I’ve had more than a dozen e-mails from SurvivalBlog readers in recent weeks regarding Iran’s plans open a new oil bourse in March that will be denominated in Euros. Meanwhile there is lots of saber rattling going on, regarding Iran’s nuclear program–leading to the prospect of an Iranian oil embargo, which could of course mean very bad things for the U.S. economy. I have no idea how these two semi-related situations will play out. I’d be a fool to say that I knew. Aside for a few Ayatollahs, nobody knows. All that I can tell you is that these situations spell instability and uncertainty. The speculative side of the precious metals market is driven by fear, and I think that there will be plenty of fear in the coming months. Therefore, I can foresee a spike in the price of precious metals. The biggest gain will surely be in silver, which has been undervalued for years. In fact, silver could jump to over $90 an ounce. How? Here is one scenario: What if the recently-announced silver exchange traded fund (ETF) goes “live” at roughly the same time as either a.) a dollar crisis (precipitated by the new oil bourse), or b.) an Iranian oil embargo, or c.) military action in Iran–most likely an attack on their nuclear reactors. It could even be a combination of all of the above. Consider that silver ran up to $50 per ounce during the Hunt Brothers short squeeze/buying panic in the late 1970s. Adjusted for inflation that would be the equivalent of around $80 per ounce these days.
I can’t overstate the significance of the Iran situation. For some more background, see: http://www.gold-eagle.com/editorials_05/willie012506.html
I’m just glad that I bought nearly all my Engelhard 100 ounce bars back when spot silver was around $4.40 an ounce!
Back in February of 2001, I stuck my neck out and “called the bottom” publicly when spot silver dipped to $4.55 per ounce. In that same post I predicted a possible further price sag to “as low as $4.25.” In fact it actually bottomed a few months later, at around $4.16. Okay, so I missed calling the exact the bottom, but on a macro scale I fairly accurately called the end of a 15+ year bear market and the beginning of the current bull market. BTW, if you think I’m making this up, see the Usenet newsgroup archives: http://groups.google.com/groups?q=Rawles+Calls+Bottom+Silver&hl=en
The long term charts at Kitco.com are a real eye-opener.
Buckle your seat belts, folks. We are in for quite a roller coaster ride.