Caution for Silver Bulls

In Monday’s column, I gave you some pretty impressive data on gold and how it has been a good long-term performer since we bought our “lone coin” back in 2001.

This was naturally followed with a number of emails from silver permabulls who told me I was giving the short-shrift to silver.

Linguistic point:  A shrift is like an “absolution” with a priest, so the term short shrift is along the lines of a “short blessing.

Point is, silver doesn’t get one – leastwise from father George.  Because Silver has not been a particularly good performer, despite all the hype on the web.  Let me explain why…

Long-term readers of this column will remember in 2004, Elaine and I were out in Burbank.  I’d been hired to manage and move the old Soundmaster Recording Engineering School from its then-present location on Magnolia Blvd. to a new location.

While we were in Tinseltown North and hanging at The Smokehouse, I figured that it would be a fine thing to buy a little bit of silver.  The prospects seemed good at the time.  No question in our minds that the US FedGov was going to keep “making up money” in order to paper-over the federal spending disaster – a slow-motion/ongoing train wreck – so I bought a little.

Paid between 6.96 and $7.03 an ounce.  2004, remember.

Fast forward to this morning.  The price of silver futures on FinViz is $15,63.  And, when I looked at the charts (bottom of this page after the comments), looked to me like $15.55.  To be conservative, let’s use the lower number.

Thus, on a 15-year investment, the price of silver is up how much?  15.55 divided by 7, call it.

About  2,143 times.  That’s nowhere near as well as gold has done.

Maybe you don’t keep a small flip type shirt pocket economic notebook around – but if you’re young, there are lots of worse things you could invest in.

IF you do, pencil in the following for your long-term learning.

2001 (and one 2004)-2019 data:

Gold increased:  4.73491773308958 times.

  • The NASDAQ IXIC increased: 4.134905492682349 times.
  • The Dow increased: 2.498050667041438 times.
  • The S&P 500 Index increased: 2.391239477610566 times.
  • Silver (2003 price basis) increased: 2.221428571428571 times.

Now, play “spot the turkey.”

At the time we bought that “lone silver ounce” I had high hopes for the gray dog.  When it was up to $20 an ounce I was thinking “What a genius move!”  Now, obviously, like people who should have sold ALL their cryptos when the BTC’s were up in the $18,000 range, holding out for longer-term gains was a bad idea.  I have lots of those.  If you run low, let me know…

The key thing, though, is how long does it take for that pony on the financial merry-go-round to come around again?

Well, hope springs eternal in the bosoms of capitalists.  The Silver permabulls are still dreaming of $200- and trying to start rumors of $100.  Just like the crypto people are dreaming of a $300,000 BTCs while this morning the digitulips are sucking down in the $3,640 range.

Is there a critical lesson to be learned here?

Of course – except it’s a constant relearning process that has to go on throughout Life.

You need to study the damn numbers.

The numbers never lie.  The lies come from our slanting their meaning, one way or the other, in order to justify our own actions.  If you’re well into the seven figure net worth category maybe you read the numbers better than some poor family schmoe who has a negative net worth.

But, I wanted to be clear for silver bulls that talking up $100 or even $10,000 silver won’t do any more good than an alcoholic promising “Oh, I can quit any time…”  (Then they’ll admit “Not till tomorrow, though maybe…I’m not ready just yet – hand me n’other?“)

The reason to study – I mean really read and feel books like David Goggins’ book Can’t Hurt Me: Master Your Mind and Defy the Odds is because they reveal a process one can go through to begin to cut through the layers of false justifications and self-denial (lies for short) that keep us all from making better financial (and life) decisions.

Making a lot of money usually involves that shouldering of some risk, but also being brutally honest with yourself at all times.

So when someone says “Silver is going to $200!” you can sit back and run the freaking numbers.

Divide the number of accurate predictions this oh-so-insightful source  has made by the total number that have been put out over your sample period.  Say a person has made 20 financial predictions overall, but only 7 have been objectively correct.

That’s in the range of chance.

Yet, because of quirks, we tend to assign higher recall values to accurate predictions about silver (or whatever, BTC’s – you name it) than we do to incorrect or predictions that can be written in such a way as to seem right after the fact.

