you told someone gold would be 60x higher in 50 years, you might have gotten funny looks, considering it didn’t even double in the previous 50 years. I think we’re at that point with silver, where you could think of silver now in like a 1971 scenario for gold – where over 50 years it goes up 60x. Assume for now we are dealing with a $25 silver price, you are looking at $1250 silver in that 10-50 year time frame.
Now, trying to value this is dollars 30-50 years out is somewhat silly due to how we might have Zimbabwe like numbers printed by then. But I’m a very big on relative values.
Let’s think about how the stock market is important today. Big tech!! Wow, throw money at the markets and everyone gets rich!! Tesla valued at 350x P/E ratio. If you look at the Tesla to silver ratio, you might be looking at what – 20:1?
I believe that over the next 5-10 years, commodities are going to take the hell over, from everything. You have the silver ore grade issue….at the same time you have a lower amount of development in petroleum. all of these idiots want to turn off our power generation before we have the next generation capable of taking over. Creating artificial energy shortages – which can ONLY be fixed by throwing trillions into “green” (because it is not viable, of course, to spend money on oil, nat gas, or coal).
The common themes you can see amongst all commodities:
- Supply chains are broken. Ore grades will be getting more and more strained the more we pull from earth. This costs more in energy.
- Under development in commodities happened as investment capital chased alpha in over-valued stock markets with manipulated interest rates
- Globalization may be overrun by countries trying to secure their own commodities
- Energy shortages may become more widespread, leading to much higher costs for commodities
- Wars may be fought over resources as they used to be.
- Long term structural supply issues. We do not have enough commodities NOW. Rare earths may be needed to advance global tech. Copper needed for electrification of Africa and other places. Silver needed for solar and EVs. Lithium. Nickel. Cobalt. Uranium. Oil. All of these items may have a palladium moment inside of 5-10 years given they are all managed prices.
- War and civil unrest happens when food (commodity) prices rise too much, relative to income. War may happen between nations for valuable resources. Meaning – countries rich with resources may be targets for those without resources. Think of expansionism into Africa with rigging of elections, wars, and fights to control these untapped resources.
If I am correct, and commodities may become much more highly valued relative to other things (like the stock markets and real estate) – it then stands to reason over a given amount of time this then leads to global strife as well as domestic issues. My bet is local economies will begin to start growing now as supply chains sourcing from other nations can become a lot more in danger. Think of Russia with Germany and natural gas. If Germany had their own power/heat source then they would not be at the mercy of Russia turning off their nat gas.
The Arab spring apparently was launched when food prices became more than 35% of incomes. With nat gas/fertilizer issues, it is prudent to think that corn, soy, and just about every other food-based commodity is set to launch into orbit. So my guess is that commodities will gain a lot of value, relative to other things, and quickly.
I like to talk about how in 1964, a gallon of gas cost two silver dimes. As 95% of you reading this know, the silver was removed for 1965. So today, if you took those same two silver dimes to a coin shop it would buy you…a gallon of gas. The nominal value of the price of silver AND gas are higher – but their relative values remain – relatively unchanged over 60 years. You see fluctuations in values, but there are ebbs and flows.
When you look at the Dow to gold ratio, you can see it touched 1:1 in 1980.
So how will it fare to gold?
Right now, it’s on the upper band of “buy silver” or perhaps selling gold to buy silver. When it gets in the green, people may buy 1:1. When it’s on the lower end, you are selling silver to buy gold.
Lobo Tiggre talked about gold and the blockchain – how he feels silver won’t be money anymore. He might be right, but people like me may always have silver. I feel, like him, that eventually you will have a Russia getting banned on Swift, and they simply take payment in gold over the blockchain. I am a heavy investor in Kinesis – and a Russia or the like might have gold in vaults all over the world. Companies like Kinesis can act as a neutral disinterested 3rd party as a sort of Visa or Mastercard. For example, Russia and Germany may have gold in a Kinesis vault. If Germany wants gas, they pay in KAU. Russia can then hold the KAU and buy pork from China in KAU, or convert it back to the ruble.
