This Is 1969, Not 1979

By David Bond
April 24, 2006

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, 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