Silver guru, David Morgan, says forget about the manipulated price suppression of the yellow and white metals. It’s only a matter of time before the debt and derivative markets crash, catapulting precious metals prices exponentially higher. Morgan explains, “The bigger problem all exists in the debt markets, and the debt markets is where the problem is really. When that problem blows up, there’s going to be a run to gold unlike anything in the history of mankind. . . . The spillover into silver will be phenomenal, as well, because once it (debt markets) starts down, everyone that understands what’s going on, which will be very few, will be running to gold. They will try to get gold in any form that they can, and again, a huge spillover into the silver market. All of a sudden, even at the retail level, and at the wholesale level or commercial level, or the futures market or bar level—it’s over. A big ETF type or silver holding company will call up and say I want to buy $50 million of silver, or $150 million or $200 million, which is peanuts compared to the bond market. . . . The answer is going to be ‘we don’t have it.’ When that happens, it’s over.”
Morgan goes on to say, “These types of events are anomalies. . . . Few people see them coming, and with the silver price being so low the last three years, a lot of people who once believed us are going to say that these guys just can’t be right. The paper manipulators are going to keep prices under control forever, but they won’t. It will be an event that will be unlike anything we have seen.”
On the recent strength of the U.S. dollar, Morgan says, “John Exter’s upside down pyramid explains it very well. The derivative markets blow up, and you go down the pyramid of liquidity. The step above the run to gold is the U.S. dollar. Most people who are under educated about money think if you have physical dollars under your mattress, you are in the safest position you could possibly be in. If you have all of your savings in physical greenback, you don’t have to worry about a bank failure. That is the most important step until that doesn’t work. When that doesn’t work, faith in the dollar is lost or being lost, then where do you go?
The answer is you go to money that has lasted for 5,000 years. So, to see the dollar have all this strength and look good, that’s just the step before you go to the last step, which is a run to gold. So, it (the strength of the dollar) doesn’t surprise me. It’s part of the process . . . and the run to the dollar is a precursor that is absolutely necessary before the next step down the pyramid. . . . This is the big picture, and I see how things narrow down and why precious metals are so important in today’s financial system.”
Morgan admits that his low of $18.17 silver did not hold and now thinks that the next “price spike” for silver “will be going lower.” Morgan explains, “This means we would get a spike down of maybe a dollar or something like that, from $18 to $17 or maybe even in the $16 range. I think that would be a spike that would be a dramatic drop. . . . It would be primarily a paper driven situation, and it would take place in a short duration.” Morgan goes on to predict, “Silver will be back in the $20 per ounce range, and the high $1,300 per ounce range for gold by the end of the year. That just presupposes that the system, as it is, continues, and the paper markets continue, and the derivative markets continue, and the powers that be are able to manage this price as they see fit with the derivatives. In the event that something happens, that whole scenario could go away very, very rapidly. That’s why you really want to be 6 months too early than 6 minutes too late.
Nenner makes a prediction.
On the U.S. dollar, Nenner predicts, “Timing is our business, and we’ve always said the dollar is going to collapse in end of 2014. There are different reasons for this. The government has loans outstanding that are very short term. If interest rates only go up a half a percent, they are already in trouble. Also, the United States doesn’t have the power to force a lot (of Treasury bonds) on other countries because the United States has decided not to be a power anymore. So, of course, the dollar goes with it. Oil is going to be much higher, and inflation is going to start moving its tail. This is the start of inflation. Five years from now, you will see inflation started in 2014. It’s not that everything happens in 2014, it’s just the beginning.
What happens when the dollar collapses?
Many things, most of them bad. When foreign investors and central banks stop demanding dollars, U.S. bond prices will fall, which is another way of saying that U.S. interest rates will rise. Mortgage and credit card rates will soar, sending the U.S. economy back into recession. The U.S. government will respond by opening the monetary floodgates, printing as many paper dollars as necessary to keep the economy from collapsing. This surge in supply will send the value of the dollar through the floor. Prices for most things will skyrocket, and people whose life savings are in cash, bank CDs, or dollar-denominated bonds will be wiped out. Many U.S. financial and manufacturing companies will be ruined, along with their stockholders.
THEN the Dollar Disease will go global. The only reason Japan or Europe have been able to generate their current meager rates of growth is the willingness of U.S. consumers to buy their Hondas and BMWs. As the dollar plunges, Asian and European goods, priced in suddenly-appreciating currencies, will become prohibitively expensive for U.S. consumers, who will respond by buying U.S.-made alternatives or nothing at all. Correctly interpreting this change in buying patterns as a threat to their vital export sectors, European and Asian leaders will respond with the only weapon they have left: monetary inflation. They’ll cut interest rates and buy dollars with their currencies, flooding the world with euros and yen the way the U.S. now floods the world with dollars. The result of these “competitive devaluations” will be a death spiral for all major fiat currencies, in which European and Japanese bonds will, eventually, fare as badly as their U.S. cousins.
Why will gold go up when the dollar goes down?
Until very recently, gold was humanity’s money of choice, for one very good reason: It exists in limited supply, and governments can’t make more of it, so its value tends to be stable. As paper currencies collapse, the world will look for alternatives, one of which is sure to be gold. Massive amounts of global capital will start chasing a very limited supply of gold, sending its value through the roof.
Silver is currently selling for $19 an ounce, and less if you buy in some quantity. This is the lowest price for silver I have seen in four years. The sudden 25% drop in the price of silver is consistent with what we have been telling you. JP Morgan holds more than 30 thousand short contracts on Silver. If Silver goes down, they stand to make billions. If it goes up too soon, before they can cash in on the short contracts, then they lose billions. Once the short contracts have been satisfied, the price is free to float to the market value, which is designed to be about 1/20th that of gold. Gold is less than $1,200 an ounce today, so that would be mean $240 Silver if the price was normalized.
Keep in mind that Gold is expected to drop another $300 an ounce, as investors dump the metal to reclaim their liquidity, which they think will save them. This places the currency basis in the hands of savvy investors who will scoop up the metal at bargain prices. When the crash is fully engaged, they will step in and increase their real holdings for pennies on the dollar. If you have been to the rich man’s seminar, you are already prepared for this. If you’re not rich, you can become more wealthy if you listen to what I an saying.
Actually, the value of the dollar will plunge at about the same time through hyper-inflation as the government will attempt to print its way out of the crash. It always does. Having dollars won’t mean much at that time. You must have something else, preferably not paper money. Silver or Gold will be the universal currency.