The 3 Big Charts I Watch For Silver

I realized very early on that using the dollar as a measuring stick was a trick the Elite use to manipulate the masses. Through the insidious process of inflation, the Elite can shift power from us to them. The more money they print, the less the dollar buys. When you understand that prices are not going up as much as the purchasing power of the dollar is declining, then you have made an important leap.

Everyone is now crowing that silver reached it’s “bubble top” of $50 back in 1980. The reality is that $50 in 1980 had a ton more purchasing power than it does now. 31 years of debts and money printing has cut the value of that $50 tremendously. If you go by the rigged BLS numbers adjusting for inflation, silver would have to get to $143 to get to it’s inflation adjusted highs from 31 years ago. If you use REAL inflation adjusted numbers, like those of shadowstats.com, then silver needs to get to at least $450. And that is just adjusting for inflation… When you factor in the decades long physical deficits of silver, trillions of unfunded liabilities and a mathematically inevitable, world-wide fiat currency collapse, the case for silver is even stronger.

I knew the dollar could not be trusted as a measuring stick, so I started to search for something else to guide me. I found that ratio investing is the best way to overcome this dollar centric view of the world. The idea is simply taking the currency out of the equation and simply divide asset by asset to get its ratio of purchasing power. It is also important to use this line of thinking when you look back in history to make historical analysis of the real purchasing power of silver. (Read: Historical Case for $960 Silver.)Most importantly, this line of thinking will help you see values in a post-dollar world.

In a recent exchange between me and another investor, he made the case that I should sell my silver because I am still up 500% on my silver investment and that I could buy other assets that are cheaper and not in a “bubble.” I first made the case that by any inflation adjusted level, we are so far off the record high, that I can barely see the top. We also have not seen the public buy into the market with the same level of excitement that they did in the housing and stock market bubbles. The biggest argument was, what other asset class is better? So I let him in on the big 3 charts that I have been watching for 6 years now.

The first chart is the one that got me to literally bet the house on silver in 2005. I got out when the ratio was about 42,000 ounces to 1 average house, now it is down to 6552 to 1. Using the ratio, so far the real purchasing power of silver is up over 600%. That’s great and all, but I believe that we have much further to go. As many of you know I have spent the past 2 years working in the Foreclosure education business. I can tell you that from first hand experience that we are no where near the bottom of housing. First, until jobs come back there will never be a recovery in housing. Then there is a huge shadow inventory in housing of either foreclosed homes held off of the market or homes where people have not paid their mortgages in years. Then there is the whole MERS mess that has not been resolved. Think about how many houses were sold with fraudulent documents, I mean would you feel comfortable buying a house with a title that the bank may not even own?

We also have ridiculously low interest rates that are artificially supporting the housing market. I am not that old, but I remember when 4.9% was a pretty good deal on a 60 month finance deal on a car and now we have that for 30 year mortgages? If you are like me, and believe that inflation is running at 10%+ in the real world, when you factor in stuff that the Fed does not want to count like food and fuel, we now have NEGATIVE interest rates on housing. Even with this artificial support we are now starting to look at a double dip in the housing market.

Let’s get two steps ahead of the crowd… Say things do go the hell in a hand basket. The dollar crashes, interest rates sky rocket, necessities like food and fuel moonshot, wars, civil unrest, cats and dogs are friends, you know…mass hysteria, what would that do to housing? At the very least it would make it impossible to find financing for your house. What is your house worth without a 30 year mortgage? If you have a house that is worth $250,000 and interest rates are at 4.9% and for argument’s sake say that we did not factor in down payment, taxes or maintenance,  your payment would be $1,316 a month. That is maybe something that people could afford right now. What if we go through this SHTF senario and you are lucky to find a couple that can afford that payment and are willing to buy your house, but now interest rates are 10%. You would have to sell that house for $150,000 to get to that payment.  You see, people don’t buy homes or cars on the price of the asset, they buy it based off of the monthly payments. What if interest rates went to 20%? That would drop that $250,000 home to $80,000. And all of that is contingent on that couple even having a job or a down payment which is becoming increasingly harder to find.

