|Silver's Next Major Rally|
The Doc spent the evening last night observing a group of sheople discuss silver.
Yes, just observing.
The Doc's mom had invited her extended family over for dinner for a reunion of sorts. Over dinner, one of the extended family members enthusiastically brought up the fact that he had recently made over $700 by taking all of the old pre-1964 silver coins his wife had collected during the 1980's as a waitress into the local coin shop to cash them in-because silver "has never been worth as much as it is now- they gave me $27 per dollar of face value!"
Immediately mom looked at dad (who taught The Doc everything he knows about sound money and convinced me to go all-in on gold and silver in 1999) while my wife looked at me- both females obviously anticipating their spouses to pounce upon the opportunity to discuss the topic of silver and the protection of sound money against the ravages of inflation. Both must have been shocked however, as both the Doc and Sr. just sat and focused on our steaks.
These people must have gone on for 15 minutes boasting about how much they made by selling those worthless old coins. They added that some "crazy guy" at the coin shop had tried to keep them from selling the silver because "one day soon silver will be the only money worth anything in this country."
So the two "crazy guys" at the dinner table who shared the viewpoint of the "crazy guy" in the coin shop just kept chewing their steak.
I almost told him I would have given him more for his silver than the coin shop did, but bit my tongue. What's the point- it's not like he will have any more silver to dump and sell anytime soon.
There is a good biblical teaching regarding sharing your wisdom with a certain class of sheople. I understood its truth completely by experience tonight for perhaps the first time.
"Do not give what is holy to dogs, and do not throw your pearls before swine, or they will trample them under their feet, and turn and tear you to pieces"
Having an understanding of the truth can make social conversations ridiculously depressing.
Obviously, I am more than willing to literally share hours of my precious time and life educating others on economics, fiat money, and the importance and protection of gold and silver- but there is a class of sheople that are not worth bothering the waste of breath.
These extended family members were educated individuals. Unlike the Average Jane who literally did not not know what gold and silver are prior to The Doc convincing her to purchase physical bullion, they understood the value of silver- having first taken it out of circulation in the 1980's, and then kept it all these years.
Six months ago, at a similar family get together, Mrs. Doc's grandfather- a tough, grizzly old codger who fought in the Korean War, told the family he had cashed in his over $2,000 face value pre-1964 silver for $27/oz as it was the highest he had seen silver in 30 years- and his only regret was that he hadn't waited till the end of April when he could have sold it for nearly $50/oz.
Over the past 6 months, and especially during last March and April while silver ran up to nearly $50, a significant percentage of those American's who have held silver for years and even decades have sold most or all of it into what is perceived to be the highest price ever for silver. These are individuals who have a knowledge of the value of silver- but absolutely NO UNDERSTANDING of inflation or fiat currency debasement (meaning that even at nominal highs, silver is nowhere near CPI adjusted highs, much less TRUE INFLATION adjusted highs, which are now approximately $350/oz- 10 fold higher than current fiat prices.
It is of my personal opinion that nearly everyone who purchased silver in the past 40 years and has been waiting for the price to get back high enough so that they can sell it- has now done so. (minus perhaps the few that purchased silver for the first time during the last week of April 2011 without an understanding of WHY they were purchasing it, and will dump their positions as silver again reaches $50)
I believe that nearly everyone who might sell long-held physical silver anywhere near current prices has now already done so.
This means that the remaining holders of physical silver are those who have an understanding not only of the value of silver- but also of its spectacular supply/demand fundamentals, the global epidemic of QE, the systemic debt issues among all Western nations, the potential collapse of the Euro and the dollar, and the $1.25 + QUADRILLION in worthless derivatives that are the ultimate reason for the entire financial collapse.
The remaining holders of physical silver UNDERSTAND why they purchased their silver, have no intentions of selling it back for fiat federal reserve debt notes at anywhere near current prices IF EVER, and are THE STRONGEST OF STRONG HANDS.
Most will not depart with their phyzz until silver reaches at least $150-$200/oz at a minimum, or before a collapse of the US dollar.
Look for already extremely tight supply issues to come to a head during the next major rally in silver. Demand always increases as the public becomes excited about a rise in silver, and chases the price into the mini-exponential rallies. During the bull market to date- this increased investor demand has been met to some extent with increased selling of long-held silver by those waiting for years and even decades to get out of their silver positions.
The next major rally will not see this source of supply- as it has already been exhausted.
Combine this with QE3 and also the fact that The Morgue will likely NOT be massively increasing silver shorts into the next major rally for the first time of this bull market due to the coming (albeit at least a year out for non-spot month contracts) implementation of position limits for silver- and we are looking at the potential for silver to literally go SUPERNOVA when $50 is cleared decisively.
This is the basis for The Doc's $70 silver call for the end of 2011- as the next rally in silver should be the sharpest and steepest of the entire bull market to date.
When this rally kicks off and whether silver sees $70 by the end of 2011 or in 2012 will depend on when The Fed publicly announces the launch of QE3. Judging by the level of Fed Speak over the past few weeks, it appears official QE3 is nearing.
Any corrections back into the lower $30's need to be bought aggressively, as once The Bernank kicks off the next rally in silver, the train will have left the station.