|Silver And The Shift To Measuring Wealth In Ounces Instead Of Dollars
The debt-based monetary system
creates an illusion of wealth. It allows for claims on real goods to
significantly exceed the actual amount of real goods. You then have a
number of people believing they have wealth, since they have claims
(pieces of paper or tokens) showing that they have these real assets,
whereas, in reality, if everyone was to claim the real goods, there
would not be enough to go around.
The high debt levels, in some way, represent the
extent to which there are more claims than the actual underlying real
During the period of credit extension – that has
been for at least 80 years – most businesses are set up to take
advantage of this system. The system allows for an easier way to
increase wealth (illusionary), since only claims on real assets need to
be increased, instead of the actual real assets.
As you come to the end of the credit extension
cycle, most businesses are dependent on this credit extension, either
directly or indirectly. When the debts become too heavy to bear (no one
knows the day or the hour, but there are signs), the debt bubble will
burst, and over time eliminate all those business opportunities brought
about by the debt-based system, as well as the businesses dependent on
When this process reverses, there is little
opportunity to trade the claim on an asset instead of the actual asset,
and also few opportunities to increase the amount of real assets.
Furthermore, instead of measuring wealth in terms of claims on real
assets (as is now the case), people are more likely to measure wealth
in terms of real assets, especially gold.
Today, after a consistent period of credit
extension, we have exactly the situation where most businesses are
dependent on the debt-based monetary system. I believe we are moving
past the point, where any benefit can be achieved from credit
extension; therefore, we have the ideal set up for a massive collapse
in the world economy.
The increase in the gold price, in real terms, is
the clearest signal that it is becoming more and more difficult to
increase real wealth (wealth in gold ounces). It will become even more
difficult as the economic decline sets in; eliminating businesses very
dependent on the debt-based monetary system. Financial institutions
like banks would be at the top of this list, but will not be the only
The shift from measuring wealth in terms of paper
claims (dollars) to gold ounces, and the limited means to increase gold
ounces, will change the business and investment world significantly,
and will create a massive rush into those opportunities that increase
gold ounces. The shift is already evident, with some countries possibly
trading oil for gold.
Currently, in my opinion, silver bullion and gold
miners present some of the best opportunities to increase the amount of
real wealth as measured in gold ounces.
Both, silver bullion and gold miners are still
trading lower or at its 1980 high, and also at relatively historic lows
against gold. Silver offers the best opportunity, at the moment, since
it offers less risk than shares in gold miners. However, as the
gold/silver ratio falls (which is expected), gold miners will become
more and more attractive.
Silver Chart Update:
Below, is a 6 year silver chart:
Silver is making its intention to pass the $50
level clear. It is continuing in a pattern similar to gold did, before
it cleared its 1980 high (see here).
The next important obstacle is to get out of the flag (at about $35
currently). If it continues the pattern that gold made, then it will
blast past $50.
For more guidance on silver and gold miners, I have prepared a Long-term Silver Fractal Report, as well as a Gold Mining Fractal Analysis Report. You are also welcome to consider subscribing to my free newsletter at my website
Warm regards and God bless,