This Overlooked Metal Will Ride to the Rescue When the Dollar Fails
If you know with a reasonable certainty that your house will flood at some unknown point in the future, would you buy flood insurance today?
And if one brand of flood insurance costs $2,000 for a policy, and a second brand costs $24 for a policy… which would you buy, assuming they both were going to give you relatively similar coverage?
Obviously, I am not talking about actual flood insurance or flood-insurance policies—that just serves as an analogy for my real story today: U.S. monetary crisis and silver.
I write a lot about gold and why gold should be a primary and near-permanent holding in your portfolio. And it should be because gold is the anti-dollar, the anti-fiat currency.
Gold bows to no ruler, and it doesn’t give two shakes of a rat’s rump about U.S. central bankers who claim gold is an archaic relic of a less-evolved period of human finance. Gold bides its time, quietly watching paint dry while counting blades of grass in a pasture.
And then, one day, when you need it most, gold leaps up and races to the rescue as the dollar struggles with whatever the crisis-du-jour happens to be.
In 1933, that crisis was a dollar collapsing under the weight of idiotic congressional policies that fostered and deepened the Great Depression. In 1971, it was a crisis that spun out of America’s accumulation of war debt and Great Society largesse, and rest of the world realizing it would end badly for the Yanks, so they figured let’s go to Fort Knox and turn all our greenbacks in for bars of gold… which the U.S. government promised to do under the 1944 Bretton Woods agreement.
But very often lost in the story of gold is the story of silver.
It’s the red-headed stepchild of precious metals (though I assume in the lunacy of a woke world that picking on red-headed stepchildren is no longer copasetic, so I guess it’s good that I am an equal-opportunity disregarder of woke lunacy).
Silver’s problem is that it’s both fish and fowl. It’s a precious metal that governments dating back to ancient times have used for coinage… but it’s also an industrial metal employed in the most mundane of products like washing machines and salves to treat warts.
It has also been the subject of long-running rumors of market manipulation and rigged prices at the hands of banks such as JP Morgan, and agencies including the Federal Reserve and the U.S. Treasury. Whether any of that is true, who knows?
What is known is that silver is primarily a tangential byproduct. What I mean is that about 80% of all silver production globally is a happy accident of mining for gold, copper, lead, uranium, and zinc.
We also know that silver production is in decline, and that silver demand is ramping among industrial users. Many of the biggest trends of the day demand silver. 5G networks—loaded with silver. Same with solar panels and lots of green-tech electricity production. Electric cars need nearly 2x the amount of silver as do traditional gasoline and diesel cars.
And the industries that care about fighting germs—everything from makers of medical equipment, to sportswear clothing companies, to makers of washing machines I mentioned above—are snapping up tons of silver because of its antimicrobial properties.
Still, silver prices have been underwhelming.
In the months following the arrival of COVID in 2020, silver spiked to nearly $29 per ounce from about $12. Since then, however, silver has bounced around between $21 and $26, showing no real direction or momentum, sort of like a barista with a doctorate in art history and no real desire to do much with that beyond crema designs atop a cappuccino.
But this is the time to own silver.
Time to wade into the market and grab some ounces to stash away in a safe-deposit box, a home safe, or, even by way of a silver exchange traded fund, through a brokerage account or a retirement account like an IRA.
A U.S. fiscal crisis seems more probable than possible.
Congress really doesn’t care about debts and deficits, and the party factions that do rant about it from time to time only do so because the other party is in power, and they want to anger the base to fuel campaign donations. When they return to power, they inevitably and conveniently forget that they hate debts and deficits as they spend drunkenly on their priorities.
By my reckoning, Uncle Sam has a debt with disaster later this decade. Too much debt, too much debt-servicing costs, too many countries increasingly tired of using the U.S. dollar, too many investors avoiding U.S. Treasury debt.
When it all comes together in a crisis—and it will—the dollar will face its first significant crisis since the late `60s and early `70s, which prompted Nixon to abandon the gold standard.
In that moment, silver is going to ride high alongside gold. People will be looking to own hard assets as they flee the greenback.
Which returns us to the top of today’s dispatch: If you know with a reasonable certainty that your house will flood at some unknown point in the future, would you buy flood insurance today? And if you can buy that flood insurance for $24 (the price of an ounce of silver) instead of $2,000 (the price for an ounce of gold) would you buy that policy to cover the losses that will happen?
I’ve been buying silver for years, just packing it away here and there.
Because one day, the dollar will confront a crisis of Congress’ own making. And in that moment, silver will ride to the rescue.
