I've recently used the line (on several occasions) that "all roads lead to higher gold and silver prices".

However, as the saying goes "talk is cheap."



So to ILLUSTRATE this point I'm issuing the following challenge to any/all readers: try to INVENT any "bearish" scenario you can imagine for gold and silver - and then I'll explain to you how and why that scenario is actually "bullish" when viewed over the longer term.

Note that there is one obvious qualification here: while you're free to choose highly IMPROBABLE scenarios (otherwise this wouldn't be any fun) you can't invent IMPOSSIBLE ones.

So for instance any scenario which involves the U.S. government "balancing its budget" or "backing the dollar with gold" are both mathematically IMPOSSIBLE. John Williams has already crunched the numbers that no COMBINATION of tax increases and spending cuts could ever balance the U.S. budget.

Similarly, with total gold stockpiles in the WORLD worth approximately $6 trillion, and total U.S. dollar-denominated debts ALREADY above $15 TRILLION, there is no rational way for the U.S. to ever acquire enough gold to back the dollar.

But anything which is merely improbable is fair game - as improbable scenarios remains bound by the constraints of reality.

"All roads lead to higher gold and silver prices" - and I'm prepared to stand behind those words.



P.S. Note that your scenarios are free to include acts of manipulation, although once again such scenarios must at least be POSSIBLE...

Jeff,

I gave a true effort. But every "bear" action had a opposite more positive "bullish" reaction.

Record production, and "because of volatility a slow down of demand in the market has record supply" (read in article). Followed bye Chinas purchasing gold miners and how much gold they need long term, tactics they are using to not cause the price to sky rocket. So, demand is there. That exceeds supply.

I did come across (someone new to me) the Gary Shilling "Chart by Chart", and then ended up somewhere called the ETF Daily News GDXJ and some writer called Jeff Nielson
I gave up after reading his commentary.

No "advancements in Dentistry drops gold demand" jokes.

The "bulls" will be coming soon enough.

Earl

Yes Earl, this can be a good mental exercise for precious metals investors - as to construct your scenario you must (hopefully) reason things through first.

This is GREAT for helping people put aside their fears, as "fear of the unknown" is one of the weaknesses the banksters like to prey upon the most. Thus by inventing different scenarios in one's mind - and working through ALL the dynamics involved - it should start to look to others (as well) that "all roads lead to higher gold and silver prices."

Ok, let me try. I hope I do not misunderstand you.

The banksters, with their trillions, buy the mines and then "force" the governments to confiscate the gold/silver.

Followed by the crash of the market. This would effective destroy many people's finances.

Severe drought and famine hit the world, world population drops by 80%

Now the value of gold drops, because the only thing of real value is food.

The way I have been seeing this is, even though the USD and gold are disconnected they seem to have a very special relationship. It's almost like a couple that have seperated that still need to work together in regards to the kids. As long as the dollar maintains strength, or should I say the illusion of strength then golds value is kept moderately in check.

So consider this, what if the US uses some other form of wealth to back a new and improved dollar? Germany did this pre WWII by mortgaging their land to back the new Mark, did they not? America still has a lot of resources, land, oil, softwood, food, water and manufacturing capability to name a few. If they can somehow intergrate these resources with the dollar to maintian its strength, which is what they want, this would repress the price of gold, wouldn't it? Looking back at Germany, they were broke and they built enough strength to go to war with it, they were a powerhouse of the day.

I look forward to you shooting me down in flames Jeff.

debsyl wrote:
Ok, let me try. I hope I do not misunderstand you.

The banksters, with their trillions, buy the mines and then "force" the governments to confiscate the gold/silver.

Followed by the crash of the market. This would effective destroy many people's finances.

OK, let me roll up my sleeves and tackle some of these.

As readers know, there is no more vocal commentator than myself when it comes to WARNING people about the dangers of confiscation - of potentially ANY asset. Understand that there is no possible way to EVER plan a "perfect strategy" which will not only take into account all legitimate scenarios, but also protect someome from acts of crime - by their own government.

This is why I tell people to hold gold AND silver. Hold bullion AND miners. Make it difficult for our thieving, Fascist governments to steal EVERYTHING. However, in the case of the specific scenario you described, fortunately it's so extreme that I would label it "impossible".

