The Price Of Silver Explodes Past 20 Dollars An Ounce As The European Banking Crisis Deepens

 By Michael Snyder, on July 4th, 2016

Have you seen what the price of silver has been doing?  On Monday, it exploded past 20 dollars an ounce, and as I write this article it is sitting at $20.48.  Earlier today it actually surged above 21 dollars an ounce for a short time before moving back just a bit.  In late March, I told my readers that silver was “ridiculously undervalued” when it was sitting at $15.81 an ounce, and that call has turned out to be quite prescient.  The Friday before last, silver started the day at $17.25 an ounce, and it is up more than 18 percent since that time.  Overall, silver is up more than 30 percent for the year, and that makes it one of the best performing investments of 2016.  So what is causing this sudden surge in the price of silver?  This is something that we will discuss below… 

Unfortunately, the truth is that the crisis is just getting started.  As I warned before the Brexit vote, European banks were going to continue to implode no matter what the result was, and that is definitely what we are seeing come to pass right now. 

Without bailouts, virtually all of the major banks in Italy are going to fail.  It is just a matter of time.  And each of those failures would send financial shock waves all over the planet. 

Personally, I am convinced that the second half of 2016 is going to be even more eventful that the first half of 2016, and this new global economic crisis is going to continue to accelerate.

Precious Metals Going Ballistic as Alan Greenspan Makes an ASTOUNDING Admission

One man who understands the value of gold as money as well as anyone is Alan Greenspan. Yes, the same Alan Greenspan who steadily debased the dollar. The same Alan Greenspan who helped enable government debt to grow out of control -- and into the massive $19 trillion black hole that it is today. The former Federal Reserve chairman pursued anything but sound money policies during his long tenure at the Fed. 

But now, at age 90, Greenspan is suggesting that a gold standard could help restore soundness to our nation’s fiscal and monetary policies. He recently sat down with a Bloomberg panel to discuss Brexit and other issues, including gold. He warned that a debt crisis is coming and blamed elected officials for their unwillingness to restrain entitlement spending. 

Of course, the Federal Reserve has served as the great enabler of Washington’s spending excesses. Greenspan knows that full well, even if he is unwilling to accept any personal responsibility. But in an astounding admission, he did note that the economy performed better under the gold standard – before the Federal Reserve was even created.

Overall, things are looking good for precious metals bulls at the moment. Silver has been outperforming gold, with the gold to silver ratio dropping from a high of 83:1 earlier this year down to below 70 now. Both the HUI and GDX mining stocks indices continue to confirm the metals, closing yesterday at a fresh new 2016 highs The run up in gold mining stocks in the first half of the year of more than 120% has pushed weekly momentum oscillators to their most extreme readings since 2009.

DYI Comments:  Silver continues to be undervalued as compared to gold as the ratio remains very high historically (15 to 1 is the norm).  What this ratio is telling us there is massive systemic economic and political world wide pressure.  Investors are running to three of the highest quality assets in the world.  

One:  Swiss/Franc Treasury securities have been so sought after all bond maturities are now negative. Investors have seen this trade as played out due to negative yields and have moved to their second favorite.  

Two:  U.S./Dollar Treasuries.  Strong Dollar plus maturities that as of yet positive attracting investors world wide. 10 and 30 year maturities have soared in value dropping their current yields for new investors as yields are at 1.38% and 2.14% respectfully.  As yields drop these investors will look to diversify into their third favorite holding.

Three:  Physical Gold.  Buyers of the Swiss/Franc and U.S./Dollar Treasury securities will hedge their portfolio with gold.  They are hedging against all possible scenarios such as deflation, inflation, debt default, world wide over valued stock and bond markets, political fall out and possible out right war(China, South China Sea).

Silver is playing catch up to gold.  The ratio is so lopsided either these world wide pressures are going to cool off dropping the price of gold or silver is going to play catch up.  DYI see's this as silver catching up in price.  Either way lock in profits from selling gold to purchase silver and/or by selling overvalued stocks and bonds.

7-7-16  

Gold: $1361.  

Silver: $19.78  

Ratio: 69 to 1 (rounded)            

DYI

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