I'm stumped. For years I've been forecasting that the economy...

I'm stumped. For years I've been forecasting that the economy was

going to get bad. For years I've been forecasting that the economic

expansion would be followed by a great depression. And in the past

couple weeks, lo and behold, it's happening right before our eyes. I

don't feel the need to send out urgent warnings about the "coming"

credit crisis because the daily news is doing a good enough job

letting people know what's ahead. I almost . . . . . feel like

there's nothing more to say. The long awaited "Panic of '08" that's

been headlined on our main Silver Snowball page IS HERE. There's

nothing left to warn people about.



Well, almost nothing. Here's my guess as to what will happen. The

Panic is only just beginning. We aren't at 40% unemployment levels

yet. The government thinks it's their job to keep the stock market

from going down. Yea right. The Bailout Package will just extend the

New Great Depression like legislative action extended the 1930's one.

Instead of letting the stock market quickly reach the bottom it will

eventually reach anyway we will continue to have a slowly slowing

economy for a longer period of time. I suppose it's a good thing that

whatever they do will allow people to keep borrowing and spending for

a while. I really don't want the banks to close and credit cards to

completely stop working.



And how does this affect silver? What I do know for a fact is that

despite the theoretical "spot price" still being low there is even

less silver around than there has been all year. The silver shortage

began last April when the US Mint first ran out of silver. In trying

to find American Eagles the past few weeks there was none around. The

Mint is currently not accepting orders for silver coins and most

other precious metals too. Some dealers say they don't expect any new

Eagles until next year but I've heard differently from others so not

sure what to make of that. If I have to I will substitute an

equivalent value silver coin but I'm trying not to because I know

everyone likes the Eagles.



What does seem to make sense is that to keep the economy going many

governments, not just in US, are "pumping money into the banking

system." Where does this money come from. Certainly not "savings".

The world was awash with so much paper money the past couple decades

that some assets such as real estate and stocks rose to ridiculously

high unsustainable levels. Now that real estate and stocks are

starting to correct down the governments and central banks want to

stop this natural correction by putting more paper money into the

system. Isn't that what caused the problem in the first place?



I don't know exactly when silver prices will take off for real. It

could be this week. It could be next year. I suspect with the current

very strong demand for silver, and the fact there is little

investment silver to be found anywhere that at some point silver will

start moving up a dollar or two A DAY. I run into people (outside of

our members) who are still saying, "Well I hope my mutual funds are

safe." Or they say "Stocks always come back." That's true they do but

after the 1929 - 1932 stock market decline, where stocks lost 90% of

their value, it took about 28 years for the market to recover. I hope

those people don't mind waiting for 28 years. And no one seems to

know what to do. They all have the deer in the headlight

syndrome. Of course I'll mention two words - "Buy silver" but they

don't. They probably couldn't find any even if they tried.



To sum up my guess as to what will happen in the future - World stock

markets will continue to go down. Most "high yield" investments will

default. Low yield government bonds may keep paying if you don't mind

making 2% a year on your money. Silver and gold will go back up. In

percentage terms silver will be better than gold. Again, just my

guesses. After all, I'm not a high paid executive working for a

financial institution and don't know how to buy shady investments

that can cause multimillion dollar companies to go out of business overnight.





Here's an article about silver you may enjoy:




Why Silver is better than Oil as an Investment

(Silver's cheaper, more rare, and not nearly as dirty, or heavy!)



Silver Stock Report

by Jason Hommel



1. There is a 40-year supply of oil in the ground. There is a

14-year supply of silver in the ground. Therefore, silver is the

better investment.



If "peak oil" is true, then every peak oil nutcase out there ought to

be several times more worried about "peak silver", since silver

reserves will run out sooner.



If oil is used in more kinds of products than any other commodity on

earth, then silver is the second most used commodity, used in

electronics of all kinds. And if silver is used up first, then we

won't have all the electronic machines needed to go and get the oil!



But the "peak oilers" are not so worried about silver. Why not? I

can only guess, but it is an educated guess based on extensive

reading of their works over the years. I suspect it is because they

are ignorant of silver, ignorant of economics, irrationally fearful,

and worship government and "mother earth" instead of God.



2. In 1970, there was a 10-year supply of oil in the ground. We did

not run out in 1980. We explored, and found oil. Mankind has

explored for oil and produced oil only for 150 years or so, which

creates extra fear of uncertainty (unlike silver and gold's 5000 year

history). Since we did not run out in 1980, then we will not run out

in 2050, over 40 years from now.



3. If it's not about "running out" but rather, running out of the

"cheap stuff", fine, I agree! If we run out of "cheap oil", we will

run out of "cheap silver" far, far sooner, so silver is the better

investment, and will outperform oil.



4. The silver to oil ratio: In 1980, at the former peak prices for

oil and silver, oil cost $43/barrel and silver was $50/oz. An oz. of

silver was worth more than a barrel! At the bottom of the market

around 2000, oil was $10/barrel and silver was around $5/oz. This

implies a price for silver of somewhere between $55-110/oz., with oil

prices remaining stable. If oil doubles from here, then silver will

go up ten times, to $220. Therefore, silver is the better investment.



5. The public will never buy 100 barrels of oil to store on their

front lawn, at $110 each, to save $10,900 worth of wealth. The

public will buy a $15,000 bag of silver to store in the closet, or home safe.



6. The silver market is orders of magnitude smaller than the oil

market, and will move far higher with a smaller amount of money

moving into silver.



World oil supply is 85 million barrels of oil per day x $109 = $9.2

billion/day, or 31 billion barrels/year, which is $3.4 trillion per year.



World silver mine supply is 650 million ounces per year x $21 = $13.6

billion/year.



In the long run, if paper money fails, the world might have to pay

for oil with silver. (Gold would be used for everything else). In

that case, that implies that an ounce of silver would buy 47 barrels

of oil (31,000 / 650 = 47), which implies a price for silver of $109

x 47 = $5200/oz.



Interestingly, even gold is a much, much better investment than oil,

because all the gold ever mined in all of human history is about 5

billion ounces, which, at $1000/oz., is $5 trillion, which would

barely pay for the world's annual oil consumption of $3.4

trillion. But as you all know by now, silver is much better than gold.