I also believe that during this collapse environment that local government would be so desperate and that they will be raising property taxes in a declining housing market. We are 3 years into the housing depression, and most property taxes are either the same or higher than they were at the bubble. Also what is a McMansion be worth if the cost to run the house goes up? $1,000 a month water or electricity bills would certainly cramp any house value. What if jobs don’t come back and more people go to live at home? What if we go back to multi-generational housing? That would leave a lot of inventory on the market in addition to the huge overhang from the last bubble. One other thing to consider is your safety. What is a property worth in a city during riots or worse?

“The time to buy is when there’s blood in the streets.” Baron Rothschild

So real estate is out in my book. The average home price is about $246,000 and silver is at $36 so we are at 1:6,833 house/silver ratio. Judging by my first chart, we could still see a 400% return still in the house to silver ratio just to get back to the 1980 high when the average house was $72,400 and silver popped to $50 (1:1448). I think a very strong case that we could blow by that because we are in much worse shape as a country than we were in 1980.

The next big one is the stock market, and we are just now getting to the mean average in the Dow to Silver ratio. This is after ten years of silver out performing stocks. At it’s 1980 peak it reached 1:18 that would be almost 2,000% return in real purchasing power of silver if we go to that ratio again. I would argue again that we are in a much worse scenario than we were in 1980. This market in now admittedly being propped up by the Plunge Protection team and high frequency robo-trading. The Greenspan put has turned into the Bernanke put. The average dividend on Dow stocks is a paltry 2.6%, which after taxes and inflation, is nothing. The Dow is double what it was in the middle of the crisis of 2008. If we go through the same kind of crisis this time, we will not have the safety nets of savings that we did last time. Add on top of that having my money sitting in some brokerage account in Wall St does not sit well with me at all.

The final big chart is the good ole Gold to Silver ratio. Once again we are just getting past the mean average. If we go to the 1980 high, we could see a 200% rise in real purchasing power against gold. The ratio that gold and silver come out of the ground is about 1:10. There is a 1:1 ratio in the amount of dollars that goes into gold and silver with US Mint bullion sales. Gold has been treasured as a precious metal and silver has been trashed as a industrial metal for decades. Add on top of this all of the paper manipulation on Wall St with the Andrew MacGuire testimony and I think we could over shoot the 1980 high of 1:14.

Finally, we have the mathematically inevitable collapse of the dollar. When this happens, all paper assets will get burned. Only real tangible assets will thrive. I cannot find another asset that has the opportunity that silver presents us today. When the day does come where I find another attractive asset class to enter, I will use my tax free strategy to plow my real purchasing power into that new asset. Until then, I will keep my eye on these 3 charts and keep holding on to my physical silver.

33 comments to The 3 Big Charts I Watch For Silver

  • vfxag

    This is excellent information, Chris. I’m curious. You mentioned that you sold your house in NJ, and moved to Ohio, just before the last big crash. Did you buy the Ohio house or are you renting? I am renting right now, and made up my mind that I will not own again until I can truly own, and not mortgage my property. Do you see a time in the forseeable future when you’ll just exchange a monster box of eagles for a house and land? What, your mind, would motivate someone to uproot in an SHTF scenario to trade silver for shelter/land? I am working through module 7 right now, so, maybe you go over some of this in one of the later modules of the SOLA. Thanks for the continued work! Enjoying the forums as well!

    • Silver Shield

      I did buy out in Ohio because the Cleveland market is already cheap and I am in a rural area which should be relatively safe long term.
      Lots of farms and water.

      I also did not want to rent in turbulent times.
      I wanted a “castle” to defend and not have to be trying to move my family in the middle of a potentially stressful situation.

      I also have a 4.9% 30 year on my house which I view as a negative interest rate with tax deductions.
      In a hyper inflationary depression the debt/mortgage becomes worth less.

      At that point my hope is to pay off the mortgage with silver or not, because the price will be so low relative to other things.

  • gdnchg

    Hey Chris…

    I’ve been watching silver since it was 7 bucks, but I never had the money to buy silver until Novemeber of last year. I made my first purchase at $24 at 100k and my next purchase at $37 at 156k.
    So I hold about 7000+ ounces with an average of $31. I know that we have a long way to go in this silver bull market, but part of me feels that I’m a bit late to the game…..your thoughts?