When nation states realize this framework already exists, they may start to use it with trial balloons to bypass SWIFT. So with China and the BRICS+16 + a ton of African countries. I know many like Katusa and Johnson are big on the dollar – but my personal belief is that many countries want to get out of our shadow and trade without dollars. They may actually use dollars to buy KAU to deplete their foreign reserves.
The question then is…what value does gold get to? If you look above, you can see that gold will trade relative to other things. Here’s how this is going to play out….
- Commodities will trade stronger than equities/real estate.
- Among commodities, many of these will shoot higher in the next 12-24 months based on real problems with inflation. I’m aware these indexes are rather high right now, but I’m talking a relative performance will have these moon. That could mean real estate/stocks crash OR commodities moon and RE/stocks stay the same.
- IF gold becomes international money again, which I see as inevitable, it could re-price gold in USD. Meaning, we now see gold as $1800 per ounce. However, if we take the 8800 tons we have, supposedly, and take that against the $30T in debt we have, at a 1:1 backing, you are looking at…282,920,000 ozT of gold. And this math then comes out at $106,037 per ounce. Meaning, if you have foreign reserves in USD, they all went to shit in a second to buy gold. If you are a stacker at home and want to buy an ounce of gold, forget it. IF you are a stacker who has gold, you just made a fortune.
- In 1980, when we could have paid off our debt in gold, silver was at that time about 16:1. Now, the thinking here is if gold suddenly is re-rated higher to match our existing debt, other things will start to revert to gold. Let that really, really sink in. Day 1, gold is $106,000. Silver is $40. Now, let’s look above and see silver’s importance. The VALUE of silver, will be RELATIVE TO GOLD, not the USD. This will also mean all kinds of commodities like oil, soy, corn, hogs, everything gets REPRICED to GOLD. The IMMEDIATE solution here is to ONLY have a 10% backing to gold – and that still may not make the rest of the world happy with us. This would put gold at perhaps $10,600. Or about 6x what it is today. Instantly, things that make things may go up by 6x within months. Again – that also means everything else may EVENTUALLY have a 6x. IF that doesn’t work, you are looking at a 60x re-pricing of gold. And can you imagine everything going up 60x? No. That’s where you get your hyper inflation, son. Our dollar becomes dog shit within moments of this.
With gold, remember Weimar? If gold gets repriced in dollars, at some point – everything else will reprice. Let’s say it is $106,000 because everyone decided the US cannot be trusted with a fractional reserve.
But…Nate, the world’s reserve currency cannot do a hyper inflation? Right – I imagine a day where gold is the money of kings again – as I mentioned I think China, Russia, and the BRICS+16 are looking in that direction. The blockchain is a way of buying things with it, and you can slice up an ounce of gold by millions of times. No one is good with fractions, so they might make 1/10,000,000th of an ounce a “jewel”. That would be about a penny today. So a loaf of bread might be 300 jewels. Or, 3 USD. Rather than looking at your account in fractions of an ounce of gold – you would see the integer of jewels/USD.
Now, assume we are forced to trade in gold – I believe the way of doing this would be to look at national debt and gold and divide it out.
IF all things then re-rate to the value of gold, you can see that the GSR will snap back as well. At 75:1, like today, you are looking at a price of: $1,413 per oz silver. But remember, your house may also go up a ton.
If we are looking at a 50 year horizon, and we have silver move like gold did, you can imagine how hard it is to find gold AND silver in the ground, and my guess is that since the easy silver was found, and it’s 2:1 in the crust, AND silver will be used for a highly electric future AND most of the dumps have been mined with recycling by then – it’s possible we have a $53,000 silver price at 2:1.
So – I can tell you that while gold may end up being divisible by 10,000,000 times, you can see how silver could potentially be divided by 5,000,000 times, so 1/5,000,000th of an ounce is a jewel. Your bank account will be in jewels, and behind it you will have the credits of gold and silver.