You know what a diode is?  Wiki it and the key part of the concept is:

“A diode is a two-terminal electronic component that conducts current primarily in one direction (asymmetric conductance); it has low (ideally zero) resistance in one direction, and high (ideally infinite) resistance in the other. “

The Present may be considered, in linguistics or everyday speech, analogous to the arrow of time.

Alan Greenspan was an absolute master of writing “diode speak.”  Such that he was raised to near deity status among his adherents.  Yet, when one looks at many of the Fed statements from his reign, you can divine many statements that when read on thee other side of the time arrow (now) look prescient.

Haven’t studied prophesy much, have you?

If you have a personal investment decision to make, go back to the data.  Any day you’re sucking air you can claim your right to run data and change decisions to head in any new directions.  Take a look at the real estate where you live and see where you would be had you put your investment money into other avenues:  Gold, tools, starting a small business, improving your education – all right/proper uses of money.  But what is your measure?

Take real estate, for example.  My friend Dr. Jack Lessinger, whose books may be found on Amazon, instinctively understood how the data works and used the concepts it suggested.  A professor of business history (emeritus) at the University of Washington, he was correctly forecasting what would happen when suburbia began to fail.

When you think about it, you can put a bullseye over a city and, working out from the middle, see how different price increases tend to band over time.  Downtown core prices can go way up, or way down.  A city with a hot industry, like Seattle and software, may scream opportunity which a city like Tulsa, Oklahoma?  Not so much.

But, if you’re young?  Waterfront property in the region around Tulsa – and there are a ton of lakes and rivers up there – gets mighty interesting.

For a few minutes effort, you can hit the S&P/Case-Shiller housing data pages and look at 10 and 20 year workups for where you live and place their on your “what;’s really working” chart.  Want to live in a high beta (change) city like Seattle?

This won’t ensure you’ll become a “winner” but it can sure reduce your odds of becoming a loser.

And that’s a fine thing to aspire to…

Producer Prices Sing Deflation

Here is another helping of data to ponder just out from the Labor Department (who we thank for showing up to play):

“The Producer Price Index for final demand fell 0.2 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.1 percent in November and 0.6 percent in October. (See table A.) On an unadjusted basis, the final demand index moved up 2.5 percent in 2018, the same as in 2017.

In December, 80 percent of the decrease in the final demand index is attributable to a 0.4-percent decline in prices for final demand goods. The index for final demand services edged down 0.1 percent.

The index for final demand less foods, energy, and trade services was unchanged in December following a 0.3-percent rise in November. In 2018, prices for final demand less foods, energy, and trade services advanced 2.8 percent following a 2.3-percent increase in 2017.

Final Demand

Final demand goods: The index for final demand goods moved down 0.4 percent in December, the same as in November. In December, the decline was the result of a 5.4-percent drop in the index for final demand energy. In contrast, prices for final demand foods advanced 2.6 percent, and the index for final demand goods less foods and energy rose 0.1 percent.

Product detail: Leading the December decrease in the index for final demand goods, gasoline prices dropped 13.1 percent. The indexes for diesel fuel, basic organic chemicals, jet fuel, residual fuels, and beef and veal also moved down. Conversely, prices for fresh fruits and melons jumped 48.9 percent. The indexes for construction machinery and equipment and for residential natural gas also increased.

Here’s the key part:

The December decrease in prices for final demand services was led by margins for food retailing, which fell 2.5 percent. The indexes for cellular phone and other wireless
telecommunication services, automotive fuels and lubricants retailing, residential real estate loans (partial), and airline passenger services also moved lower. Conversely, prices for guestroom rental rose 2.9 percent. The indexes for inpatient care, machinery and equipment parts and supplies wholesaling, and long-distance motor carrying also increased.

Bummer of Another Mother?

OK, how’s about this from the NY Fed in this morning’s Empire State Manufacturing report?