    • Silver Shield

      The first thing I would stop doing is measuring your wealth in dollars, that is the whole purpose of this article.
      Relative to stocks, bonds, real estate and other commodities I believe that silver has a looong way to go still.

      And I am also planning for a mathematically inevitable world-wide fiat currency collapse that will destroy paper assets as debt/money is either defaulted on or hyper inflated away.

      At which point it will be he who has the silver makes the rules.

  • silverdoc

    We have only purged 25% of the toxicity from the 2003-2007 housing buble from the market, so the us house price/silver ratio should continue to narrow for some time to come. People think that QE2 ending will change things, but they don’t understand that at this point, we will just have perpetual QE due to reinvestment of principal payments. The US is definitely the on the human hampster wheel, thinking they are getting ahead, only to be treading on their same footsteps over and over again.
    The rare earth market is a good one to look into as well for future returns.

  • mushroom

    i’m still pondering the real estate impacts in utah after the new utah law making silver and gold currencies instead of assets.

    • Silver Shield

      Money will go where it is appreciated!

      Good move Utah!

      More states will follow along with nullification acts.

      This should help make real estate less risky in a state that is already relatively safe.

  • lastmanstanding

    ss is correct…Quit looking at dollar value. When it is gone, things will have to reset somehow. if the earth has ANYTHING to say about it…it will be of earthly value…like it has for thousands of years.

    Someone always thinks that they can trump the planet…It only lasts awhile.

    This elite thing is coming to an end…The sooner the better. People where meant to work together and love each other. The elite have divided us. They want to rule the earth. They have created a class that takes the sweat off our backs and gives it to some else for a vote. The earth doesn’t work that way. If the earth lets this continue…I don’t wish to live here any longer.

    Everyday, those of us that contribute to the betterment of things are get pushed further and further into a corner.

    Look outside the box to gather a different perspective to govt and the dollar.

    How can people live their lives EXACTLY OPPOSITE of how our planet works…and get away with it? That will soon be ending.

    Find people you can trust with your life and hang with them…Beware of those who rely on others for everything.

    • Silver Shield

      A new era of working with the natural world instead of against it would be a blessing.

  • ewkeane

    Those who hold hoards that have a purchase value in the 20-30FRN/dwt have a nice rainy day pile to draw on right now, late starters, fear not, historic trends are on your side.
    Bubbles are paper problems in ‘commerce’. See John Law, South Sea Bubble, Tulip craze, Ivar Kruger, Ponzi, ect.
    Get the real thing, secure it, and when you need something to trade, there it is.
    1964 dimes sell for no less than 2FRN. THink about it.

  • Corinthian Bronze

    Great detailed analysis and website Silver Shield. I’m thoroughly impressed. How I haven’t stumbled across it until today, i’ll never know. I remember you from the old GIM. You had some great posts. If you ever want to catch a beer and a tribe game in the big city drop me line(i think i just gave you my email).

  • goldengyrl2010

    To lastmanstanding,
    Very well said. For those who want to leave when TSHTF, check out Ecuador. It’s not yet full of ex-pats, warm, friendly people and their government makes it easy to buy property and open a business. They are not involved in the drug trade. It’s one of the cleanest/most beautiful countries in the world–the Galapalos Islands brings in huge eco-tourist dollars. They’re on the USD but not a major trading partner so when the dollar dies, they will be okay. Also they export oil, don’t hate Americans and are peaceful people. Oh yeah, some of the best surfing and cheapest beach front property in the modern world–really beautiful!

  • SilberSurfer

    I buy silver, philharmoniker 1oz,
    silber go more than 200$/ oz !
    f..k the banksters, Buy silver!
    Tchuss,

  • Shawn

    Good article SS. I have been telling my closest friends and family to buy silver for past 2yrs and finally I started 18mons ago. My mother’s friend told her silver was crap compared to gold, she must have thought buying a 100oz ingot was for personal adornment not for protection. Anyway she bought a 1oz coin the other day so perhaps its not too late for the oldies to save themselves. My Dad is heavily in the stock market and I told him to take some money out and buy silver. Other friends said if the paper fiat crashes then what is silver going to be valued at? I said a hot meal and other supplies, so people still keep thinking they will exchange it for ponzi money at some point.

