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2021: Silver Hits The Ground Running (And Might Start Sprinting)

Wow!

What a start to the year!

A lot of people may be feeling nervous about the price of silver since it has risen over 20% in price since the end of November, but I’m not one of those people. I think silver still has a good way to run before becoming “overbought”, and I’m kind of expecting silver to surprise to the upside, and I say that for three primary reasons: Stimulus checks, TINA, and a possible Democrat-controlled Federal Government.

The Stimulus Checks and TINA

The check is in the mail!

Supposedly.

And the great thing about that for Silver Bugs, Stackers, and other Smart Investors is that silver hasn’t even put in 52-week highs! Many so-called “analysts”, “experts” and “traders,” say to wait for weakness and see where silver bottoms out to scoop up some metal, although could it not be argued that still trading below, on paper, recent highs qualifies that as weakness in and of itself?

Furthermore, agricultural commodities, as in, food, are breaking out in price, crude oil just poked its head above $50 per barrel, the yield on the 10-Year Note popped above 1.0%, and base metals such as copper are breaking out, but we’re supposed to think that silver is going back down into the low $20s or possibly down into the teens?

I don’t think so.

Especially with stimulus checks in the mail, so to say, and people catching on rather quickly that they need to get rid of their US dollars fast and put them into something that is rising in price, and in my opinion, there is no better bang for the buck than silver.

But wait, there’s more!

That’s right folks, and her name is TINA, as in, “there is no alternative”.

You see, it only seems logical that some Silver Bugs, Stackers, and other Smart Investors are planning on making purchases of other durable goods or other things with their stimulus money, instead of just spending it all on the shiny phyzz. That said, what happens if the refrigerator that is on somebody’s shopping list is not in stock and won’t be for a while?

Or what happens if a prepper wants to stock up on some ammunition, but only buys locally and is unable to find what he or she needs?

Or what happens if that new iPhone isn’t coming out until September?

If one doesn’t want to hold on to rapidly devaluing fiat currency, which is guaranteed to buy less real things going forward, there is no alternative to silver as the way to save that money until needed.

OK, well, there are other ways, but I’d still only be talking about the other three precious metals, but I think silver is the one with the most potential, especially since silver is still a country mile away from its all-time record high, which, coincidentally, was set over forty years ago.

By “potential”, I mean silver as an inflation hedge with the added benefit of capital appreciation in excess of the rate of inflation.

Possible Democrat-Controlled Congress

Today, January 6th, we are awaiting the results from yesterday’s Georgia runoff elections, and apparently, after winning one Senate seat already, the MSM is reporting all over the place that the Democrats are on the verge of taking both Senate seats for Georgia. If that is the case, that would mean we have a Democrat-controlled Congress. Moreover, while the Senate would be split 50-50 in terms of Republicans and Democrats, there is an incoming Democrat Vice President.

And so today is an important day in the political landscape of the United States, and it is also the day that Congress will tally up the electoral college votes from the 2020 Presidential Election, so on what would otherwise be a rubber stamp day in politics is turning out to be quite the nail-biter. In other words, the so-called “balance of power” hinges on one Senate seat in Georgia, and Congress will most likely formally be giving Biden the election win.

Some people are holding out for a Trump miracle, but I do not think Congress will rock the boat.

Needless to say, if the Democrats gain control of the Congress, along with the White House, it is widely assumed that the fiscal spending will be even more gargantuan.

Silver poked its head above $28 this morning:

To me, it's clear that silver is in rally mode, and in my opinion, we have room to run before the technicals become "extreme".

This means the gold-to-silver ratio will probably kiss the 70-handle goodbye, maybe even this very week:

One of the reasons I'm expecting silver to outperform gold so much is just how far silver is away from all-time record highs.

That is to say, gold has been there, and silver couldn't even get there in 2011!

This time around, however, I think we're going to blow through $50 and keep on charging higher.

We'll see.

We see gold's off to a good start to 2021:

I'm looking at two higher-highs and three higher-lows on gold's daily chart, so I'm not really certain how people are still bearish in the short term?

Palladium looks like it wants to break-out of its sideways choppy channel:

This is adding to the argument that we're in rally mode.

Platinum has also had a great start to 2021:

Along with the other three precious metals, in my opinion, platinum also has some really good room to run to the upside before becoming "overbought".

What is the overall point here?

Let's ask Dr. Copper:

He's saying we're in an inflationary environment.

Even crude oil poked its head above $50:

 

Let's see here: Pain at the grocery store, pain with raw materials, pain at the department store, and pretty soon, pain at the pump?

And to think, the dollar hasn't even plummeted yet:

And I wouldn't get my hopes up for a "Biden Bounce", either.

Yield on the 10-Year Note is becoming interesting to watch again:

What will be even more interesting will be watching the Fed and Federal Government Bureaucrats trying to cling to the narrative that there's no inflation!

As usual, "market participants" are oblivious to all of this:

Here's the cold hard truth: In the markets, most of the people lose most of the time.

And even if they gain with ever-increasing Bitcoin, or perhaps the US Stock Market:

What good will all of those "riches" do when people literally can't buy anything during the hyperinflationary crack-up boom?

People laugh when I say to get ready for $35 bottles of ranch salad dressing, $1500 run-of-the-mill tennis shoes, and $10,000 plane tickets.

In my opinion, and in practice, I'm front running the hyperinflationary crack-up boom, and whatever I can't front-run, because, well, let's face it, for you can only really eat so much ranch salad dressing, I'm putting my unbacked, debt-based fiat currency dependent on exponential, unsustainable growth, known as Federal Reserve Notes and commonly called "US Dollars", into real money: Silver.

Thanks for reading,

Paul Eberhart

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Paul Eberhart
Paul Eberhart
Senior Market Analyst and Columnist

Paul Eberhart has been actively trading and writing about precious metals for more than a decade. A U.S. Army Iraq War Combat Veteran, he holds an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill.