Silver Cycles and War Cycles

by Gary Christenson, Deviant Investor:

Why Silver Cycles and War Cycles?

Because silver prices and wars are connected, and because cycles have predictive value when viewed over the long term.  Look at silver prices since the year 1900.  Yes, silver has not freely traded for a long time, but there is value in the study.

 

Six important silver lows have been identified with green ovals.  Two other lows in 1931 and 1971 are ignored.  The six lows identified approximately match these wars:

Low            Date                                War

1                  1914                               World War I

2                  1939                               World War II

3                  1963                               Vietnam War

4                  1990                               Gulf War

5                  2001                               War on Terror

6                  2017                               Beginning of the XXX war

Wars are usually financed with debt – borrowed currency.  The extra currency in circulation creates price inflation.  Silver prices, along with most other commodities, rise due to currency devaluation.  Silver is used in war materials and war production, so demand rises, which also causes prices to rise.

Conclusion:  We expect silver prices to rise at the beginning of new wars or the escalation of major and costly wars.  There is little doubt that both World Wars and the Vietnam War were costly and important to the U.S. economy.

The Gulf War and the War on Terror were expensive.  National debt at the end of 1990 was $3.3 trillion.  Today it is $20 trillion.  Much of that debt resulted from the Gulf War, Iraq War 2.0, the war in Afghanistan, War on Terror, and other military actions.  The War on Terror caused a spike in silver prices and national debt.

 

Date                      Silver Appx. Price       National Debt

Sept. 2001                   $4.20                             $5.8 trillion

April 2011                    $48.00                         $14.3 trillion

August 2017                $17.00                          $20 trillion

Observe that following each green oval – the beginning or escalation of a war – the price of silver increased considerably.

Date                      SI Appx. Low          SI Appx. High               Date of High

1914                                $0.50                            $1.33                          1919

1939                                $0.35                            $0.86                         1946

1963                                $1.29                          $50.00                         1980

1990                                $4.12                            $7.40                          1998

2001                                $4.67                          $20.94                         2008

2017                              $16.70                              ?                                      ?

These approximate dates, skipping the War on Terror, are 25, 24, 27, and 27 years apart.  A major war occurred about every 26 years.  Based on this approximate cycle a costly war is due … about now.

North Korea, Syria, Iran, China, or Russia?  Many possibilities exist for expanded wars.  Although we do not want war, the supposed benefits of war are:

  • A major war distracts the populace from government and central banker mismanagement of the nation and economy.
  • A major war pumps huge profits into the military-industrial-media-security-banking complex and benefits many other corporations including Big Pharma, Big Ag, weapons manufacturers, and more.
  • Big Oil benefits when crude oil prices rise, as they will.
  • Congress and lobbyists get their cut of the swag. There is something for everyone in the political and financial elite.
  • A major war justifies a massive increase in debt and a “clean” debt ceiling law. Why bother with a ceiling if we know it isn’t real?
  • Central banks want inflation and a big war assures it.
  • The nation might unite against a common enemy instead of wasting resources on current nonsense.
  • The military tests their new weapons and expands their importance.
  • The NSA eavesdrops on everyone claiming national security priorities and the need to ferret out North Korean, Russian, and Chinese spies.
  • And the list goes on.

Many vested interests support escalation of existing wars and beginning new wars.  It is all about money and power.  The Deep State favors more war.

SILVER:

High tech weaponry, missiles, military hardware, fighter jets, helicopters, and computers need silver, lots of silver.  A new war will increase demand.  Silver prices will rise, as they have following WWI & WWII, the Vietnam War, the Gulf War, and the War on Terror.

The inevitable massive increase in debt – say another $20 trillion in eight years – will devalue the dollar and create silver price rises.  Some individuals will protect their savings, investments, and pensions from devastating consumer price inflation with silver purchases, increasing demand.  We see the precursor of those silver purchases with the fantastic increases during 2017 in Bitcoin and other cryptocurrencies.

The Stock Market:

Dollar devaluations diminish the buying power of the dollar so the DOW rises.  War will increase corporate profitability so the DOW will also be pushed up by earnings, probably after a major correction.

 

Date                 Dow Appx Low     Dow Appx High    Date of High

1914                           59                                  390                        1929

1939                         140                                 680                        1959

1963                         700                              1000                        1966

1990                      2,500                           11,750                        2000

2001                      8,100                          14,000                        2007

 

The DOW and S&P 500 are trading at all-time highs in August 2017.  A new war might temporarily crash the stock markets, but they are likely to rise after a nasty correction.  Massive debt increases, dollar devaluations, and central bank levitation support stock prices.

 

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