  • cory

    i have been purchasing now for around 3-4 years since it was 16 an oz. in these 3-4 years i have been talking to tons of people about the failing dollar eventual collapse and the need to prepare for an actual shtf scenario and all the people that have told me i am crazy has been astounding. there is a condition called “normalcy bias” in which people cannot imagine the extent to which their live’s will change because they have never lived through it.

    well the math is simple and the future is essentially mapped for the U.S. at least for the forseable future. 1+1=2 and nothing will change that. the elite want a one world currency and that is what they are aiming for. the only thing you can do is create a life that is sustainable, protectable, and have real assets.

    thank you for the article it was extremely insightful

    Cory

  • Charlie Patterson

    This is the best web site I know that has as yet not been compromised… It is my wish it lasts…

    I won’t waste my time hoping it will be. Instead, I’ll be doing something about it and doing my best to assure that it remains so…

    I’ll be supporting Chris and this movement and I will be encouraging my friends to do the same.
    ——————————————————————————–

    Did you check out NIA’s “College conspiracy” ‘expose’?

    They went soft-shoe and did not even mention the fact that the student lobby has been banned country-wide. Perhaps it slipped their mind? The students noticed the omission and it makes them afraid.. we had placed such high hopes for this ‘expose’…

    They did not mention that many of the colleges (University of Phoenix, for one)holds student money for many (up to seven months for me) months without releasing it while they wait for the next terms release of funds.

    They also sell the students personal information to the banksters who have sent out “preapproved” credit cards (Capitol one, for example)for the students while they wait for their money that the college withholds (for up to seven months!)for their own gain.

    The banks refused all of the students attempts at gaining the card and instead sent the query information to the three credit reporting agencies ho then lowered the students credit ratings- which in turn drove up the students insurance costs and other costs associated with a poor credit report. That is the real story…

    The students take online classes where they are not allowed to discuss anything amongst themselves without censorship or active retribution in the form of threats and intimidation. They are not allowed to discuss such things as business opportunities, the business market, the job market, financial aid issues, the merits of therapy over prescription drugs,privacy issues, etc…

    I have found nothing in the contract that would grant them this ability (in any legal sense) and they don’t even bother to stick to their own contracts. This is what my research tells me. Am I mistaken?

    The privacy laws concerning the protection of the students have been breached to a greater extent than ever before by this school and the selling and marketing of private information (married with illegal solicitations and resulting damaging effects) has been their policy in motion.

    If you add the Ponzi scheme with the student loans and grants (of which they hold and exploit for a period of many months before releasing), it only starts to outline the kinds of problems inherent in this money generating system that is UOP. Please comprehend the meaning of this sentence and add the obligatory accompanying information that is inherent in such an institution:

    Currency is created here.

    This is where it gets ‘dicey.’

    Anyone who is previously educated to a level that is higher than the class text and material is not allowed to share that information and indeed; is actively barred from doing so.

    I did not come to this school to draw attention to myself or “Grandstand.” I find all of this very distracting and it fills me with the sense that I have witlessly arrived into a contrived arena of control which is reminiscent of a Police state and which far exceeds the power of any bygone Historical connotation that might come to mind. The only thing missing now is the event that will start the Thing off and awaken It from its latent state. I will not elucidate further on this point as I am sure you are aware of the implications that would accompany such a scenario. I am not going to spell it out for you any further…

    I did not come here to be placed into such a desolate arena to be batted around by inferior beings. It will not fit.

    Normally, it would not be my place to comment on such a subject as I have not (nor have I ever been-up to this point) active in any capacity on the behalf of students since I last attended college in the 1990’s.
    The classroom arena as an online student at UOP is structured in such a way as to make the exchange of information in this kind of setting awkward and cumbersome, to say the least…

    Every comment in our classes is partitioned in such a way as to make the whole process close-celled, uncommunicative and ineffective.