I can sit here with a straight face and tell you a Palladium for silver could happen literally any month now to take us over $100. While there are some low cost silver primary miners, any real conversation about catching up with the deficit from mining needs a $50 discussion for NOW to get miners all of the exploration and development they need to get these mines online in 7-15 years. Problem is, that’s not how the futures work. The futures may continue to put pressure on silver – as long as this hoard of a leased pile is out there. Think about it – IF there is a pile of 100-150m oz NOW willing to sell at this price, the futures is doing it’s job. But, this all breaks if there is a structural deficit – which we can see in the shadows with short selling/leasing.
I have shown how you can logically hit a $150-$200 price inside of a decade taking into account the recycling, scrap, and new mines coming online. But more important, I feel silver will always be looked at as money as well as industrial, and as bad economic times come at the end of the 4th turning, many investors will be looking for real money and be priced out of gold. WITH the blockchain, it is then possible to revert to a gold and silver standard. Furthermore, our usage of SWIFT to punish enemies has built a framework in which our enemies would fight back economically. Like all great civilizations, it is possible this empire falls just how the Romans did.
When you are asking about prices RELATIVE to things – perhaps you need to broaden your time horizons to 40 or 50 years. You can make the argument we won’t fall, but in that scenario, the USD is no longer the world’s reserve currency, as gold is now able to be used for this to settle debts among nations. I came up with stupid high gold prices, but this gets far higher if you then discuss unfunded liabilities. What we have seen is our country go off of a gold standard, and then spend us into an eventual collapse of currency. Gold has increased in value 60x since 1971. Or rather, the currency has lost that much spending power.
With inflation now taking shape here in the US, and many crypto people understanding sound money, it will not be terribly long before the crypto people then understand and back gold/silver on a blockchain – and demand for these will increase massively. If you liked Bitcoin’s move from $100 to $65,000 – I have some ounces of silver and gold you can buy on the blockchain that may move like that in the coming years.
So I may have come up with stupid silver prices, but all I did was value it against gold, as found in the earth’s crust based off of the $30T in debt – which promises to be super low if we talk about the unfunded liabilities. Meaning – silver could be perhaps even 5x from there at $250,000 per ounce.
While all of this sounds like stupid crazy talk, this is the STRUCTURE of a hyper inflation all of you need to understand. Why? Because that $250,000 per ounce for silver may actually buy about 50 gallons of gas then.
If you are like me, and can see the ground work for a hyper inflation to eventually happen, you would take your worthless green slips of paper and buy MONEY with them.
While commodities are high in RSI right now, think about the CONCEPT of an ounce of gold eventually being re-priced to service our debt IF our enemies all turn in their bonds AND spend US Dollars to buy gold over months. Think about the USD cratering and gold doing a moon shot?
Then consider this…perhaps the 8800 tons of gold I used for my calculations no longer exists and they only have 1100 tons. Remember, there has been no audit of our gold since 1954. Take that gold price and times it by 8 – which takes you to $2m per ounce of silver. Unfunded liabilities? Sorry, we are bankrupt. You have no social security, medicare/medicaid, military pension or anything.
The reality is many people in my country take their next 1,000 meals for granted. When you grow up poor, you know you are always worried about your next meal. That doesn’t change when you are an adult. You always have that mind set. And, if you can, you buy silver, gold, and miners – along with freezers full of food to protect yourself against potential challenging times ahead.
All of this last part sounds like silly talk because we would see $2m buy a massive estate today by me. But you have to look at that dollar amount and its PURCHASING POWER in that reality. Remember, gold and silver have relationships to THINGS – and these things will reprice to gold. So $2m sounds hilarious, but then you look at Venezuela, once one of the richest nations on earth that collapsed under socialism. Is it a stretch to think our enemies will not attack our financial system and all of them spend dollars to buy things from us, flooding us with inflation all at once to collapse our currency?
Don’t take shit for granted. Our tanks, planes, soldiers are the best in the world. But without a bank to fund them, they go the way of the Romans. Stock up. Buy silver.
Short term: $100 is rational
10-50 years: $2m possible in a hyper inflation scenario where enemies attack our financial system and go to a gold-backed transaction system.