These three physical assets are set to rise in price. Just when you thought the U.S. couldn’t handle another war, here we go again. Oil is now pushing $110 per barrel, gold is poised to break through $1,600, and silver is ready to catapult to the $40-$50 range, and beyond.
I have maintained that oil reached its global peak supply back in the 2005 time frame. The price has reflected that conclusion for the most part. There were expectations of $30 oil but it never materialized. A global depression could bring the price of oil to $30 but I don’t think anyone wants to see that happen.
Silver has been leading the charge in the precious metals group. Those who were betting against silver are now covering their losses. Those who were buying the metal below $20 (excluding premium) are smiling now. Related stocks are recovering nicely. It was emotionally tough to keep buying as the prices were falling, but now we are being rewarded for our convictions.
I still contend that the silver/gold ratio should be 16/1 in price terms. For this to happen, silver must skyrocket in price. Silver’s industrial use will increase as the global population demands technologies requiring this metal. Long term gold prices are suggested to be between $10,000 and $50,000 per ounce in U.S. Dollar terms. Devaluation of fiat currency will help move gold to these heights. People will lose purchasing power but the Federal Debt will get paid with depreciated Dollars.
When the precious metals soar to new highs, the derivative investors who bet on gold prices declining will take a financial bath. There will be some significant bankruptcies take place. Only then will we know how much “betting” was happening without any real regulation occurring.
The markets are already expecting the U.S. to lead an attack in Syria. An attack may be scheduled after the market closes on Friday. This allows the investing public to absorb the emotional shock of war before the market opens on Monday. War tends to remove the focus from the economic issues at hand. These issues are sizeable to say the least. This may provide the central planners with a plausible reason for gold, silver, and oil to reside at higher levels even though they are heading that way already. Isn’t it amazing how much energy is spent managing the masses!