Manufacturing firms in N e w Yo r k
State reported that business activity expanded slightly. The general business conditions index fell eight points to 3.9, its lowest reading since mid-2017. The headline index
has fallen a cumulative eighteen points since November. Twenty-three percent of respondents reported that conditions had improved over the month, while 20 percent reported that conditions had worsened. The new orders index fell ten points to 3.5, indicating that growth in orders slowed significantly, while the shipments index was
little changed at 17.9. Unfilled orders were somewhat lower, inventories declined, and delivery times were slightly  shorter.”

I think the world is suxabunch.  Down futures went negative after being positive earlier.  God knows why they would have been – are we the only ones who can read?

Shutdown Hype?

Need another poster-child for innumeracy run rampant in America?  Pardon us while we take a chill pill on the Shutdown Hysteria.

Here’s why:  In the story “No. of no-show airport security screeners soars in shutdown” there is one sentence that gives us some “workable numbers.”  Here’s the part to notice:

“…the Transportation Security Administration reported a national absence rate of 7.6 percent compared with 3.2 percent on a comparable day a year ago. “

The mostly corporate/left media in this country has, in our obscenely fact-based view, been trying to give borderline federal employees an excuse to “sick out.”

But the AP giving us actual numbers means a lot to us.  For one, that’s only a bit over 4 employees per hundred who MIGHT be even considered “sick outs.”

But now comes even more mental ACUITY”  Could more people actually BE SICK?  Well, let’s see, what MIGHT cause that?

A major blizzard might make it impossible for some people to get to work.  So we scan the headlines for snow storm stories and wonder if there have been any of those?

Well, of course there was.  And working into the hype of the press on Shutdown Mania we read how “Another snowstorm could be on its way.

But, let’s not stop there.  let’s put on the reality goggles and consider the flu this year versus last year.  And here’s a story in the Washington Post a couple of days old but “The flu has sickened about 7 million in the US so far, CDC estimates.

In Ure’s Alternate News Reality (ANR) we would propose that the left-leaning media is trying to work the naturally occurring data (snowstorm and flu numbers vary by year) in the very same way the Climate Change Hysteria (CCH) has been modulated.

The objective, as we read it, is to pressure Donald Trump into caving so Peloser can claim a win and keep the even-crazier socialists ascending from marginalizing her.

All of which might sound a bit right of center in our thinking except for the fact that Congress can override Trump any time they can get enough crooks on the hill to come back from Puerto Rico beaches to actually do the work of the people, not the freaking lobbyists who they party with.

Anyway, yes, a few will always sick out but end of the world?  Or just part of the ongoing disaster area of ‘Mercia Media that has too much news capacity and not enough content?

“We will find the news or make some…” as I used to tell young reporters.   It wasn’t fake – But we had airtime to fill and that’s a very harsh metric.

Ure A Pin-Cushion?

Off for another blood draw this morning.  Last week when I went in for normal labs, no one could get blood out of me.  Six prick limit, so to speak.  So, this morning, off for another pin-cushion session.

Not only am I heartless, but apparently bloodless, too, lol.  Deep veins or stingy.  You may the call..   Personally, I think with my elevated cholesterol levels, I just need to warm up.  Oil doesn’t flow as easy when cold…

Moron the morrow

36 thoughts on “Caution for Silver Bulls”

  1. Even if silver coins were to go back to face value I would break even in the silver game. I was lucky enough to work in a small country grocery and silver coins came through my register regularly. I always bought them out of the till. I still check all my change, though my luck isn’t nearly as good. I think I’ll keep my silver position.

  2. Professor don’t look now but Russia just announced plans for $10 Billion a month Bitcoin purchases, as a viable way to get around/avoid US sanctions.
    Who would have ever thunk the digital gangs that obviously run Russia now, would go public with their finance plans. Hard for this reader to believe that Putin is as stupid as Nancy P/ Slappy Maxey looks!
    George just think you too can start paying TAX for your drinking water, just by moving back to Cali. New Governor is pushing a new drinking water Tax, cant make this stuff up. You would be closer to family members, and get to pay Tax on the water you drink…sounds dreamy, no?

    • EastCoast,
      If you take that headline at face value, it sounds silly..I admit…But there is a deep and purposeful reason for this budget item.