    It would take many hours clicking on each partitioned cell (or comment) from each student for us to access all the discussion in our learning forums in the classroom. If this is the future of online college education, we are in big trouble…

    It could have easily been displayed in one active page, to be accessed immediately for our perusal. For some reason, this obvious solution is not allowed as a subject for discussion- let alone creating the possibility for its implementation. This is a typical arrangement at this “school.” To say this is an inefficient and grossly obtuse method and approach is an understatement.

    There seems to be intent. Again, I will say- “we are in big trouble.”

    When I first arrived at this school, I started chatting with the students and I could not help but be amazed at the picture of obvious abject poverty of which most of these students share in common.

    I also have to comment on the fact that I am sure that the average I.Q level of students that go to this school is at least 20-30 points lower (I am being very kind) than the students with whom I attended college in the 1990’s, and I fear that it may be indicative of an overall failure in the quality of education available to the average student who pursues a ‘public education’, as compared to the average ability of my fellow students during that former period.

    I call it a “consumer education.” I am sure you are aware that this is a “two-tiered society.” The middle class may soon disappear and I can assure you that I will not be among ‘the chattel.’

    Who decided that we were going to “spin” these kids instead of teaching them something that they can use in a real life situation, did I miss the memo?

    This place is like an episode of “the Twilight Zone.”

    Although I went into this endeavor with the highest of hopes, and the most positive of attitudes, the experience has shown to me that it is a frivolous waste of time, effort, and taxpayer money.

    I do not want to finish my degree at the University of Phoenix, as I believe that it would be a mark of lowered expectations accompanied with the stigma of shame, failure and defeat. Therefore, I have decided to “opt out,” and I will finish my degree at a school where there will not be such a shameful stigma attached.

    They do not teach essential education at the University of Phoenix. They teach lemmings obsolete methods that will put and keep them in a poorhouse.

    I am afraid that these poor people; in their desperation and ignorance, will bow in supplication to an enslaving Government and arrive as permanent wards as an on-site asset and Human resource.

    I am afraid that these students (‘containers’ or “chattel”) will be assets entered into a company ledger; owned and exploited by appointed “czars” in a corporate bailiwick.

    What they teach is conformity.

    Excellence goes to this school – to die.
    If you are extremely intelligent, and you are a student at this school, you are regarded as a threat; and treated as such.

    There is no student lobby. That should be enough to tell you that something is wrong.

    I believe that UOP (in a corporate sense) will not be allowed to fail, as is policy in “Our United States of America.”
    In case you haven’t noticed, the people are no longer served, and- as this institution is now considered part of the financial structure of this country (i.e. in bed with ?GOG!), you can be sure that they will use every asset at their disposal to ensure the Status-Quo.

    If you are intelligent enough to know what’s going on right now “underneath the surface” (in a National and Supranational sense), you probably realize there is more at stake than the small amount of reform we can realistically expect from pursuing our common endeavors in regards to this school.
    I admire your temerity (which I do not believe is a waste of effort)and I wish you the best of luck.

    Do you think this school is “Too big to fail?”

    Charles Patterson
    consul1@email.phoenix.edu
    mr_fun99@live.com
    Pacific Standard Time

    It is a Ponzi scheme- which NIA handily left out of this so-called ‘documentary.”

    There also is no mention of the censorship or intimidation, either; which makes us think that they have been compromised.

    Just thought that I would let you know that if you thought you learned a lot about what is happening in our colleges was left out by NIA and not mentioned or addressed.

    This was not an investigative report- in fact it is quite ineffectual and distracting…

    What do you think about it?

  • Charlie Patterson

    I apologize for my long diatribe.

    It would have probably been better if I had stuck to the subject and posted this somewhere more appropriate.

    I will let Chris do that if he chooses and he has permission to use any of this comment (and any other I may leave at any location on this website – and at any time he chooses) at a more appropriate location…

    Charlie P
    mr_fun99@live.com

  • bob k

    learn from the 3rd chart…. gold killed silver in the last depression.

    • Silver Shield

      Huge difference between then and now…

      We are a world without an anchor flooded with fiat currency and enough debt to know the world out of orbit.

      This will all mathematically will end the only question is how it will happen?

