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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. Selah.
By David Bond, Editor
The Silver Valley
Mining Journal
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