Monday, March 2, 2009

The DOWN JONES and HI YO SILVER

Well I am not one who tries to predict anything but I am going to make this one and only prediction about the Dow Jones and stocks in general. I have looked back at the trends back to the 1929 era and the fall then was 89% in value. We are at a 50% drop in value so far on the Dow. The market fell 11% just in Feb. so I am predicting that the DOW will drop to 1530 points or so which is 1985 levels. That is an equal drop with the 1929 figure or so. In the Great depression our country had a currency that was backed by GOLD, there were no credit cards, we had a manufacturing base (5% manufacturing now, 95% service), Ag was more of an industry than now and the dust bowl era did not help that industry, The government did not have all the obligations it has now IE; social security(result of depression), medicare, medicaid, welfare, food stamps, you get the idea. My grandfather varnished peoples doors for a quarter a door during the depression. I do not plan a repeat performance thank you.

All I can say is buy SILVER. Why not gold? Well one ounce of gold is above $900 pushing $1000 and one ounce of silver is $13.00. Try buying a loaf of bread or anything with a one ounce gold coin. Yes I know they make 1/10 ounce coins but you pay a premium for them more than the one ounce coins, why pay more for the same metal? Even if the dollar ends up like Germany of the 30's your gold will increase in value and be harder to liquidate.

Silver is the one precious metal that when used in manufacturing is NON recoverable. The majority of this metal s used in the film industry, yes they still make film. Anyway back to owning silver. It is what I call the poor mans gold. Cheap for now and becoming scarce in any size coin or bar. For gold to be at the same levels as the 1980's high of the $800 an ounce range it would have to be at $ 2300.00 range NOW, Silver was at $49.00 an ounce range in the 80's and it would now have to be at, WAIT FOR IT, $400.00+ AN OUNCE (about $437.00 or so) now to be equal in dollar value of the 1980's high. So gold is $1300.00 away from its all time high and silver is $387.00 away from its all time high. That means that gold would have to increase 2.5 times its current value (using $940.00 an ounce) or so to reach the all time high and silver would have to increase(using $13.00 an ounce)WAIT FOR IT 33.6 times its current value to reach the all time high in dollar value. (all figures for dollar value is inflation adjustment for your info)Which one has the potential for more upside just based on those numbers? DUH! Now there is no limit as to where any of these go but silver is better than gold on an ounce per ounce basis.

Yes silver is heavy in quantity, but I would rather have 72 ounces of silver than 1 ounce of gold (gold at 940.00 and silver at 13.00). Silver is the way to go and you can get 1 ounce for your share of the STIMULUS PACKAGE ($13.00) Not really ha ha (see below). I recommend not buying that box of ammo or that extra magazine instead buy SILVER. Now remember that any local business that sells precious metals is going to make a profit on every ounce of what ever they sell so that ounce of silver may cost you as much as $16.50 AN OUNCE. STILL CHEAP!!! Also remember to only buy PHYSICAL METALS NO PAPER. Any online dealer now has a 6 to 8 week wait for delivery but you are locked into the price. Cheaper on line by about 50 cents or so and most do not charge postage. That is important when buying silver. One more thing just buy the generic silver not the U.S. government stuff which carries a premium (I just said something that goes against my usual rant of buy American) But a buck is a buck and it is still American silver just not U.S. government silver.

Mark Kent

Yes I know you cannot eat precious metals so food is good but having both is better.

*** NOTE I MADE A GRAVE ERROR IN THE CALCULATIONS OF CURRENT VALUES TO WHAT THEY SHOULD BE IN 1980 DOLLARS. INSTEAD OF A 2.5% INCREASE IN GOLD IT IS A 2.5 TIMES THE CURRENT VALUE OR ABOUT 250% INCREASE AND THE SILVER IS THE SAME ERROR IT SHOULD BE 33.6 TIMES THE CURRENT VALUE INSTEAD OF 33.6%. THAT MEANS THAT SILVER WOULD HAVE TO INCREASE OVER 3360% TO REACH AN ALL TIME HIGH OF ABOUT $437.00 AN OUNCE. ***** I already changed it above but I wanted to point it out just in case you read the previous post info. My bad or Good should I say.

2 comments:

  1. Hi Mark,
    Like your writing. Agree that silver is more useful to convert. Think you are optimistic in predicting Dow at 1530-mainly because back then the united States were a powerhouse of manufacturing and now we don't make sh*t.

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