      Hyper inflationary depression or deflationary depression either way REAL Tangible Assets will win the day as humanity runs back to the money that has lasted all of history.

  • JM

    Where can we get these particular charts so we can follow them on a regular basis?

  • Silver Shield

    sharelynx.com

  • ES

    great read, at the end of the article you mention “tax free strategy”…do you have more info on this?

  • Kevin

    The reason gold ‘killed’ silver in the Depression is that the dollar was equivalent to gold at that time. There was big-time deflation and a rush to cash, which in those days, 20$ gold piece was.

    The Bernank will not allow deflation to occur, as this will wipe out the banksters through widespread debt defaults and paper asset devaluation. What we will have is a hyperinflationary depression, where paper assets and wages increase slowly or stay the same in price, while the price of food, fuel, gold, silver skyrocket.

    I believe silver is massively undervalued relative to gold (and everything else) and will come screaming back to 10:1 Gold/silver ratio or more before the end of this decade. Gold will be (conservatively) 5000$ by then, if the US dollar has not been replaced yet.

  • KA

    I’m new to all of this so forgive my ignorance…does anyone have a thought or comment about whether or not our government would ever confiscate silver and make it illegal to own? I believe in our history, they confiscated gold and made it illegal to own. everyone had to sell their gold to the government. What is the probability of that happening with silver? I assume the government would focus solely on gold, but would not confiscate silver. If that happened, Silver would be even more valuable as purchasing power when there isn’t any other option out there. Any thoughts on this???

  • Peter

    Yes, You are totally right.

  • IONICSILVER

    >I believe in our history, they confiscated gold and made it illegal to own. everyone had to sell their gold to the government.
    [MANY PEOPLE DID NOT TURN IN THEIR GOLD – NOTE: Franklin D. Roosevelt’s real name was actually ROOSENTFELT – A CRYPTO JEW, he was PART of the present gang of (jew) crooks in our present time.
    http://www.jewwatch.com/jew-leaders-roosevelt.html

    What is the probability of that happening with silver?
    [Executive Order 6814 – Requiring the Delivery of All Silver to the United States for Coinage
    August 9, 1934 – HOWEVER, most people refused the ‘order’]
    http://www.presidency.ucsb.edu/ws/index.php?pid=14741#axzz1XaxTfNoG

    http://www.silverbarter.com/history.html

  • […] is the original post: The 3 Big Charts I Watch For Silver | Don’t Tread On Me Written by: IanDavidChapman on May 14, […]

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  • […] 5) The gold to silver ratio is at 1:45. It takes approximately 45 ounces of silver to buy one ounce of gold. If throughout all of history silver has been mined a gold to silver ratio 1:10, how much longer can a 1:45 ratio exist? If silver has been trashed for decades and gold treasured, how much longer can the 1:45 ratio exist? If the amount of dollars invested in gold and silver at Sprott Asset management and GoldMoney is 1:1, how much longer can the 1:45 ratio exist? At some point the market is going to recognize the incredible opportunity. When it does, it will most likely overshoot and could make silver more valuable than gold. So if you really want gold, buy silver. You can buy 45 ounces of silver now and if the ratio falls to a 1:1 ratio you can trade 45 ounces of silver for 45 ounces of gold. (Read the 3 Big Charts I Watch for Silver.) […]

  • […] 5) The gold to silver ratio is at 1:45. It takes approximately 45 ounces of silver to buy one ounce of gold. If throughout all of history silver has been mined a gold to silver ratio 1:10, how much longer can a 1:45 ratio exist? If silver has been trashed for decades and gold treasured, how much longer can the 1:45 ratio exist? If the amount of dollars invested in gold and silver at Sprott Asset management and GoldMoney is 1:1, how much longer can the 1:45 ratio exist? At some point the market is going to recognize the incredible opportunity. When it does, it will most likely overshoot and could make silver more valuable than gold. So if you really want gold, buy silver. You can buy 45 ounces of silver now and if the ratio falls to a 1:1 ratio you can trade 45 ounces of silver for 45 ounces of gold. (Read the 3 Big Charts I Watch for Silver.) […]

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