The silver price has dropped to such low levels that, a year from now, traders will wonder why they didn’t buy some at such great prices. And if the price isn’t much higher a year from now, it must have been that politicians and central banks suddenly got religion and stopped debasing currencies.
But how likely is that? Who wants to be in an official capacity when the Bastille is being stormed by people all over Europe in one massive European Spring? Scarey stuff, indeed.
According to the silver chart, the price has approached very close to a meaningful support level of $26.15. A plunge below $26.15 most likely can only mean one thing: a John Taylor (of FX Concepts) scenario of complete financial Armageddon in Europe, riots, government overthrows in countries not typically in the radar of Western news, or maybe revolution in Greece, for example. Under that scenario, the gold price might hit $1,000, according to Taylor.
A collapsed euro would temporarily soar the dollar until investors jump ship from the greenback following the short-term knee-jerk reaction. Then the focus on the dollar begins, and the financial metrics aren’t any better in America.
Sounds too speculative?
Consider, in 1873, when the German property market collapsed and Austria demonetized silver, the ripple effect in the US was devastating. The 1873-1878 Depression in the U.S. and Europe was worse than the Depression of the 1930s, though very few analysts refer to that period as a comparison to today’s financial crisis; that period was too long ago.
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