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Gold and Silver

Oct 21, 2008

Gold and silver prices are artificially depressed at present. But with the huge amounts of money being created by government borrowing, the value of the dollar can only go down, with inflation jumping to new highs. This may not happen in the next few months, but in the long run it seems inevitable.

The next president will have to deal with the worst of it, assuming that the elections take place and we really do get a new president in January.

Right now, the price ratio between gold and silver is about 80 to 1. One expert says that this price ratio will go to 150 to 1 before it is over.


I don't know, of course. Edelson is a "gold bug" and likes gold at the present time, though he thinks silver will be just as good or better at a later time.

Of course, he is talking about paper prices. Paper silver can be purchased for about $10/oz right now. But you will have to wait four or five months to get delivery by going that route. Real silver is selling on e-bay for about $15/oz. In other words, in the real world, if people want real silver, no one will sell it for under $15. That is the true price of silver these days, as opposed to the $10 paper promise.

The mines are beginning to shut down because the prices are much lower than the cost of production. The effect of mine closures may not be seen immediately, but long term, it can't help having an effect.

The article above takes the position that silver's position as an industrial metal is bearish, compared to gold. Ted Butler takes the opposite position, saying that industry must have silver at any price, or else they must stop making electronics which all use small amounts of silver. Without it, they are out of business, so they would pay any price to get it, if necessary.

In my view, gold's appeal is not due to its physical shortage, but rather to the fact that people have faith that it will always be in demand, especially when paper currency plunges in value. Silver's demand is based upon real need to do business and manufacture goods that are in demand in the world markets. The fact that silver is in short supply, making people wait 4 or 5 months for delivery, makes the current $10 price a mockery. In a non-manipulated market, the law of supply and demand would raise the price until demand came into alignment with supply.

I think that overall, we are just starting to see the real economic problems in the world. First the U.S. caught a cold, and then passed it on to Europe, which came down with pneumonia. For this reason, the British pound and the Euro are going down the toilet. The European problem will probably be passed back to U.S. and perhaps to Asia as well. Who knows how many times the baton will be passed before we see the bottom of this.

Today, President Bush says that we are beginning to come back from "near panic." At the same time, they are saying with a straight face that the economy needs another "stimulus package." In other words, the first one ($168 billion) did not work earlier this year, and even the $700 billion bailout was not enough. Nor was it enough for the government to take over Fannie Mae and Freddie Mac.

Where is the end of all this? The national debt is skyrocketing. The Fed chairman is encouraging us to BORROW more money from the Federal Reserve. Sounds to me like he's drumming up more business, knowing that new money can simply be created out of nothing and loaned to the government at face value. Why doesn't anyone suggest that the government issue money of its own and stop borrowing it from those who create it out of nothing?

You can be sure that no presidential candidate will be allowed to hold office unless he continues with business as usual insofar as the Fed is concerned. The debate rages over Joe the Plumber, but no one suggests the real solution to the problem (except for Congressman Ron Paul).

My biggest concern is that we will see martial law implemented, if the people get too restless and angry. We have been under martial law for decades, of course, but most of its provisions have not been implemented yet, because the people have submitted to the wooden yoke of Babylon. My suggestion is to let these world rulers have their way and let them destroy the system on their own. They're doing a good job of destroying the system all by themselves, and they don't need your help to finish the job.

More accurately, God is helping them destroy Babylon, and God doesn't require your help.

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Category: Commentary

Dr. Stephen Jones

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