Silver Rockets Past $67 to Another Record High

When I wrote about the debasement trade on Dec. 5, silver was “approaching $60 an ounce.” Yesterday, just two weeks later, it set a new high at $67.10 an ounce. That’s about an 8.4 percent jump in price in the past week and an almost 11 percent increase in the two weeks since that article. This just caps off a tremendous year for silver, with it up more than 130 percent.

An ounce of silver today is worth more than a barrel of oil. That rarely happens.

I will not rehash that article (you should read it) and talk about inflation and why fiat currency is failing. Instead, I’m going to discuss a few other reasons silver might continue to rise in price.

Runaway Silver

First, there is a supply and demand imbalance. More silver is being consumed each year than the mines can produce. The resulting shortage is driving up the cost of silver as the prices rises to encourage banks and individuals with large holdings to sell silver. At first, that worked, and people sold like crazy as silver neared $50. Now people are holding on to it because they think the sky is the limit. Why sell at $67 if it can reach $87 or $127?

This physical imbalance is upsetting the silver market, which often deals in paper silver, or silver futures contracts. In some cases, there may not be enough physical metal to fulfill purchase obligations.

Second, the United States has listed silver as a critical mineral, meaning it has strategic national importance. This is because it is used in AI, electronics, and military equipment. China followed in our footsteps and announced it would stop exporting silver. The result will be an even greater shortage as China not only mines about 40 percent of the world’s silver, it refines and processes silver from other countries. If China refuses to export silver, the global shortage will increase, driving up its price. Once the price skyrockets, China could then let small amounts trickle into the market, getting a big economic payoff.

Third, it can take years for mines to gear up to produce more ore. Many silver mines also need capital improvements before they can boost output to meet increased demand. That just extends the shortage and may ensure the prices stay elevated. But not all silver comes from dedicated silver mines. Much of it is produced as a byproduct of mining other metals, including copper and gold. So the silver market depends on those miners to boost production.

The Future of Silver

As I have said before, I am not a precious metals specialist or a financial advisor (see the disclaimer below), but I am betting that this silver run has legs. I’m holding on to my junk silver. In fact, as I wrote yesterday, I’m going to bury some of it in a hidden location in our 20-acre property, and I have no intention of digging it up until I am desperate.

Even if I wanted to sell, I understand some dealers are not buying silver and others are buying it at $5 or $7 dollars under the spot price. They don’t want to get stuck holding silver they paid $67 for if the price crashes back to $60.

What should you do? Should you buy silver hoping it goes up? Should you hold or sell any you have? I don’t know; that’s your call. If you bought it to use for trade after the SHTF, then it doesn’t matter what the price is today. On the other hand, if your modest investment has tripled or quadrupled, I wouldn’t blame you for selling, especially if you use the proceeds to pay off debt or to improve your preps.

A Final Warning

The rising price of silver may be good for individuals who stack it, but it is sending a worrisome signal about the state of the U.S. dollar. The rising silver and gold prices represent the fear, uncertainty, and doubt about the future of the dollar. Remember, inflation means the value of your currency is weakening. Ask yourself: Is silver becoming worth more, or is the dollar becoming worth less? Seeing as the dollar has lost 97 or 98 percent of its value since the Federal Reserve was founded in 1913, it’s probably the latter.

Prepare accordingly.

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Disclaimer

I am not a financial advisor, accountant, economist, tax professional, lawyer, or precious metals expert, so do not consider this or any other posts to be financial or legal advice. I am simply a well-educated prepper relaying my personal beliefs established over more than 30 years of prepping experience. Do your own research and consider consulting a financial professional to assist you with your investments and financial decisions.