      California has a decades long fight for water resources. We are the number one agricultural region…almost 2to 1 in production and acreage in the US. Farmers need water. We are also in the top 3 in Seafood production. More important, we have 40 million thirsty people to hydrate…not to mention another 40 million tourists/ business travelers that visit us every year. Water is our gold.

      The bill is not as much a Tax as it is an allocated budget for fair distribution. There is a reason for everything. We all get water bills right? And we get increases from time to time. This is just an increase in our water bill..except it will be official to allocate it to providing clean drinking water to all communities, not just the ones served by tech/ag/ big Corp/ fisheries.

      Gov Newsom is a player and has the potential for bigger endeavors down the road. That article you read is just a smear piece by the far right to discredit him…because he has the looks, the smarts and the swagger to be President someday. Plus, he likes to throw things out for discussion. He has done that his entire career. The lbudget item he is proposing is a draft that will be fine tuned before it ever is executed.

  3. FYI……..Local news coverage of TSA screeners not coming to work reports that the Sioux Falls, SD airport is fully staffed as the screeners are NOT government workers but provided by a private security firm. If this is the case in Sufu, why is it not done everywhere?

    • There’s a whole list of cities across the USA that are included in that story.

      Some just see a situation like this as a federally funded free holiday.they will be paid. Kind of like Congress taking off for a lobbyist funded island trip wine women and song..
      Then the work ethics of different regions..the Midwest flyover country has always had good old farm boy work ethics in comparison to lets say Oklahoma where they have a difficult time getting anyone to do anything during regular working hours..

  4. Well, I might argue that the economic manipulations propagated by the US government through sanctions and treasury bond pricing is close to an end. Which means the rest of the world is already on a path to replace the US as a world economic controller. Therefore, what type of system takes its place, if not precious metals for the short term. To be replaced by crypto currencies after SDR’s, the ESF, and SWIFT all fail. It is fairly apparent we are in a transition and without revolutionary technological advancements that are game changers, we are entering a VERY difficult period. No doubt the ruling elite have their GOOT, ( get out of town) plans already laid out, but the rest of us will need some form of barter system in place to avoid the government goons who were just elected. So why not precious metals or cryptos, (which by the way the rest of the world seems to be adopting), to protect yourself against a fascist government.

    • IF government monetary systems fail so do all the contributing infrastructures .ie. power water communications and BANKS… Cryptos REQUIRE a computer/cell and IF the big one hits…POWER will be gone…along with the only way to ‘trade your crypts’….On the other hand, coins in hand can be used with out any infrastructure needed……as in days of old…

  5. Hey George, I had to chuckle a bit while reading your take on silver ie. the hypesters on what’s going on with silver like the world supply is running out is such BS it is not even funny they are mining silver like there is no tomorrow in NV (I sent you a pic of the ore that they are taking out 2100oz to the ton) there is also another deposit in MT that core samples show to be in the range of 35mil. tons so I don’t think we are going to run out any time soon. But all of that said silver will have it’s day unfortunately what is on the other side of that day will not be good!

    • When the Trillions of fiat dollars (paper and digital) start looking for a new home, There will not be enough Gold and Silver available at any reasonable price to sop up the financial mess that all major Governments have created over the last 50 years! Keep on stacking:)

  6. Good article on silver. The only question I was left with, was where you saw silver actually going, (which is not actually financial advice)

  7. Pres. Trump is showing weakness in this Dem onslaut. Why not end Muller’s investigation & start an investigation on Mueller. Also, start a investigation on th FBI for insinuating he is a Russian Spy. Fight back…or does PT have something he wants hidden & doesn’t want to rock that boat?

    So far, I would not vote to reelect PT if he decides to run again. He is mismanageing the chaos.