Is it POSSIBLE that the banksters could buy up all the miners? Yes. They have enough paper. They have destroyed the market caps of these companies enough to do so. BUT if the bankers have taken over all SUPPLY then where would be the possible justification for CONFISCATION?

In other words of you're already in control of all new SUPPLY then where is the need to TAKE all existing inventories? It's virtually impossible to conceive of any "justification" for a scenario that extreme. Indeed if our government were going to steal all our bullion and all our mining stocks that same government would likely be stealing ALL our stocks - and perhaps our land too.

Thus the only "defense" against extreme Fascism is to GET RID OF THE FASCISTS.

This scenario WOULD be more realistic if it discussed confiscating all our bullion OR confiscating all the miners. And THAT scenario strongly supports my argument that we should "diversify" between bullion and miners.

rroush wrote:
Severe drought and famine hit the world, world population drops by 80%

Now the value of gold drops, because the only thing of real value is food.

Rroush full marks for creativity, but fortunately such a scenario would NOT be as bleak for gold and silver as you suggest. To explain this we must flesh-out this scenario a bit.

First of all (as with Debsyl's scenario) the majority of this is at least plausible. Indeed, I have been PREDICTING some major food catastrophe in our future. This would come from a combination of the banksters GENERALLY destroying all of our commodity markets, while (specifically) the U.S. undercuts global agriculture production by DUMPING endless $BILLIONS of heavily-subsidized products into markets all over the world.

However, where your scenario becomes unrealistic is when we look at RELATIVE PRICES. You are quite correct that RELATIVE TO THE PRICE OF FOOD that the price of bullion could fall. However that is NOT the scenario you described.

In order for the "price" of gold and silver to crash (priced in PAPER), then the price of gold and silver would have to fall relative to the value of paper. However there is absolutely no reason - indeed no possibility - that gold and silver would fall VERSUS PAPER in that scenario.

Ultimately this is just a specific EXAMPLE of a "crash scenario". In any food catastrophe of that nature it would undoubtedly lead to some severe global recession/depression. Recall what I tell people MUST happen in any crash scenario: the Western debt-dominoes QUICKLY topple into debt-default one by one - and $10's of TRILLIONS in banker paper goes to ZERO.

As I continue to remind people PAPER GOING TO ZERO is even MORE bullish than a hyperinflation scenario - because in the panic of the crash we will likely get enoug money-printing to cause hyperinflation AS WELL (thus validating John Williams' long term prediction of a "hyperinflationary depression".

Understand the general principle here: for the price of gold and silver to crash (versus paper) SOMETHING must happen to make the paper more valuable. And there is NO possible scenario where $TRILLIONS in worthless paper can suddenly become "valuable" again.

Although I agree with what you said in reply to me,

Your challenge did not specify value of gold/silver vs paper, just that the value of gold/silver go down.


I've recently used the line (on several occasions) that "all roads lead to higher gold and silver prices".

However, as the saying goes "talk is cheap."

So to ILLUSTRATE this point I'm issuing the following challenge to any/all readers: try to INVENT any "bearish" scenario you can imagine for gold and silver - and then I'll explain to you how and why that scenario is actually "bullish" when viewed over the longer term.


My scenario shows that the value of gold/silver would go down vs food. In my scenario, food would become money as that is what the people would then care most for. I think that gold/silver would still maintain value, but I believe that most transactions would involve barter dealing with food.

I'll gladly take a 1oz silver bar as reward

BlackMill wrote:
The way I have been seeing this is, even though the USD and gold are disconnected they seem to have a very special relationship. It's almost like a couple that have seperated that still need to work together in regards to the kids. As long as the dollar maintains strength, or should I say the illusion of strength then golds value is kept moderately in check.

So consider this, what if the US uses some other form of wealth to back a new and improved dollar? Germany did this pre WWII by mortgaging their land to back the new Mark, did they not? America still has a lot of resources, land, oil, softwood, food, water and manufacturing capability to name a few. If they can somehow intergrate these resources with the dollar to maintian its strength, which is what they want, this would repress the price of gold, wouldn't it? Looking back at Germany, they were broke and they built enough strength to go to war with it, they were a powerhouse of the day.

