Wallace, Idaho (24th
April 2006) – So the “bubble has burst,”
the talking heads are saying. After flirting with $15, silver
got the stuffing knocked out of it late last week, and we
suspect the blood-letting will continue, as we forecast it
might several weeks ago.
But it won’t last long. The youngsters
who think they saw a “bubble” at $14.55, that
this signals the end of the bull market, weren’t around
for the last one and unless they sober up won’t be around
much longer for this one.
Commodities bull markets last at least two decades,
on average, going back to when God was in knickers. And no
further proof that this is a bull market “correction”
was necessary than Friday’s rebound, which saw silver
return nearly to its two-decade highs. Some bubble. Get a
grip, kiddies, you ain’t seen nothing yet.
Saddle up your silver and be prepared for a
serious case of The Fears. Thursday wasn’t the first
catastrophe nor will it be the last. You think life is linear,
or at least comprises some oleaginous curve? Bullshit. This
is rock ‘n’ roll.
Our dearest friend David Morgan, who makes a
living being the Glummest Silver Bull Alive at silver-investor.com,
fears that Thursday’s deflection probably won’t
wash out until August. Insofar as he’s mostly always
right, we’ll adopt his pessimism. This means a downside
crash to $8.50 or $9. What a bummer! The mines here are calculating
their reserves, their operating futures, around something
like $6. So let’s hear it for $6.50, or $7.50, or $8.50.
Found money! Fourteen bucks? We don’t know anybody at
Coeur who can even count that high.
Thursday’s “disaster” went
unnoticed by copper, which decided instead to top $3 a pound.
Three bucks for copper? We are thinking of installing oil
lamps in this old pad, ripping out the Romex, taking it to
the junk dealer and paying off the mortgage. Except that oil
ain’t cheap either. Oil crashed down to somewhere in
the $73 range. We are sore afraid.
Zinc went over the top on the LME, and so did
lead. Nickel wondered what all the fuss was about and charged
ahead. Uranium, at last count, was $40, and it’s more
common than zits on a teenager. Ditto moly. See, this chaos
is not about silver and gold. It’s about a two-decade-long
(and long overdue) bull market in commodities. There’s
nothing overheated about this market, yet.
You think you see the bubble? Heck, the last
silver bubble was in 1980, when she whacked $48.88. Those
were 1980 Fednote dollars, worth double what 2006 Fednote
dollars are. So you ain’t seen no stinking $48.88 bubble
in silver until she hits $97. We are a long, long way from
there. Try to plot a straight line between $1.29 and $48 silver;
it cannot be done, except over the long haul between 1966
and 1980. Ditto gold; $35 to $800-something. Took twenty years,
plenty of turbulence intervening.
Sure there is froth at these stopping points.
You get about 6 hours’ notice to reload. That will be
it. If Morgan is right and we’re in for a summer-long
doldrums, so much the better. Time to see the lawyers and
accountants and get out of the Delphi pension plan and in
to something real. Be fearless. The right mining juniors will
do you well. But be afraid as well. Those paper dollars you
hold won’t even get the kindling in the woodstove alight.
This is not the “bubble” of
1980. The by-w6rd here is “fungible.” Metals and
commodities are fungible. Silver is silver is silver, the
world over, no matter where it’s made. Dollars are not
fungible, especially if they say, “Made In USA.”.
What you are hearing is the deafening racket of copper, zinc,
lead, uranium, concrete, rebar and oil, clamouring for a free-market
price so they can catch up with the price of a loaf of bread,
or even the cost of real estate in Wallace. The market cries
out for Justice. And, replies Silver, Justice will be ours.
By David Bond, Editor
The Silver Valley Mining