Bubbles come and go.
- Silver and gold – 1980
- Japanese Nikkei – 1990
- NASDAQ – 2000
- Mortgages and Real Estate – 2006
- Bonds, Debt, Stocks, Real Estate – 2017
Examine the following graph of monthly data for 32 years of the NASDAQ 100 Index and Silver.
We saw the NASDAQ bubble in 1999-2000, a rapid rise for silver in
2010 – 2011 and a large rise in the NASDAQ 100 during 2009 – 2017.
Prices for both markets have often risen too far and too fast, and
then corrected or crashed. The NASDAQ dropped more than 80% from 2000 to
2002. Silver dropped about 70% from 2011 to late 2015.
The NASDAQ 100 is likely to drop by a large percentage following its current run-up. Stay tuned – no correction yet.
Prices for stocks and silver rise, primarily because of currency
devaluations. The two markets often offset each other, which suggests we
should look at their sum. Examine 32 years of the NASDAQ 100 plus 175
times silver prices, which gives both markets roughly equal weight.
Over thirty years prices have risen exponentially as the dollar has purchased progressively less. Conclusion:
Prices rise exponentially and probably will continue to rise as long as
governments increase debt and central banks devalue their currencies.
Is the NASDAQ 100 high and is silver low?
Examine the ratio of 175 times the silver price divided by the NASDAQ
100. When the ratio is high – as in 2011 – silver is relatively high.
When the ratio is low – as in 2017 – silver is undervalued compared to
the NASDAQ 100 Index.
How long will the ratio stay this low? Probably not much longer …
When the NASDAQ 100 top will occur is important if you are riding the NASDAQ bull market. Now is a time for caution!
How much longer silver prices will stay low is important if you are
stacking silver, as I hope you are. Take advantage of these low prices!
REVIEW – and then do your own due diligence:
- Prices for silver and the NASDAQ 100 rise exponentially as unbacked paper currencies are systematically devalued.
- Expect much higher silver prices because the silver to NASDAQ ratio is too low, along with dozens of other reasons.
- Consider taking profits out of the NASDAQ to buy silver. Don’t expect to hear this suggestion on Wall Street.
- Wall Street benefits from higher NASDAQ prices. Wall Street benefits
little from higher silver prices, with the exception of JPM which, per
Ted Butler’s data, has accumulated a massive hoard of silver bullion.
Expect Wall Street to promote buying stocks and discourage acquisition
of silver, as usual.
- Silver has been money and a store of value for thousands of years.
The NASDAQ stocks have existed for a few decades. In the long term,
trust silver. In the short term, the NASDAQ is over-valued and silver is
inexpensive. Buy Silver!
Read Gold Moves Ahead of Silver
Read “House of Cards: Netflix is One of the Poster Children for Tech Bubble 2.0”
John Mauldin quoting Jim Mellon:
“And that makes it a bit like the markets – quiet at the moment, but the mayhem is just around the corner.
Assume the brace position.”
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GE Christenson is the owner and writer for the popular and contrarian investment site Deviant Investor and the author of the book, “Gold Value and Gold Prices 1971 - 2021.” He is a retired accountant and business manager with 30 years of experience studying markets, investing, and trading. He writes about investing, gold, silver, the economy, and central banking. His articles are published on Deviant Investor as well as other popular sites.
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The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
