Silver Will Benefit From America’s Debt Crisis

Via International Man

The media hated them.

Big Business, numerous federal agencies, and politicians of all stripes hated them too.

Even Tiffany & Co., the famous jewelry company, vilified them in a full-page advertisement in The New York Times, calling them “unconscionable.”

The villains everyone loved to hate were the Hunt brothers. They were critics of the fiat money system and advocated for hard money based on commodities.

At the time, private ownership of most gold was illegal in the US. So the Hunt brothers turned to the next best thing: silver.

From the late 1970s to 1980, they stockpiled silver. And unlike other investors who settled their silver trades in cash, the Hunts took physical delivery. This often meant flying the silver to Switzerland for storage.

It squeezed the supply… and helped push the silver price up. Its price went from around $6 in the late ’70s to around $50 in 1980.

But were the Hunts really the bad guys everyone made them out to be?

They did nothing unethical. They just exchanged US dollars for silver from voluntary sellers. In fact, it was a response to the government’s unethical actions…

Longtime readers will recall President Nixon severed the US dollar’s last link to gold in 1971. Without the discipline of gold, there was nothing to stop the US government from printing as many dollars as it pleased. The dollar was now a purely fiat currency.

The Hunts bought silver because they figured the US government’s actions would lead to inflation. And they were right…

The ’70s saw the highest levels of inflation in living memory – even according to the government’s own crooked statistics. See for yourself:

You see, the silver market is tiny. It’s roughly one-tenth the size of the gold market. So it’s prone to crisis-driven upside explosions as money floods into it during periods of high inflation.

And today, the stage is set for an explosion in inflation. I expect it to kick off a crisis-driven mania into silver like what happened in 1980.

Adjusted for today’s prices, that means silver soaring above $160 an ounce… almost 10 times the current price.

So let’s look at why silver could be on the verge of a big rally…

The Next Crisis

The same kind of wrongheaded domestic and foreign policies that caused the panic into silver in the ’70s and early ’80s are not only present today, but stronger.

Let’s look at domestic ones first.

In the late ’60s and early ’70s, the US was still on a form of the gold standard that tied gold to the dollar at $35 an ounce.

But runaway deficit spending on welfare and the Vietnam War caused the US government to print more dollars than it could back with gold at the promised price.

By the late ’60s, the number of dollars circulating had drastically increased relative to the amount of gold backing them. This encouraged foreign countries to exchange their dollars for gold, draining the US gold supply at an alarming rate.

To plug the drain, President Nixon severed the dollar’s last link to gold in 1971. Recall this was the event that caused the Hunt brothers to become concerned about the value of the dollar and make their first moves in the silver market.

Today, the financial wastefulness is much worse.

Analysts expect the deficit to hit $1.5 trillion in 2019. And that figure assumes there’s no economic recession.

If there’s even a mild recession, a $2 trillion deficit is a real possibility. (A recession would reduce tax revenue and drive the deficit higher.)

Either way, trillion-dollar deficits are the new normal. That means an avalanche of new government debt to finance them. This will make the federal debt grow faster and faster. Even the government predicts that within 10 years, it will hit nearly $35 trillion, up from $22 trillion today.

Who will buy all this paper? The only entity with the appetite will be the Federal Reserve.

And how does the Federal Reserve pay for the US government debt securities it buys? The only way it can: by creating new currency out of thin air.

This will debase the dollar and lead to runaway inflation.

A Predictable Pattern

Once the dollar starts to lose its value in earnest – which I expect could be sometime before the 2020 election – the next “Hunt brothers” will emerge.

As the dollar is debased, people will panic into precious metals… just like they did in the ’70s and ’80s, but likely on a much bigger scale today.

And much of that money will make its way into the tiny silver market. This will cause the price to spike. It’s a predictable pattern…

Financial Wastefulness → Currency Debasement → A Panic Into Silver → Price Spike

Bottom line, the stars are aligned for a silver price spike for the record books. And now is the perfect time to get in…

You can see below that silver is down by about 65% from its peak in 2011.

Silver is overdue for a bull market. And as silver prices head higher, select silver mining stocks could offer some of the best crisis investing returns in the months and years ahead.

Editor’s Note: The national debt continues to skyrocket, and an economic crisis is increasingly imminent. There’s an excellent chance a bull market in silver and other precious metals will follow, just as it has before.

However, there is a lesser-known precious metal that has the potential to offer even more explosive gains. This “victory metal” helped the US win World War II… and it’s still a crucial element in the military’s weapons today. In this urgent video, legendary speculator Doug Casey and his colleagues show how you can get positioned in this lesser-known precious metal before it’s too late. Click here to watch it now.

With global tensions spiking, thousands of Americans are moving their IRA or 401(k) into an IRA backed by physical gold. Now, thanks to a little-known IRS Tax Law, you can too. Learn how with a free info kit on gold from Birch Gold Group. It reveals how physical precious metals can protect your savings, and how to open a Gold IRA. Click here to get your free Info Kit on Gold.​​

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