  8. Silver. We all realize there is manipulation on the Comex , where the entire world supply can be bought and sold as paper shares (supposedly as good as the real metal) in hours. China and Russia are buying gold to back their respective currencies. In the event that we have a currency crisis ,paper money, or FLAT money will probably be devalued ,even to the extent that it will not be accepted for something as mundane as food. Speaking of which (food) ,one of the several possibilities with a global lower temperature environment will be horribly higher food prices. Also , the possibility that food production may be curtailed due to shorter crop growing windows , and lower temperatures…I am of the opinion that there will be a rise in the price(value) of silver because people will not accept worthless for something of value. So, I have a few coins ,the input is done paid for a long time ago . They cost nothing to hold.. About the only use , right now ,would be to fill plastic milk jugs to use as hold downs at the local farmers market. So, anyone wishing to help prevent my tent from blowing away, feel free to donate “weight”. Since you are into TH’ing, local story is that a local guy went into a basement saw little circles in the dirt on the floor.. About the size of half dollars….. they were.

  9. George, drink some water before you go to get your veins poked by your medical personal, keeps the veins full and easier to stab. good luck with your tests

    • George, I agee with Jack. I have suffered this problem forever.

      I have a 4 prick limit after sending nurses out of the room crying at the sixth attempt. Drinking 2 or 3 glasses of water before leaving the house has helped a lot. Also, left arm is much more accommodating than the left arm.

      Good luck

      • Always..go for the kid wanting to tell you about his hot date.. Or crazy weekend…kids cats dogs..
        The pleb tech.. They will stick four or five hundred a day easy.. Where a desk anchor maybe sticks a hundred a week..
        The same thing with x-ray techs monitor techs etc.
        I got my ACLS ( advanced cardiac life support) cred just so I could read my fathers strips. A use it or loose it thing..
        First day.. Just got the book… A code blue.. Run in and everyone have more experience with this and leaves.. Here we are two raisins no experience lol.. They lived no thanks to the rest of the staff.. My mother fell..I knew hours before they told me just because I can read a negative. And have seen thousands..
        The worst stick I ever got was from a guy that said he had thirty years experience..his experience was sitting behind a desk.. I had to ask him if he wanted me to do it lol..I was saved by the kid..
        Go for the fleb.
        The same thing with an accident.. Bet on the emt..

  10. As far as TSA employees calling in sick…many are doing it out of necessity…to make money…whether it’s driving an Uber or working a part time job on the side. Consider that. Uber and Lyft do provide a quick way to make a few extra bucks. Better than zero. Some TSA employees can weather the storm…some live day to day and need to put food on the table. Those are the ones that may be skipping.

    Are some really sick? Yes…there is a strain that is a bear out there. I haven’t been sick in 3 years and this strain got me for about 4 days around New Years.

    About the market…today Netflix stock made me very happy after 4 months of mediocrity. Today it’s up almost $20. Why? They raised their rates…it wasn’t that long ago that Netflix raised their subscription fees and everyone ranted and raved. They raised their prices today from $11 to $13..In today’s dollars, that $2 price change doesn’t mean much to consumers, but on a financial ledger, it’s well over a 15% increase in revenue. That makes Wall Street and me, very satisfied.

    Finally, on the shutdown…I am going way out of my comfort zone here and am fearful that there is a echo effect on the horizon…

    Back in 2001, GW Bush has the lowest Presidental poll numbers in recent history. They were abysmal. They 9/11 happened. I know there a good portion of you that follow George and Urban Survival that think this was a conspiracy.

    Well fast forward to today. We have lapses in TSA coverage, and a President that is extremely unpopular and a world full of politicians that think he is a joke. Then… Just before Mueller is about to open up and expose Russia, Saudi Arabia and Trump…………?

    Just sayin’

    • Just saying: an inside job can happen at any time with or without a President’s knowledge but definitely planned to move this country along it’s already outlined transformational agenda.

    • ‘that $2 price change doesn’t mean much to consumers, ”

      Sadly Mark…as a person on the bottom…
      IT DOES make a difference..
      On your take home wage that’s one plus cents an hour.
      Our increase in power was between four cents and six cents an hour..water.. That was fifty cents an hour.. Groceries..another four cents..
      It doesn’t sound like much a penny here a penny there..
      Now being an employer.. Did you give everyone across the board an increase in income when prices went up..or did you assume that the increase as such a small one that it wasn’t really going to have any affect and there was enough disposable income in every ones budget to cover the increase.
      For me I see it.. The average wage earner will just discard it as nothing to worry about.. But take the pyramid out and follow it..all the pennies here and there..then compare them all to wages.. Two dollars here and there and wages aren’t keeping have to reduce expenses or increase income

    • One of my friends in CA I correspond with, even though he’s the typical CA liberal, came back with a very similar theory this morning. You two must be reading the same paper or editorials or something out there.

