The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
) -- Throughout the history of our industrialized economies, gold and silver have typically represented between 5% and 10% of the average investor portfolio, or roughly 5% to 10% of his or her wealth. Note that historically, this ratio has typically risen in times of financial turmoil, crisis, or simply any time of high inflation.
Despite the price of gold having surged in price by well over 500% from its absolute low, despite the price of silver having surged more than 800% off of its absolute low, gold and silver still represent little more than 1% of the wealth of the average individual. The gross under-ownership of this historic "safe haven" is taking place at a time when western markets, financial systems and their entire economies have never been in
a greater state of crisis.
Already these debt-saturated dominoes have begun effectively declaring national bankruptcy. This is the only way to describe the 75% default on Greek government debt and the wholesale liquidation of government-owned assets. This only increases the leverage (and the strain) on the bankers' $1+ quadrillion derivatives market.
The derivatives market is a totally unregulated casino, operated by western banking Oligarchs. It is nothing but a collection of bets on the world's markets and economies. Indeed, one of the largest categories of derivatives is credit default swaps -- which had been banned for decades based upon U.S. anti-gambling statutes.
With this insanely leveraged casino having swollen to a size equal to more than 20 times total global GDP, it is only a question of "when," not if, this
paper Ponzi-scheme will implode. The amounts are so huge that a bailout isn't even theoretically possible. When this implosion occurs, the western financial system is 100% certain to be vaporized (and most likely all western paper currencies).
Meanwhile, the same cabal of bankers is printing up their paper money at the most reckless rates in history, which is the only reason they have been able to delay the implosion of their paper house-of-cards this long. It is a matter of elementary economics and arithmetic that if you print currency at a rate in excess of economic growth, the value of that paper must decline.
Hence, an ounce of gold that used to be priced at under $300 is now over $1,600 (and had been much higher). An ounce of silver that used to be sold for less than $4 is now close to $32 (and had been much higher). A barrel of oil that was priced at $30 a few years ago is priced at over $100 today -- despite energy analysts continuing to talk about a glut of current supplies/inventories.
A loaf of bread that cost $2 only a few years ago costs $4 today. A dozen eggs that used to be under $2 is now over $3. A pound of ground beef that used to cost about $2 is now about $4. The quality of none of these goods has improved. Indeed, the disease-ridden livestock that produce much of our food are arguably getting more and more inferior. Rather, it is the paper that is plummeting in value -- despite our government's foisting their "low inflation" lies upon us.
The paper-printing continues to
increase exponentially. Every time you hear the words "bail out," understand that none of our governments has any money, and that all "bail out" means is printing-up much, much more paper. Thus the inflation that has already ravaged our purchasing power has only just begun.
Throughout the thousand-year history of paper money, there has only been one certain means of protecting one's self from the depravity of bankers: precious metals. Thus, the greatest fear of myself and the growing community of precious metals commentators is that we would be too late in alerting the general public to the absolute, imperative need to convert
their paper to real money -- and as quickly as possible.
It's easy to recapture this sense of urgency by going back exactly one year in time. The price of gold was over $1,400/oz, and had risen by approximately 30% over the year preceding that. The price of silver was actually about $4.50/oz higher in price then, and had risen by about 100% over the preceding year.
For all the reasons listed above, along with the strongest supply/demand fundamentals for any class of commodities on our planet, it was (and is) 100% certain that gold and silver prices can only go
much higher over the longer term -- until some time past when the bankers have completed the
inevitable destruction of their entire paper empire.
For lack of a better term, let's describe what has happened over the past year as "sideways" trading in gold and silver. The price of gold is up a little less than 20%; the price of silver is down a little less than 15%. In statistical terms, given the extreme volatility of these markets these relatively small price movements can only be discussed in those terms.
Now let us pose a hypothetical scenario. Instead of the bankers having staged a massive (and
totally artificial) operation one year ago to temporarily cap the price of silver at just below $50/oz; let us assume that the price of silver had simply continued on its inevitable upward trajectory -- and was now priced at over $100/oz.
Hypothetically, let us also assume that instead of the price of gold having been temporarily capped last summer at just under $2,000/oz that it had also simply resumed this 10+ year bull-run, and was now somewhere north of $2,500/oz. What would the investing public be lamenting as they sat there with only 1% of their own wealth in precious metals?
The answer is obvious. They would all be wishing they had "one last chance" to jump on the bandwagon before prices had run up so high that their ability to shelter their wealth had been greatly diminished.
We can therefore state unequivocally that what the bankers have done in their last-ditch defense of yet more obsolete "technical barriers" in these markets has been to provide ordinary investors who have missed out on this golden (or silver) opportunity with a final chance to make up for lost time -- and at sale prices.
As stated previously, the fundamentals for gold and silver clearly dictate much higher prices. However, many potential investors have (ironically) been frightened away by this manipulation of these
markets and the tremendous volatility, which has accompanied them. Their fear is that the anti-bullion banking cabal is somehow omnipotent -- and can suppress prices indefinitely.
The rebuttal to that thinking is simple and absolute. If the bankers retained that sort of control over these markets then silver would still be priced at under $4/oz, and gold would still be priced at under $300/oz. More than 10 years of rising prices in defiance of these paper-pushers is absolute, empirical proof that the bankers can only restrain these markets over temporary intervals.
The other way to describe that dynamic is as follows: the current "sale" on gold and silver must end soon. Rational investors need to ask themselves whether they would rather have purchased their silver at its recent high (over $49/oz) or at under $33/oz. They need to ask themselves whether they would have rather purchased their gold at its recent high (just under $2,000/oz), or at under $1,700/oz.
With governments continually talking about "bailouts" out of one side of their mouths, and
"competitive devaluation" out of the other side, it is as certain as night follows day that the collapse in the value of our paper money can only accelerate. Historically, every previous experiment in these paper, fiat currencies has ended with the paper going to zero, or simply being removed from circulation (at some near-zero price).
The same group of bankers who are certain to completely destroy the value of the scraps of paper in our wallets are ironically the same individuals giving the sheep one last chance to protect themselves from the wolves, by converting their doomed paper into the 5,000-year safe haven represented by gold and silver.
Investors now have the rarest of opportunities in our markets: a clear warning and a clear buying opportunity. Those who miss out on this window will have no one to blame but themselves.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.