I look forward to you shooting me down in flames Jeff.

Lol Blackmill! It's always a pleasure to deal with readers who can muster more HUMILITY than myself.



And while Debsyl's and Rroush's scenarios were worthy efforts, it's this one that makes me work a little harder.

"Backing" the USD (and thus resurrecting it) with something OTHER THAN gold (or silver)? Obviously we have current examples: the so-called "petro currencies" - like the OPEC nations and even (supposedly) Canada.

So let's start to rebut this scenario by dealing with a specific myth that has been widely circulated in the U.S.: the the U.S.'s "deep shale" oil and gas will turn it into some oil/gas powerhouse.

This is NOT a possible scenario (short of radical and unforeseeable technological change). Given existing technology, it's IMPOSSIBLE to extract all of those billions/trillions barrels of oil without USING roughly 90% of all energy produced to EXTRACT IT.

Thus drilling out all that oil and gas WOULD do unbelievable amounts of environmental damage to the U.S. It WOULD greatly exacerbate our "greenhouse gas" problems. But it could NEVER do anything significant as a global energy supplier - because 90% of every barrel produced is CONSUMED in the process.

So then the scenario becomes more problematic, as (at this point) we don't have ANY examples of currencies which are considered even INDIRECTLY "backed" by anything other than oil or gold. Why not?

Why couldn't a nation become a FOOD-backed economy? Three reasons: first of all it's not realistic to back a currency with any PERISHABLE substance. Secondly, the DRAMATIC fluctuations in global food production (and food commodity prices) make food much too volatile to use in "backing" any currency. Third, we NEED food to EAT.

So the USD can't be backed by gold, oil, or food. BUT (you say) the U.S. has LOTS of other "valuable" resources. Water?

That MIGHT have been a possibility - IF it wasn't funneling most of its water to the Agriculture Oligarchs (at heavily SUBSIDIZED prices). To "back" the USD with water (even partially) would mean cutting off the Agriculture Oligarchs. Given the TREMENDOUS amount of time/effort expended by the U.S. government to BECOME a "banana republic" we can safely say it would NEVER cut-off the Oligarchs from their choke-hold on U.S. water.

Indeed, a MORE likely scenario would be a future where Americans have to BUY their water from Monsanto. In other words, the U.S. government is far more likely to use water to OPPRESS its own citizens than to back the USD.

But the U.S. still has OTHER natural resources you say. True, but so does EVERY other nation on Earth. Could ANYONE envisage a world where all the paper-pushing nations around the Earth suddenly all announce that their currencies are "backed"?

One nation "backs" their currency with coffee beans, another with copper, another with aluminum, etc., etc. etc.

Several problems emerge in such a scenario. FIRST, again there is the volatility issue. INVESTORS are warned away from commodities PRECISELY for the very reason that their prices are too volatile.

Recall our history (via The Silver Stealers): the Great Depression was caused when the U.S./UK (deliberately) crashed the price of silver - thus destroying the (silver-backed) currencies of China, India, and other nations. Just imagine how JP Morgan and Goldman Sachs would start SALIVATING at the prospect of the manipulation they could accomplish with each currency backed by a DIFFERENT commodity!!

And of course the REASON that the banksters could engage in an ORGY of currency manipulation (with extremely destructive consequences) was that if any nations TRIED to back their MASSIVE DEBTS (officially) with natural resources they would need to accumulate (and permanently hold) unbelievably huge quantities of these resources - thus causing SHORTAGES of one commodity after another.

In other words, there would be INIFINITE amounts of economic chaos produced by such pseudo-backed currencies - and one must assume that even the CLOWNS in charge of our governments would figure out that such a scenario would NOT be feasible.

More generally, this is why GOLD (and only gold) is THE perfect resource to use as money (or to back our money). DESPITE the constant manipulation of the banksters its value has been (relatively) stable - relative to ANY other commodity on the planet.



Secondly, it's not NEEDED to fuel the global economy. This is why we could NEVER have a world of silver-backed economies today. With the banksters having destroyed global stockpiles, we NEED that silver too desperately for industry to ever allow our governments to start stockpiling 10's of thousands of tons.