  11. re having issues getting blood drawn – me too! However, my naturopath has a procedure to do just that and it has worked every time for me –

    First, make sure you are hydrated – might mean drinking lots of water 1-2 hours prior;
    next, about 30-60 min prior, engage in some physical activity that gets the heart pumping – could be a workout but could also be as simple as doing jumping jacks and other basic exercises; and finally, the thing that really really helps – apply a heating pad for about 10 minutes to the elbow crook immediately prior to the draw (this last measure helps bring the veins closer to the surface)

    When I engage in the above prior to a blood draw, I have never had a problem. Wish I knew about this years ago when I was a pincushion that passed out!

  12. Hey George, another excellent piece on the economy.
    But never a piece on how the Conservatives tripled the national debt under Reagan, who set off their unprecedented run of debt build up.
    We can debate whether over 90% of Obama’s debt was from Bush II’s policies, debt, and recession (hint: it was).
    But despite shrilly preaching austerity over infrastructure during the great recession, when they finally got unfettered control of the national checkbook, finally during good times, they quickly added over $2 trillion to the national debt.
    So it went for the the value of the US dollar.
    So it goes for brutal honesty. Best, Mike.

  13. This article is a good counterpoint to those who keep pushing metals. I do like PM’s since they require a bit less oversight than paper, and certainly cryptos. If they’re in a safe place(no such thing), then it’s set and forget until the next spike, providing that you have a living income already. IMHO, just don’t get too heavy into them and remember to unload some if there’s a spike. Most don’t, and lose the moment, like the BTC holders that held at 18K.

    Of course this is not financial advice, and again, IMHO, there’s no better investment than being clear of all non-productive debt, and most productive debt too. There’s peace of mind that comes from being able to live comfortably without looking at your portfolio for a few months, at least.

  14. What is the group’s thought on PG&E getting bailouts – or at least going Chapter 11 to reduce pension liability? It’s not like California is going to go without electrical power.

    (How would Bitcoin transactions process with rolling blackouts. ;))

  15. Anyone see the Gillette ad emaculating men for their boorish behavior. Did you notice all the men in the ad are white to remind white males they are the ones by their past behavior that have caused all the racial problems. Unfortunately, white males are buying into this rhetoric by the droves.

    Did you ever wonder why women like men who lift weights? Because they are stronger & can give the woman a feeling of comfort & security. That is called a normal human trait, unlike the Dem traits designed to castrate all deplorable males.

    As the boorish male said to his mate, “I am going to pump iron & then you.”

  16. Dont understand the paycheck to paycheck people in govt. employment. They have already been guaranteed a paycheck for all this off time. Dont they have credit unions, etc. they can put the touch on to make it through this non payday time. Sounds like somebody is just making up news.

  17. My sympathies for you deep-veined people. I’ve had a lot of IV work done, and am fortunate to have bulging ‘sewer pipes’ for veins. I teased the phlebotomists that they go back to school if they miss that vein. One nurse grinned and said “I could hit that blindfolded in the dark with a dart!”.

  18. As told to me by a wise old man…if you don’t hold it, you don’t own it. And all it is(metals) is insurance. Won’t make you rich, but it will keep you alive.

  19. It’s sad but true that many nurses don’t actually draw blood from a human until they graduate and enter the workforce. One of the reasons my daughter-in-law (a trauma nurse) went to the school she did is that they were highly ranked and the students had to demonstrate competency in drawing blood before graduating. The nursing students had to practice on each other instead of fruit like many schools.

    James Johnson, ex-nuke

  20. George,

    I remember back in the day when I paid for a couple year’s subscription in Liberty Dollars. While everyone would agree that Gold has out performed silver, everyone will also have to agree that silver has out performed paper.

    Gold is for holding wealth over long periods of time and distance. Silver is for holding wealth for transactions, short time and distance. They both have their place and should be part of everyone “system” and “preppier” portfolio.



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